Evening star., 1933-05-22
REVENUE PROGRAM
VEX|NG CONGRESS
President May Have to Step
in and Formulate Own
Solution.
BY DAVID LAWRENCE.

AACiC uocu to &c query, WIlAt COMES
after the purchase price ?-and the same
may be asked about the new industrial
control-public works legislation. For.
after the first flush of enthusiasm by
capital and labor, the real problem Of
how to raise 1920, ,000, 900 of additional
taxes Is upon them. They both get
something out of the new bill-labor
gets jobs and capital gets immunity
from antitrust laws and possibly the
power to raise prices to the consumer.
But these objectives have completely
overshadowed the basic difficulty OF
raising revenues as service charges for
the $4,000, ,000,0 project.
The same old controversy over
spreading the tax burden by a sales tax
or concentrating it on those of incomes
above $4,000 year is up again. Labor
and business organizations might have
agreed on sales tax, but congressional
sentiment Is wary of it. The President
cautiously has kept his hands free from
the drafting Of a revenue plan, prefer
ring to leave it to Congress. He may
yet have to intervene.
The Ways and Means Committee has
about reached the conclusion that
higher income taxes and higher gaso-
line taxes will do the trick. As for the
latter it is fought by the Automobile
Chamber of Commerce and Is pain
full addition to an already much abused
tax source, but the theory of spreading
the payments over q large volume OF
sales Is in line with recent trends in
taxation Of certain widely used articles
like tobacco and beer. AS for higher
income taxes, the members Of Con-
gress have not yet taken seriously the
diminished incomes due to the depres-
sion, and the ear srts on Capitol Hill
are making estimates based upon what
they think will be the returns
What they do not apparently realize,
is that taxation of income above GER
tain point leads to a drying up of capi-
tai for investment purposes and de-
styoys incentive. Unless the Govern
ment intends to furnish the capital for
business and industry in the next year,
the possibilities of reviving business
through fiotations of the customary type
Of capital loans may be said to be dim
anyway.
Every tax revision since the war. has
showed that the lower the tax rate. the
higher the revenue for the Government
on high incomes and that as tax rates
were increased, funds were driven into
tax-exempt securities or held in gilt
edged securities without furnishing the
equity money so much needed for the
enlargement Of business activity and
hence the increased employment OF
labor.
Congress will take considerable time
to work out a new revenue program. It
is one Of the things that will delay ad-
journment. Mr.. Roosevelt has prom
ised to formulate his own tax program
If Congress does not find a satisfactory
formula and it looks as If his help will
be needed. For If there is any one
thing on which Congress can get tam
gled up easily, it's tax problem, espe-
cially when income taxes are touched.
The general sales tax still has Its
friends and sponsors in both the Demo-
cratic and Republican camps. Opposi-
ton which year or two ago developed
to 1t on the theory that costs would be
raised too precipitately Is not as ap-
plicable today when the price level is
rising and the public Is expecting in
creases anyway in costs and wage levels
and individual incomes come back. If
ever there is q time to impose a sales
tax, it is on rising price level. Mr..
Roosevelt is issuing the comforting sug-
gestion that when the eighteenth
is repealed, the higher taxes
can be removed But the probabilities
are that both the liquor taxes and the
income taxes will be retained II the
projects hereabouts continue to be cal
culated in the billions instead Of the
modest millions Of yesteryears.
tCopyright. 1933)