The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1936-01-10
FRIDAY. JANUARY 10. 1885.
A TAX CREDIT PLAN
Ll scRTPPs-HowARp NEWSPAPER,

alton in campaign year, the problem begins to ap
pear unacceptable.
In this connection, as well as in connection will
he Job of raising the maximum amount of none
Under tax laws already existent, believe the fol
owing letter from Robert P Scrpps controlling stock
holder of the Scripps Howard newspapers to be per
inent that it states problem which, could it b
solved would result automatically in a much-im
proved state of health in the Federal treasury TIL
etter:
Mr. G. P. Parker,
Editor -in-Chief,
The Scripps- Howard Newspapers,
Washington, D. G.
Dear Mr.. Parker:
The thesis of this letter is that, regardless OF
how we come out of the depression, or who is
elected this year, government debts and probable
future and continuing responsibilities are such
that continued high Federal taxes are inevitable,
and that at this time profitable discussion must
be, not of how much we pay but of how we pay
1t, and what with.
The chief point wish to make is that con-
ceivably most of the drag on business, industry
and finance that the contemplation of high taxes
produces would be eliminated should the gov
eminent itself provide guaranteed credit medi-
um ON a long-term basis for the payment of
large part of the Federal tax bill.
AS an experienced payer of income estate and
inheritance taxes, as well as controlling stock
holder of these newspapers, perhaps it is about
time that go on record as still believing in the
principles of visible, graduated, and ability-to-
pay taxation which these leves represent. AS you
know have been executor and trustee for two
large Estates the beneficiary of these estates, and
the receiver of income calling for upper-bracket
income tax payments.
WITHOUT underwriting all or any present
w Federal government expenditures, am not
objecting to any of them. This country has
faced--perhaps is still facing-an economic
emergency. 1t is at least doubtful If any Ad-
nninistraton could have done better or more
economical job under the circumstances than has
the present one.
Still do know that there would not be any
business at all in this country did we not main
tain strong and active government, able to
meet just such relief and reconstruction
emergency as that referred to; and that would
rather pay large a part AS possible of my
share of maintaining it through these out-in-
the-open personal income and estate taxes than
through any other form of taxes that I know
of-especially concealed ones like sales taxes,
tariffs, corporation taxes, and special ones like
taxes on tobacco liquor. gasoline etc.
The purpose of taxation ought to be to pro-
duce necessary revenues without hindering,
gripping or killing or business-the goose that
lays the egg, This is something that our pres
ent laws do not exactly do
After the death of E. w. Scripps in 1926 there
was good market for bonds so that the f1nanc-
ing of the obligations of his estate presented no
great difficulty. However, as was proved in 1880,
that was largely matter of chance; and chance
has no place in sound business or financing.
The fact is that profits, as the Treasury De-
partment counts them, are frequently paper"
although tax claims against them "cash on
demand"
L. livestock, notes or other items which fluc-
tuate widely with the market, often regardless of
intrinsic values Tax claims against these are
also cash on demand sometimes when cash is
hardest to get.
One result is that credit is disturbed Mergers,
1iqudations changes of control and management
take place. A great element of uncertainty is
introduced into the conduct of businesses both
large and small.
Effectiveness and continuity of management
of the going businesses in the control of which
they function really represent a principal asset
of most large, and therefore heavily taxable,
estates, and any tax-forced management change
strikes directly at this asset But beyond this in
every such case there will be policy and employ
ment changes affecting perhaps hundreds or
thousands of workers and their families, so max
ing this question social as we'll as merely
fiscal or economic one.
To guard against this chaos, especially with
respect to estate and inheritance taxes, many
business leaders carry excessive cash or liquid re-
serves, instead of employing this capital in the
development of their business and the employ
ment of workers These men are forced to Gre
ate large personal fortunes, which they do not
need, by the very tax laws which some feel
should be the instruments for the wider distri-
button of wealth
Other men, when tax liabilities loom suddenly.
60 to their commercial or investment bankers for
funds-which may or may not be readily avail
able. The bankers assume sort of tax-farming
function; sometimes they also assume an I'M
warranted control over enterprises built up
without their aid.
A witnessed during recent depression years,
"A some estates, normally sound, ere forced
into bankruptcy by the sudden imposition of tax
liabilities so that there is nothing left for the
government to collect on. N4
With respect to income taxes, 1t is not I'M
usual for normally profitable transactions to be
delayed. or abandoned altogether because of the
taxes involved. In the latter case, of course, the
government gets nothing
What I want to stress is that IN all of these
cases it is not generally the amount of the tax
itself that is discouraging that holds up action,
and that harnesses responsible management but
the difficulty of financing payment in cash, or of
absorbing into an otherwise reasonable llance
sheet new large government cash on demand"
obligation
What would like to see thoroughly explored,
In our editorial columns and indeed in Con-
gress and the Administration, is the possibility
of our government doing its own banking, ex-
tending its own credit to solvent income and
estate tax payers. This could be accomplished
through acceptance by the government of long
term notes or other paper payable in annual in
stallments in the Is to 25-year period that SELL
ers and buyers of bonds are used e. at interest
rates approximating those on industrial bonds.