The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1936-01-23
BY JOHN T. FLYNN

BY JOHN T. FLYNN
Copyright, 1896. by NEA Service. Inc)
VXTASHINGTON, Jan. 23.-The
w first go years will be the
hardest when DIR. Townsend puts
his plan on the statute books.
After that it will be all skittles
and beer-$200 month for life.
Then when DR.. Carrel and the
other scientists add another score
of years to our lives, we can look
forward to grand and glorious
old age on the public pay roll.
This pleasant Utopia is sweep
ing the country. There are TO-
385,000 people in the country who
would be eligible for the pension.
And they are all over 81 and can
vote. SO Congress is going to
have to face the movement and
we might all just as well know
precisely what it is about.
The plan is as follows: Every
person, upon arriving at the age
of so, will be entitled to a pension
of 5000 month from the Federal
government. The conditions will
be Cd that he retire from work;
90 that he be free from a GRIM
inal record; CD that he agree to
spend the 5000 within 80 days
after receiving it each month
within the United States; "a that
he does not possess an income of
over $1,000 year.
Each person over go, therefore
will draw $4,000 year. There are
10,385,000 persons over 60. But
the TownsenditeS insist that be-
cause Of the conditions, only
about 100000 will receive the
money. This means it will cost
the government $4,000, 100000
year. This is twice the present
cost of all the Federal, state, coun-
ty and town governments.
A man and his wife each over
60 will both receive 5000 month
$500 to the family.
u
THE money would be paid, &C
Il cording to DR.. Townsend, in
the following manner: The Fed
eral government would send to
each state 5000 for each person
over so in it's population. The
state would send 5000 to each
county for all of it's aged.
But where would the money
come from? From a tax on the
nation. DR.. Townsend proposes
what he calls a transactions tax.
The tax would be 2 per cent. This
has been fixed on because the doc
tor figures that the total business
transactions of the nation in a
year-running around 100000
900, 000-would yield a sum suf-
ficient to pay the bill
Every business operation is a
transaction. The miller buys
wheat. He pays 2 per cent on the
purchase. The baker pays 2 per
cent when he buys the flour. The
consumer pays 2 per cent when
he buys the bread. Buy theater
ticket, a railroad ticket, a movie
seat, share of stock-these are
transactions and would incur the
2 per cent tax.
This is statement of the plan.
DR.. Townsend's great argument
for his plan is that it would end
hard times. His explanation is
very simple These 100000 old
people with $1,500,000,0O0 month
to spend, would have to spend it.
The money would flow right back
into business, increasing the pur-
chasing power of the nation and
stimulating every business.
TINE Townsendites insist that
i the plan will not create in
f1ation. That is correct. No fresh
purchasing power will be created,
hence there will be no imitation.
But at the same time they insist
that fresh purchasing power will
be created, Their theory is that
they will take money by taxes
from those who would not spend
it and give it to old people who
would spend it and thus create
active purchasing power
Will it give us fresh purchasing
power? Let us apply the argu-
ment to a small number of peo-
pie. Suppose there are 10 per-
sons who have wages of 500 a
month each. That makes $1,000
month. That is their purchas-
ing power. Now these 10 people
are taxed $40 each in order to
pay a pension to an eleventh per-
son of S100 month. 1t is clear
that the eleventh person now has
500 to spend which he didn't
have before. But what of the
other 10? After each has paid
tax of $40, each has but 500 to
spend, The 10 have 5000, the
eleventh has sl00-a total of $1,000
which is precisely what there was
before the tax was laid.
The $4,000, 100000 collected in
taxes will be added to the cost of
what the people buy. Therefore
they will buy S19,000,00o, 900 less.
While the pensioners will buy
$4,000, 100000 more. The two
items will cancel each other
There will be no increase in pur-
chasing power
NEXT-Two essential elements
of the plan.
EPllMnW IN IMTRnn!InE