Evening star., 1936-06-22
s'RefOrm'' Taxation.

Under the lash of eXpediency the
Senate somersaulted into capitulation
on the tax bill and the administration
nov has what it wanted in the applica-
tion of A new. and for this country, an
untried principle of revenue raising.
No tax measure in recent years has been
so generally or so severely condemned
by practical business men who have
studied its potentialities. No revenue
measure Of the past has so plainly evl-
denced the trend by governmental
theorists to take over the bureaucratic
direction of the financial policies Of
private business. No tax measure has
so plainly indicated the dangers of
hastily enacted revenue measures in a
campaign year.
This BILL however, is not going to
demoralize business and it is doubtful
# many of the unhappy results pre-
dicted for it, in the way of curtailing
normal business expansion, will come
to pass. When Congress reassembleS
next January the campaign will be
over No matter what party is successful
at the polls, the time will have arrived
when the serious problem of raising
revenue to meet the vast obligations
assumed by the New Deal must be
taken up in earnest. If the study of
the finally enacted bill confirms the
previously expressed fears of spokes
men for business, Congress will be in
the mood to revise the tax bill in its
necessary search for greatly needed new
revenues.
Such hopes do not remove from
Congress the criticism which it will
continue to bear as the result of its
action on this tax bill at this time.
Common sense would have dictated a
delay on tax legislation until the cam
paign was over Political demands and
not an honest search for needed revenue,
pushed through p bill that was danger
Gus in the beginning and remains dan
gerous in final form.
The original House bill was ridiculed
for its complexity, denounced for it's
application of the principle of the puni-
tive tax on earnings withheld from divi-
dend distribution; a principle defended
almost entirely on the contention that
corporations created surpluses in avoid
snce of taxation. Representatives of
American business, appearing before the
Senate Finance Committee, riddled that
principle with what seemed to be con-
vincng criticism. The Senate Finance
Committee was convinced to the point
Of practically eliminating the punitive
tax provision and condemning it
heartily in a report in which all but
two members of the committee con-
Cured. That condemnation was based
on the grounds that the application
of this untried taxing principle would
prevent the growth of new corpora
tons; would retard business expansion,
seriously affecting the unemployment
problem; would penalize small corpo-
rations with insufficient reserves and
would tend to transfer corporate con-
troll from the officers and directors
to the legislative branch of the Govern
ment."
The Senate upheld its Finance Com
inittee in passing Senate tax bill rad
ically different from the House bill. An
amendment by Senators Black and La
Toilette would have reinserted the
House principle in modified form as to
rates and would doubtless have been
defeated, but in maneuver which left
the Senate conferees free to yield to
the House. the amendment was with
drawn. In agreeing to the conference
report, the Senate reversed itself A tax
bill has been enacted, carrying into
effect the principle of Furnishing corpo-
rations which seek to accumulate re-
serves and retaining the corporation
Income tax for which that principle was
to have been substituted.
After the campaign, the hope of the
country should be for a Congress that
will honestly approach the business of
raising revenue by equitably distributing
the burden of taxation not by theoret-
ical ideas of reform or application of the
philosophy that to get the golden eggs
you must kill the goose that lays them.