Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-03-04
STOP-AND-GO TAX
SEEN IN PROPOSAL
Surplus Levy Held Spur to
Business, Also a
Check.
BY CARLISLE BARGERoN.

BY CARLISLE BARGERON.
Confronted with the proposition OF
giving business a breathing spell
and at the same time the necessity
of raising more taxes, President
Roosevelt has worked out plan
which he thinks will stimulate busi-
ness. His plan, observers agree, and
he intimates, is designed to get the
huge corporate SURPRISES into the
marts of trade.
The newspaper men went to his
press conference en- masse yesterday
there was the biggest crowd since he
uttred his famous statement about
the horse and buggy days" which he
later egretted-saying to one an
other, rs it another carefully dis
guised soak the-rich bill?" but came
away in a more deliberate thought
about its ramifications.
Aside from the fact that it is in
tended to raise revenue, the impress
sion was that it is intended, perhaps
primarily. to get corporate money into
more usefulness. Mr. Roosevelt, in his
talk with the newspaper men, seemed
to have the small investor in mind.
This is to say, that he figures that
the small investor. under his proposed
taxes on the undistributed surplus of
corporations, will receive bigger divi-
dends. And. receiving bigger divi-
dendS, this investor will, of course,
spend more money. Under the new
tax plan it will be a distinct liability
for big business units to keep money
on hand as undistributed surplus.
These units have commended heretofore
that big SURPRISES were necessary to
take care of unforeseen eventualities.
And economists agree that had not
the big business units of the country
had large SURPRISES on hand at the
beginning of the depression, the I'M
employment and resulting distress
would have been greater than it was.
Opens Doors to Enterprise.
Apparently Mr.. Roosevelt sees the
situation on the upgrade, however,
and rather than having these sur
pluses as protective reserve he would
like to see them made useful towards
getting men back to work. In sup
port of his supposed theme, observers
recalled excess tax lays" of 1927 when
big business organization, rather than
pay the excess profits tax, threw their
money into one adventure after an
other in an effort to lose money, but
instead made money out of the addi-
tional enterprises Whether they made
money or not, they were creating this
enterprise and that, in an effort to
avoid paying the excess profits tax.
Such a mood on the part of business
now would be most acceptable, 1t is
pointed out.
An indication of just what Mr..
Roosevelt probably has in mind was
seen in Wall Street, where industrial
shares. instead of weakening as a re-
suit of "sock-the-rich' tax measure,
responded with higher values.
One immediate result of such a
tax program as has been proposed
was. as observers saw it, to make
toward driving Ford and General
Motors into the hands of the bank
ers." which has been an obSesslon OF
Henry Ford for several years. Both
he and General Motors, it is pointed
out. have been able to finance their
industries through their corporate sur
plus.
Ford Reported Anxious.
In the case of Ford. it is pointed
out, he takes no dividends from his
organization except what is necessary
to run him and Edsel. That is, speak
ing generally Under the new tax
plan, he would either have to pay a
high tax on his surplus profits or
else distribute it in dividends. But,
as an economic matter, it is pointed
out in New Deal circles, Ford can't
be expected to live so long and when
he does die his estate would be largely
eaten up in taxes and the same re-
suit obtained as is now brought about
under the new tax plan.
That Ford is most anxious about
the turn of events is indicated by the
fact that last Sunday night his pub
licity representative, w. j. Cameron,
made radio address, anticipating
such a program as has been enun-
ciated and warning against it.
There seems to be another method
in Mr.. Roosevelt's mind, and that
Is to keep big business from running
wild. Apparently he can't get over
his earlier impression that the coun-
try is over built, as evidenced by the
time he pointed out that there were
plant facilities capable of turning out
more shoes than the country could
possibly consume. To this end his
proposed tax program would not
exempt the expenditures of corpora
tions for plant extensions The plac-
ing of money into plant extensions
was one of the ways of avoiding the
excess profits tax in 1927 which
created additional industrial activity.
Apparently, Mr.. Roosevelt has in
mind a plan which would jar loose
the corporate surpluses without at
the same time creating what he con-
eiders useless or "inf1ationary" &C
ft1itv