Letter to Senate Leaders Mike Mansfield and Hugh Scott on the Tax Reform Bill.

THE SENATE is to be commended for the deliberate speed with which it is considering H.R. 13270, the Tax Reform Act of 1969. I hope that meaningful and acceptable legislation can be passed by Congress before the end of this year. But to be acceptable, such legislation must be equitable and it must meet the test of fiscal responsibility.

Certain amendments scheduled to be considered by the Senate this week fail these tests. I refer to the proposals to raise the personal exemption from $600 to either , $800 or $1,000, and to establish a $1,000 uniform standard deduction. Those proposals would be substituted for the major tax-relief provisions of H.R. 13270 as voted by the Senate Finance Committee.

The Finance Committee bill would result in a net revenue gain for fiscal years 1970 and 1971, and a minor loss in 1972. It is consistent with our determined efforts to control inflation.

This bill fights inflation by extending the income tax surcharge at 5 percent until mid-1970; postponing scheduled reductions in certain excises; and repealing the 7-percent investment credit. It is simply not in the national interest then to add new inflationary pressures through reductions in personal income taxes which are too early and too generous.

The proposed amendments would substitute imbalanced, inequitable relief for the Committee's evenhanded tax rate reductions in all income brackets.

The proposal to raise the personal exemption to $1,000 would fall some `$6 billion short of the Committee bill during the next 2 ½ years. The `$800 exemption would result in a $4.8 billion short-fall. The Administration's economical Low Income Allowance, which would take some 5 million citizens off the tax rolls and lower taxes on 7 million others, goes far enough this time.

The spirit of this legislation is tax reform which attempts to make taxation fairer to all Americans not tax reduction. It would be unfortunate indeed if Congress violated this spirit of reform and thereby jeopardized both the source of revenue for vital national goals and the fight against inflation.

This Administration is strongly committed to tax reform. I have stated that I will sign a good tax reform bill. I still intend to do so, but it must be equitably constructed and it must be fiscally responsible.

I urge the Senate to accept the tax relief provisions so carefully constructed by the Senate Finance Committee.

Sincerely,

RICHARD NIXON