Evening star., 1935-06-27
R0OSEVELT'S TAX
POLITICAL MOVE
Proposal Seen as Gesture
to Left Wingers, With
House Taking Blow.
BY DAVID LAWRENCE.

suited from President Roosevelts de-
cision to recommend new taxes on in
heritances, corporations and large in
comes would be amusing II 1t did moi
have its tragic aspect-tinkering with
the economic mechanism OF. the coun-
try at time when 1t might sotherwise
be bending its efforts tot re- employ
some Of the millions of idle workmen
Just what prompted Mr. Roosevelt
to inject these new issues at the very
time that Congress has been trying to
wind up its work for the session 4
something which remains secret oi
his own political strategy. But what
happened was transparently a gesture
in the direction of the left wingers
like Senator Huey Long and Senator
La Toilette, but with an accompanying
belief that the radicals would be salts
fed with the simple announcement OF
the program and that they would not
press for passage.
Retreat Impossible.
When the radicals in the Senate
began, however, to question Mr. Roose-
NOlO SllICll lIy IilCLC COuld DC IlO lC-
treat-the President had to say he
wanted action at this session. What
else could he say? If he had remarked
that the matter should go over till
next session, he would have been &C.
cused of trying to raise issues for 1896
or Of really trying to sidetrack his
own recommendations But there /,
no reason why Congress should be in
q hurry, even II the President /,
caught in an embarrassing politica,
corner.
So the conferences that have beer
going on this week behind the scenes
have not been for the purpose OF
rushing the new legislation through
but of giving the appearance of rush.
ing without actually putting the bill,
into law.
What led to the impression OF ex.
cessive haste was the fact that the
so-called nuisance taxes-levies or
miscellaneous articles-have to be ex-
tended from next Saturday on or there
will be a loss of current revenue. Sen.
ator La Toilette of Wisconsin held the
whip hand when he threatened to at.
tach the Presidents program for new
taxes to the nuisance taxes as ar
amendment to the bill which has al.
ready passed the House This coulc
be done, of course, by the Senate, but
1t could be eliminated in the House
when the bill came back from confer.
ence on the ground that bills to raise
revenue must, under the Constitution
originate in the House of Represent.
atives
Would Satisfy Leftists.
II, therefore. the Senate did pas.
the tax legislation as an amendment
Mr.. Roosevelt would be in the position
Of satisfying the prodding Of the lef
wing Senators. and then the question
OF whether the House wanted the new
tax rates to be written into law woulc
be question for the membership there
to decide.
Already there are indications thai
the House doesn't want a new tax pro:
gram at this time. Speaker Byrnl
himself has begun to refer Significant,
to the delays due to hearings, ETC., ant
the prospect Of. an adjournment IL
August or even September
This is rather sign that the Presi.
dent cannot force the House to act
and, indeed, that he may not exert any
pressure. The result would be thai
the blame for blocking the Legislation
at this session would fall on the House
and not on Mr.. Roosevelt.
The President then could say ne
tried hard enough to get action, but
the House interfered with his plans
Anyway, 1t is apparent that q grand
game Of buck-passing is going on and
that every day the chances Of drastic
tax program are dwindling.
For one thing. the graduated taz
on corporation income will be found
unpopular with all holders Of securi-
ties-a by no means small number
politically speaking. A corporation
with a million-dollar income may
have $4,000 stockholders, so the
heavier tax would reduce dividends tc
small shareholders. yet a small com
pany with a small capital investment
might be making 200 or 500 per cent
profit and pay a smaller tax than the
large company. where the rate OF
profit on capital invested Is in the
neighborhood Of 4 or S per cent.
1nequities like this will be the sub
3ect Of hearings, and this takes time
Deficit 10 Times Sum.
The amazing thing Is that a meas
ure to raise $34o, o,000, 900 Is spoken of
as an attempt at budget balancing
The deficit Of the Federal Govern
ment in the fiscal year ending this
week is about 10 times that sum.
When will the administration come
forward with a plan to balance the
budget? 1t Is afraid to do so before
1886 because it must soak the poor
in what is called broadening of the
tax base, and that's politically dan
gerous. because, unlike the large in
heritance taxes, the number Of voters
affected is considerable.
There Is no certainty that the new
tax rates now under consideration will
bring In $340,000,000. The breaking
up Of estates and the selling of assets
at reasonable instead Of forced sale
values cannot be accomplished in q
year. Indeed. five years from now
some benefits in revenue from the in
heritance taxes may be expected. But
in the meantime, the damage to busi-
ness through unsettlement and
through inequitable taxation will
amount to many times the tax reve-
hues involved.
Mr.. Roosevelt may wriggle out Of
the hole he has got into by getting
the House quietly to delay, but the
injury to business morale Is incalcu-
liable.