Evening star., 1932-05-08
NEW YORK WANTS
BROAD TAX BASE
Trend of Opinion Is for Adop.
tion of Some Kind of
Sales Levy.
BY DAVID LAWRENCE.

NEW YORK, May 7-If Washington
is always political and New York IS
economic in its point of view, there
never w~s a tine when the gap wa
wider and more difficult to bridge than
in the present crisis.
The business men here think Con-
eresS consists Of individuals ANXIOUS
only about their own reelection, that
their jCb5 mean more to them than
saving the Nation from financial chaos.
Upon being told that Congress as a
whole is Just as vitally concerned with
ecCn~mic reha bilitatiOn as anybody in
New York, the invariable answer is
that members of the House and Senat e
have a strange way of going about 1t.
New Yorl'S financial community IS
saddled with debt and worried over the
absence of intermediate capital to take
care of operating deficits or even the
refunding of maturing obligations on
which fixed charges are actually being
earned.
Forced to Take Risks.
What gives pause, therefore. is the
possibility that in the face of un-
paralleled credit difficulties, Congress
is about to make the biggest attack on
individual and corporate incentive that
has ever been made. Taxation when
based upon a capacity to pay is not
begrudged by the people here. They
point to the huge excess profits taxes
paid in war time and Immediately
thereafter. They point to the large
surtaXeS and other imposts which the
Nation paid and still yielded a surplus.
But what shall be said, it is asked, Of
tax planning that has learned nothing
about the difference between high tax
that is unproductive and low tax that
yields a big revenue?
we invested two years ago about two
million dollars" said a manufacturer OF
machinery, and we now are getting
our money back on the product We
sold. There's a chance that we could
bio on some new work and l am sure
we could get it. But what happens to
our profit. The Government takes
some of it from our company and then
more from us as individuals. The
amount to be surrendered by taxation
is so big that I would rather invest our
money in taX-eXempt securities OF mu-
inequalities or States and sit and wait
for developments. Yet is that right ?
Should we not be going ahead with
that money and putting labor to work
with it? We cannot tell whether We
will make profit on the new work. We
must take risks. If we win, the Gov
erament gets a big share of the profits.
II we lose, the Government doesn't
share that loss. Why should we take
risks, then? That's how taxation when
carried to extreme destroys incentive. y
Wants Chance to Earn Money.
On every side when inquiry is made
as to what ought to be done, the trend
of the answers is that some form of
sales tax should be adopted Argument
is frequently made for low percent
age sales tax with no exemptions in
stead of the relatively high tax which
the House attempted and a multitude
of exemptions.
What the business world wants is q
chance to earn money for itself to pay
its debts and this cannot come, it feels
With a narrow system of taxation
What is recommended is a broader base
of taxation with indirect taxes as well
as widely spread income tax.
II Congress would enact a broadenec
tax plan, apply such economies to the
budget as it can in the next 30 days
ana give the Executive some power tc
deal with such emergencies as may
arise during the Summer and Autumn
the sigh of relief that would go up in
the island of Manhattan would be
echoed from here to La Sale street
in Chicago and to the Golden Gate and
/ every other financial and business COM
munity. For coupled with other diff
culties and problems there has arisen a
psychology of despair that can be lifted
overnight if Congress comes to under
stand that this year the best politics is
sound economies.