The Waterbury Democrat., 1937-11-30
Euery Effort To Check Business Recession
More Generous Attitude Developed By Federal Govt.
 Capital Gains, Corporation Surplus Taxes Must GO

CO Dala0Ce the puQgeC.
 Chairman Pat Harrison of the senate finance committee repudi- ated present capital gains and cor poration surplus taxes in a speech insisting that both must be modi- fled.
 Harrison gave business grounds to hope that modification may go be- yond limits now planned by house ways and means committeeman. The senator charged the taxes with responsibility for curtailing federal revenue >retarding industrial devel- opment and contributing to unem- ployment. He said the capital gains tax had discouraged trading in stocks, securities and other hold ings.
 Details of Balancing
 Details of budget balancing econ- omies to be eected by reducing fed- eral contributions to highway con- struction were contained in a presi- dential message to congress to be read shortly after noon.
 President Roosevelt outlined gen. eral highway economy objectives last week before departing for a Florida fishing vacation. It was understood the. administration hoped to modify statutory require- ments that more than $200, ,000, ,000 of highway funds be offered annu- ally as federal grants in aid of road building. On the basis of last weeks White House remarks 1t was esti- mated that the president might ask congress to reduce that commitment to $80,000,000 or $90,000,000 to es- tablish a net saving of upwards of $lo0,00o,0o0.
 Endorses Economy
 MT. Roosevelt's message repre- sents a positive endorsement of the economy program proposed Nov. 10 in a speech by Secretary of Treas ury Henry Morgenthau, Jr. Mor- genthau told a New York audience the government should bring its ex- penditures within income by mak- ing cuts aggregating $700, 100000 in appropriation for unemployment relief, Civilian Conservation corps, public highways, public works and agriculture.
 Those items of expenditure will aggregate $3,311 100000 in this fis- cal year. Morgenthau's proposed economies would reduce the cost next year to $2,6l1, ,000, 900. Congress sional reaction to economies ill the fields proposed by Morgenthau still is uncertain but there is general non partisan enthusiasm for a re- duction of taxes that apply to bus- mess.
 Harrison Issues Warning
 Harrison warned in a radio ad- dress last night that people should not be encouraged to expect retro active feature" in modification of either the corporation surplus or capital gains levies.
 Every good citizen," he said, twill appreciate that adequate taxes must be provided for the efficient admin istration of government. Only in exceptional cases should the pur- pose be of social or punitive na- ture. have no doubt that the country today is Suering from fear and uncertainty, occasioned, may say, to some extent by certain pro- visions of our tax laws.
 At the prfesent time. I believe we have at least two so-called abil- ity-to-pay taxes which have reached a point of diminishing rather than increasing revenues. The taxes to which I refer are the undistributed profits tax and the tax on capital gains. Not only do believe that these taxes have an adverse eect so far as revenue is concerned, but I believe they have retarded indus trial progress and contributed to the unemployment situation"
 Correct Mistakes
 Harrison insisted that when a public servant makes @ mistake then the mistake should be ac. knowledged and corrected. He said that large corporations should not be permitted to build up unreason. able and unnecessary reserves but argued that 1t is 6 "harsh and un- wise policy for the government to compel corporation that may be giving employment to hundreds of thousands of men and women to declare its earnings in the form of dividends to It's stockholders when 1t needs such earnings to perpetuate the employment of those people.
 'It is my hope and belief," he continued, "that in any event the law will be modified 50 as to permit a corporation, if it desires, to pay from its annual earnings, without