The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-03-21
Liberal Viewpoint
by DR.. HARRY ELMER BARNES

TT is an old adage that mo chain is stronger
than its weakest link" 1t seems agreed pretty
generally, even among friends of the new deal
that the weakest link in the Roosevelt program
to date has been its taxation policy Here there
has been only a very slight modification indeed
of the indefensible policies of Harding Cool
idge, Mellon, Hoover and Mills
This is made very clear in an excellent bro
chure by Professor Harold M. Groves, published
by the New Republic. Professor Groves services
as tax consultant for the government were re-
Jected by Mr. Morganthau, who replaced him
by more conservatively minded adviser
The Roosevelt administration has been bold
and adventurous enough in it's proposals to spend
money even though there may be some criticism
Of its distribution of funds. Sooner or later the
fiddler will have to be paid There are a number
OF ways in which it can be done.
The government TODAY can print between
twelve and fifteen billion dollars of paper money
and still reserve the legal backing in gold This
would pay the bill for the first couple of years
of the new deal but it would allow those who
have 'scooped up" most of our national income
to escape without making their just contribu-
ton to the financing of our efforts to escape
from economic collapse.
GOVERNMENT bonds could be sold to the
~ tune of many billions of dollars. But this
only would postpone the evil day of settlement.
1t would add to the already topheavy debt
structure of the country, which many compe-
tent economists believe is already SO great as
to make impossible any successful rehabilitation
of the capitalstic system.
There is only one sensible way in which to
meet the majority of the burden imposed by
the financing of recovery. This is taxation, lit
orally on the basis of capacity to pay.
The very wealthy did not divide up fairly
from 1921 to 1929. BY thus reducing purchas-
ing power they brought about a collapse of our
E11cir iY9 roctO IF
perity, if possible at all, only can be achieved
by taking this unfairly appropriated money away
from its holders and deVoting it to the national
veal. The essentials of a rational program of
taxation for the administration are clearly pre-
sented by Professor Henry R. Mussey, in the
Nation.
So far as possible, the desirable increase of
taxation should fall upon personal income.
Taxes on business are, to a great degree, shifted
to consumers by raising the prices of products.
They also may, to a slight extent, discourage
business initiative.
n AIsING taxes on personal incomes ran con-
N trary to the Coolidge-Mellon policy and
in the five years preceding the crash Of 1929
less than third of the total federal revenue
came from the personal income and estate
taxes.
The first step to be taken is to stop up the
gaps in the income tax fence: They need to
barbed wire charged with a million volts of
electricity and to prepare all the cells in federal
prisons vacated by prohibition violators for the
reception of income tax lawyers, who teach their
clients how to break through"
Next the income tax law should be revised
so as to fall especially heavily upon the higher
brackets. Indeed surtaXes might well be slapped
on which would automatically absorb and turn
back to the government all income over 100000
year. Under the conditions in which we now
live a greater income than this not be
socially justified.
Next the inheritance and estate taxes also
should be stiffened up and frightened SO as to
bring about the public appropriation of all in
heritances, monetary and in real property, in
excess Of two to three million dollars Almost
any poor little rich child" should be able to
stagger along through life with such benefac-
ton from his parents or rich relatives.
In short a rational taxation scheme would
not only be a fiscal expedient. It would be an
instrument for achieving social justice. 1t would
serve the cause of equity. 1t would end the in
sane and disastrous struggle for fabulous indi-
vidual riches 1t would lead to a more sensible
and effective distribution of purchasing power,
thus increasing the market effectiveness of
American consumers and stimulating q revival
of capitahstic business endeavor.
AS DR.. NIussey we'll summarizes the issue:
What we need now is to apply to the taxa
ton Of wealth something of the same daring and
imagination that the President has displayed in
other fields. Taxation can be made an enor-
mously powerful machine to help effect the pro-
found economic changes on which we are clearly
embarked, and which We must all hope to attain
peacefully"