Evening star., 1933-05-25
BY DIR. JOSEPH J. KLEIN,
Associate professor o. economics, College
the City of New York.

the City of New York.
NEW YORK, May "a (NANA)-
There must be universal approval of the
wisdom of the administrators policy
which insists that Congress should pro-
vide revenue with which to finance the
public works program of the national
industrial recovery bill It is one thing.
however, to recognize the soundnesS OF
the policy and quite another to accept
as economically sound all of the revenue
recommendations Of the Ways and
Means Committee.
: The existence of a fiscal emergency
amply justified the enactment OF Sc
lected import taxes, special excuses,
stamp taxes and various imposts in the
revenue bill of 1882, which, by its terms,
was to expire on June 80, 1884. That
emergency still exists, and 1t was there
fore to be expected that these sources of
revenue. which are. estimated to raise
almost 00,000,000. should be con-
tinued. Such continuation has been
recommended by the Ways and Means
Committee, The further provision that
these additional taxes should cease
upon the earlier occurrence OF the bal
ancing of the national budget or upon
the repeal of the eighteenth amendment
is both salutary and justifiable.
s22o, ,ooo, 900 Choice.
The further recommendation Of the
Ways and Means Committee with re-
spect to the raising of an additional
1920, 600, 900, likewise limited in time,
appears to be an unhappy and unwtse
choice.
J Even slough the proposal is desig-
mated es temporary, it is undesirable
to impose a normal tax on ordinary
dividends. Ever since the enactment OF
the present series of income tax laws,
such dividends have been subject to
surtax only, on the equitable ground
that the normal tax has been paid by
the corporation before dividend dis
tribution became possible. When the
administration is bending every effort
TO rehabilitate business, it is not wise
to encourage shifts in types Of invest
inent. Thus, for example, If a corpora
zion were to substitute bonds for stocks,
the interest paid on the bonds would
constitute deductible. expenditures Tor
the corporation, whereas dividends are
hot so deductible If dividends are sub
aect to tax in the hands of recipients,
3ust as is interest, there is obvious dis
elimination in favor of interest-bearing
obligations as distinguished from dlv1d-'
end-bearing obligations.
The proposed increase in the gasoline
tax appears also unwise, not alone be-
PAUSE of the relatively high Federal tax
TO which this product is already subject,
but also because gasoline is exposed to
Increasingly high State levies. a..
Normal Rates Increase.
The proposed increase in normal tax
rates should be avoided except as a
last resort. This source has been in
creasingly tapped. both by the Federal
Government and by States.
{ 1t is not. difficult to reconcile ones
whole hearted approval of the thesis
that the public works program should
be financed by revenlie with objections
to some of the tax proposals of the
House Of Representatives committee.
This is so because other sources OF
revenue afford sounder. fairer and
surer yields. The selective manufac-
turers' sales tax is an example of the
type of levy to which there would be
little or no objection and the yield