Word: surtaxable
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...effort to check inflation, Richard Nixon has relied heavily on the extension of the $8 billion-a-year income tax surcharge to reduce the economy's fever. Last week, assured by House leaders that the surtax would be continued into the fiscal year beginning July 1, the President confidently predicted that its impact-and that of other fiscal measures-would be felt in "two or three months." If it is not, he warned, more stringent action will be necessary...
What gave Nixon his confidence was the decision by the House Ways and Means Committee to report out the bill exactly as he had requested-extending the surtax at its present 10% rate for six months and continuing it for another half-year at 5%. The bill also eliminates the 7% tax credit for business investment. The committee vote of 16 to 9 was the result of prodding by Chairman Wilbur Mills, a Democrat, some nudging by John Byrnes, the ranking Republican, and a last-minute thrust by the President himself. Nixon sent Treasury Secretary David Kennedy and Paul McCracken...
Outmaneuvered Opposition. The committee's approval caught the surtax's opponents by surprise. Some conservatives who oppose high taxation and spending were disarmed by the bill's bipartisan support and by the nation's growing concern about inflation. Liberals, who proposed to support the bill only in exchange for broad reform of the tax structure, were also outmaneuvered. To minimize their resistance, the committee added a provision reducing or eliminating the federal taxes of 13 million low-income people-a feature the liberals could hardly oppose. To ease the reformers' consciences further, Mills pledged...
...move that was widely interpreted as a portent of a serious credit crisis. The next day, the Government's top economic policymakers managed to sound downright alarmist as they made a rare joint appearance at a Washington press conference to plead for an extension of the 10% surtax on personal and corporate incomes. That tax, which is due to expire June 30, is designed to fight inflation by reducing demand and increasing the Government's budget surplus...
Chairman William McChesney Martin of the Federal Reserve Board warned that without the surtax "we cannot succeed" in slowly controlling today's "critically serious" inflation. Sitting at his side, Treasury Secretary David M. Kennedy* declared: "The problem is much more difficult than I realized. We can't let this escalate into runaway inflation, and we're very close to that now." If Congress allows the tax to expire, he added, the economy could race far enough out of control to create "the possibility of a serious recession." To prevent that, Secretary Kennedy warned that the Government would...