Letter Recommending Living Expense Deductions for the President, Vice President, and Speaker of the House of Representatives.
My dear Senator George:
I am writing to you and Senator Millikin and also to Congressmen Cooper and Reed to ask for your cooperation in prompt handling of a legislative matter which I am sure you will agree should be approached on a completely nonpartisan basis.
The last Congress took a noteworthy step when it repealed the provisions of law under which tax-free expense allowances were provided for the President, the Vice-President, and the Speaker and other members of the Congress. I have long felt that the principle of special tax-free allowances was undemocratic and not in keeping with our concepts of the use of the taxing power. I was also gratified when the Congress, in lieu of granting its members a tax-free expense allowance, authorized as a tax deduction the special costs of maintaining themselves here in Washington, up to a maximum of $3,000 a year. Even though this step may have the result of reducing slightly the tax liability of the average Congressman, I believe that the concept underlying the new legislation is sound and wholly defensible. Tax deductions for legitimate purposes are quite different from special tax exemptions. The Congress, however, did not recognize in this legislation that the President, the Vice-President and the Speaker also have extraordinary living expenses, which result from the discharge of their official duties and which ought to be a permissible deduction for income tax purposes.
You may not be acquainted with some of the requirements which are placed upon the President. It has been assumed, for example, that the President does not have to pay for any part of the expenses incurred in running the White House. This assumption is incorrect. The President pays very substantial sums each month for food and services furnished to him and his family and guests. Official entertainment and travel of the President are paid for by the Government from the White House appropriation under an authorization for an annual appropriation of not exceeding $40,000 for these purposes. In recent years this fund has not been adequate to defray all of the expenses properly chargeable to it. In addition, there are other special living expenses associated with the Office of the President of the United States which are neither payable by the Government nor deductible for income tax purposes.
I do not believe that the Congress realized the full extent of the effect of its repeal of the tax-free features of the expense allowances. I would like, therefore, to give you some figures and to recommend most earnestly that the Congress take appropriate steps along the lines of the attached draft of a bill to permit the President, the Vice-President and the Speaker to deduct living expenses from their taxable income.
With a salary of $100,000 and a tax-free expense allowance of $50,000, the President (assuming he is married and has no dependents other than his wife) now has a maximum tax liability of more than $56,000, or better than one-third of his total compensation. In the case of the Vice-President and the Speaker, with salaries of $30,000 and $10,000 tax-free allowances, the income tax liability runs slightly in excess of $9,400 or almost one-fourth of total compensation. Under the changes in law making the expense allowances taxable, and at existing tax rates, the tax liability of the next President will climb to more than $95,000 a year, that of the Vice-President to almost $15,000, and that of the Speaker (if there is taken into account the special living expense deduction of $3,000 as a Member of Congress) to over $13,000. I do not believe that this is equitable or that the Congress intended any such result.
As a basis for the consideration of the Congress, I have suggested in the draft bill that special living expense deductions be authorized for the President, the Vice-President, and the Speaker up to maximum amounts of $50,000, $10,000, and $10,000, respectively. Under present tax laws such deductions, if wholly taken, would maintain their tax liabilities at the present level, which I believe is equitable when the financial demands of the respective offices are considered. I am, sure that the Congress does not wish the three highest elective officers of the United States to use their savings or to borrow money to maintain the offices to which they have been elected, and to cover the expenses over which they have little control.
Ordinarily I would have addressed the Speaker and the Vice President. Since they are personally affected by the proposed legislation I felt it would be more appropriate to write directly to the ranking members of the Committees which have responsibility for tax matters.
So far as the President is concerned, the Constitution requires that any corrective action must be taken prior to January 20. I most sincerely hope that my recommendation for such corrective action will receive the immediate and favorable consideration of the Congress.
HARRY S. TRUMAN
[Senator Walter F. George, United States Senate, Washington 25, D.C.]
Note: Senator George was Chairman of the Senate Finance Committee. Similar letters were sent to Eugene D. Millikin, a ranking Member of the Senate Finance Committee, and to the ranking Members of the House Ways and Means Committee, Jere Cooper, Chairman, and Daniel A. Reed.
The text of the draft legislation was released with the President's letter.
Harry S. Truman, Letter Recommending Living Expense Deductions for the President, Vice President, and Speaker of the House of Representatives. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/231295