Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1936-04-16

full requirement or by beginning with
plan that will produce a large pro-
portion of the requirements and per-
init the use Of the remainder to ac-
complish the results first above stated.
'The proposal is very simple, quite
capable of being written into legisla-
tive provisions; it would carry a clear
guarantee of useful results and reach
the final full requirements Of the gov
eminent by progressively increasing
taxable profits.
Il propose that whatever per cent Of
undistributed profits may be deter
mined upon as the tax base, permission
shall be given for drawback or re-
tention of say 20, 25 or 1873 per cent
on condition that this amount shall
be used for capital expenditure to i'm.
prove and cheaper production and
distribution facilities.
''The drawback may be by repay
ment to the taxpayer upon voucher
evidence that the amount has been
actually expended or by credit upon
the second years tax levy.
Corporations will not fail to use
this remainder and perhaps even add
to it out Of their available corporate
resources.
Permanent goods industries will at
once be stimulated by the knowledge
that purchases will
StInut0te be made to an ag-
Industries gregate Of the draw
back, and stimula-
ton of employment must result in
most needed quarters.
"The universally of this improve
ment in production and distribution
facilities will create the competitive
conditions that will compel savings to
be passed on to consumers, but if any
corporation tries to hold the added
profits they will be taxed away in the
following years.
Living standards may be raised by
making more commodities come within
the range of prices the public will pay.
"Forced distribution in dividends to
escape corporate high brackets will
find large part being paid to stock
holders taxed in very low brackets and
the result over all is not unlikely to
prove disappointing.
Increased tax rates on income or
earnings leads to the struggle to avoid
payment by every device that can be
developed. 1t may be that this plan
Of drawback would distinctly modify
this tendency"
It is the first time that have heard
from any source the suggestion that
the tax law should be made an instru-
ment to encourage business recovery
and promote employment. All of the
objections heretofore have been d.
rected at the character of the pro-
posal and have not included construc-
tive thoughts which could be used as
new base. Mr.. Wheeler's plan may
not be complete. 1t may not represent
an answer to the tax needs in their
entirety, but 1t must be said in its
favor that it suggests an approach to
the necessary answer and embodies
therein plan of action which will not
kill the goose that lays the golden
egg. In other words, it has been
proved too many times to require dis
cussion that higher tax rates reduce
the incentive and the chief opposition
to the administration proposal is just
that. 1t takes away the incentive of
the corporations to make more money
which would be available for taxation.
The Wheeler proposal, therefore, Of
fers an incentive to corporations to
proceed with plans Of expanding their
operation and thereby increase the
number of workers on their pay rolls.
l repeat that do not know whether
the Wheeler program is the complete
answer but the fact
wearing that man of his
Tax Limit status in the coun-
try's business life is
giving consideration to the tax prob
lem on long-term basis leads GER
tainly to two conclusions. These con-
clusions are, first, that the country is
nearing the limits of what might be
called reasonable taxation and, sec
ond, that very great majority of our
people believe some consideration
should be given to the need for an end
to government spending.
If taxation has reached the point
where an overexpanded federal gov
eminent requires so much money that
1t must take away the backlogs, the
reserves of business, then it is quite
apparent that a shrinkage in this struc-
ture called government must begin.
If 1t does not, one could reasonably say
that government credit Is endangered,
or will be If the spending continues
much longer.
We have been using up our resources
actually in billions for the construction
of many different types of things from
which no earnings accrue. Then, in
addition, think no one can deny but
that there has been widespread waste
Of these funds. 1t is a splendid thing
to have excellent roads, fine public
buildings, beautiful parks and restored
forests, etc., but they have to be paid
for out of taxpayers money. More
ever, there is no profit available from
any such investments that can be
taxed. That money is gone, dead. II