Evening star., 1935-08-13
SOUND TAX THEORY.
HELD DISCARDED.
Imaginary "Share-WeaIth'
Plan Hit as Inadequate
for Present Needs.
RY DAVID LAWRENCE.

The tax muddle grows daily more
complicated. politically, economically
financially
If Congress drops its soak-the- poor
program now and just passes the soak
the-rich rates then the adnlinistra-
ton will be forced to confess next
wear that even with the drastic
changes it has made the revenues
are inadequate. Its leverage will have
been used up.
Today by taxing rich and poor alike
the administration can at least argue
that everybody is being treated to
some tax increases and that, there
fore, they should be borne with
equanimity If, however, the legis-
lative program concentrates on one
group and the unbalanced budgets
continue because of the inordinate
expenditures there will be no excuses
to make next session on the very
eve, of a congressional and presi-
dental election. The people of mod
crate means would be bound to resent
being singled out then.
The regretable part of the whole
business is that sound tax theory
is being discarded for the new tangled
idea of bringing utopia by an imag-
mary redistribution of wealth whereby
the average man doesn't get any
more income, but the politicians get
more and more billions to hand out
to their henchmen.
Sound tax theory, proved by ex-
perience over 20 years, is that the
lower the tax rates, the higher are
the revenues collected, whereas the
higher the tax rates the lower are
the collections in the aggregate.
Industry's Position Stated.
THE facts, however, are clear and
ir order that the industrys position
shall not be confused, they may be
stated as follows:
This may or may not be because
avoidance of taxation is bred by pro-
hibitive rates. But it certainly Is true
that the velocity of transactions in an
economic system like ours is mate
rally diminished when taxes have to
be paid at almost every turn.
The administration is in a tight
place. If it doesn't tax the people of
moderate means as well as the rich,
its budget will not be anywhere near
balanced If it does not cut expenses,
1t will not have any balanced budget
even if the rich and poor alike are
taxed heavily.
The days of reckoning are here at
last The public is about to become
tax-conScious, which means that the
people are going to be expense-con-
scious. This is salutary develop
ment, for the way the New Deal
has been spending billions it would
seem as if money grew on trees and
was inexhaustible in supply.
Every nation in the world has faced
the unbalanced budget in time of
economic crisis But different nations
face the issue differently. In some
countries they prefer to initiate the
currency, turn on the printing presses,
send prices sky high, increase the
hardships to the poor man, whose dol
lar buys less and less food and cloth
ing; and then, after complete cycle,
the refinancing begins, but in its wake
is a casualty list which Germany in
recent years best eXemplifies,
In other countries, like England, the
lit is taken early, the expenses are
cut down irrespective of the protests
Of those on Government pay rolls and
6oleS, and a subsistence wage Is paid
Also, the graft and extravaganza and
experimentation are cut to the mini
mum.
England's Experience.
Today England is prospering be-
cause government finances there were
well handled. Taxes are still high but
never have they been as high as they
will be here under the proposed legis-
iation at this session of Congress, and
till we are far away from any bal
Bnced budgets.
: The politics of taxation is never to
tax the poor or any class which has
o large number of votes. But that
vas good politics when the Nation as
q whole was prospering. Staring the
poor people in the face on the other
side nowadays is the growing public
debt and the tar-reaching conse-
cuences of a continuing fiscal un-
soundness as it may relate to Govern
nent bonds, to the policies invested
In insurance companies. which in turn
hold Government bonds, and to the
banks, which are bound to be con-
rerned if the Government bonds they
hold are to be adversely affected by
unwillingness or incapacity to balance
the Federal budget.
The politicians would like to bal
ance the budget some day, but not
now. The American people, however,
will find out that heavy taxation is
coming. The press will tell them the
big secret and the cold figures of un-
diminished deficits will also tell them.
The courageous way to handle the
present situation is to require the
Treasury to recommend a tax pro-
gram that bears heavily on all who
are able to pay, a tax program that
does not break down the fiber of
American business or kill initiative,
but tax program that gradually in
creases Federal revenues at the same
time that an administration pledged
to economy and curtailment of ex-
travagance sets about to cut and cut
and cut expenses.
Eventually this will be our Gov
ernment's policy, irrespective Of
whether Mr.. Roosevelt or some one
else is at the helm. For it Is the
logical way to save the Nation from
imitation or such an impairment Of
the national credit as would multiply
the distress Of the depression years
MANIFOLD.