The Washington times., 1936-09-24
SECURITY PLAN
IN PERIL, SAYS
ECONOMIST
By NJ. F. DACEY

~ AVA DEASNA
COLORADO SPRINGS, Colo,
Sept. "a U.NSO.-Booms and de-
pressions will be intensified by the
National Administration corpora
ton tax.
A great fund, estimated at $780,
000,000,000, to be accumulated by
taxation in connection with the
Governments Social Security pro
gram will probably eventually be
wiped out by initiation.
These dire predictions were made
today by DR.. Charles F. Roos, re-
search director for the Cowles
Commission for Research in Eco
nomics here.
DR.. RooS, an outstanding econ
omist and statiStician, was princi-
pal economist and chief OF the re-
search section of the NRA He has
completed a book on economic
planning based upon the NRA,
and dealing with various phases
of Federal Government agencies
under the Roosevelt Administra-
ton.
Sees Through Plan
His analysis praises some efforts
of the Administration, but his final
conclusions state:
1--WE are forced to conclude
that the New Deal plans to aid
the forgotten man have failed
in their objective, or carried so
far in the opposite direction be-
cause they were ill conceived and
poorly administered"
DR.. Roos declared that the pay
roll tax, under the employment
insurance law, will actually compel
increased mechanization with con-
slant undermining of the taxpayer.
He stated:
"The social security measure,
which taxes employers through
out the country on pay rolls, and
authorizes subsidies to States
complying with national ideas
on employment insurance, old
age pensions, child welfare and
maternity care will, believe,
produce effects far beyond the
expectations of its sponsors.
BASE UNDERMINED
"Most fundamental, the tax
base itself will be constantly
undermined; the pay roll tax Of
per cent by 1888 will definitely
exert steady pressure on those
plants having high ratios OF
wages to value added and will,
therefore, compel the reduction
of pay rolls by mechaniZatiOn. If
will definitely favor the larger
companies, which are highly
mechanical, over their inter
mediate-SiZed competitors"
DR.. Roo6 predicted this situation
would eventually result in ad.
vances in prices for stocks of large
companies, particularly machinery
companies, which should expe-
rience greatly increased business,
adding:
"These effects will be intenSi-
fled by the provision requiring
the tax funds to be invested in
Government securities. AS Gov
ernment bonds are purchased
for the security board, sellers
will have funds with which to
purchase old private securities,
or invest in new ones, and a sit
uatiOn may develop similar to
that which led to the worldwide
economic collapse of 1873 in the
wake of the German investment
of proceeds of the French in
demnity.
"The plan will compel savings
comparable with the undivided
earnings of large corporations
and these will come from all con-
sumers, whether or not they par
ticipate in benefits.
WAGE CUTS SEEN
"PriceS in general will increase
in proportion to the tax burdens,
and in some instances there will
be wage cuts"
DR.. Roos pointed out that the
(security) act implies that the
total national debt by 1860 will ap-
proximate so billion dollars of say
ings then to be in the fund.
He warns:
"With such an instrument in
the hands of a political group
so unframed to government as
is the case in the United
States, the further prediction
may be advanced that the en-
tire fund will be wiped out by
initiation"
In his book, DR.. Roos further
declares that President Roose-
velt's corporation tax was pro
posed to tax undivided corpora
ton earnings for the primary
purpose of forcing the payment
of dividends and thus increasing
the taxes of recipients of large
incomes"
He declared:
"ThjS was viSualized as
plan to increase mass purchas-
ing power. The Presidents
message transmitting the act
to Congress makes this clear.
"AnOther effect of the cor
A.