Evening star., 1937-10-25

time III lllG 1Oll Ill
of social security and unemployment
insurance taxes, which money will not
otherwise be spent until several years
hence.
To understand why business has de-
elined, it is necessary to get at some
very significant, if not sensational flg-
ures, locked up among Government
economists here, which tell the extent
to which the Government has been
supporting the economic structure by
artificial means while lot of we'll
meaning people have mistakenly as
sumed that recovery really has been
achieved.
These figures show, for one thing,
that in the fiscal year beginning July
l, 1897, and continuing until July l,
1888, the Federal Government will
spend somewhere between $2,5000 000,-
600 to $3,800,0O0,000 less than it did
in the corresponding months from
July /, 1886, to July l, 1887.
Reason for Huge Decline.
This is a huge decline and is due in
part to the withholding from the
stream of purchasing power of vast
sums collected in taxes by the Federal
Government and in part to actually
decreased expenditures by the Federal
Government as compared with former
years.
Much of the decline in money spent
through the Federal Governments
instrumentality is directly traceable
to the larg payments for the soldiers
bonus made last year, which were
not duplicated during the current
fiscal year.
Now it is interesting to discover
that the expenditures by the Gov
ernment for construction will decline
very little, possibly not more than
$39,000,000 out of a total of S1,785,-
100000, and this, of course, means
direct and indirect expenditures
through States as we'll as cities, where
as the drop in money spent by the
Federal Government for what is
known as expenditures stimulating
consumption in the first instance"
amounts to about 100000 100000, or
about 81 per cent. This latter item
includes the drop off N expenditures
for soldiers bonus.
If business activity could be ex-
panded naturally 1t would take up
a good deal of the slack, but business
itself faces some almost insuperable
barriers, the fact that it must tack
on the heavy cost of taxes to its prices.
This tends to slow up selling and to
curtaiI output, which in turn means
some unemployment. If ever there
was time for labor to pause and
consider the ill-effects of unreason-
able demands for increases in wages
1t is in the economic situation faced
by American business enterprises to-
day.
Social Security Taxes.
Consider, for instance, the social
security anf unemployment insurance
taxes. Let us agree that the motive
was commendable and the objective
desirable Should American busi-
ness be asked to break off such big
chunks of it's own purchasing power,
withdrawing the same from circula-
tion, while the Government is unable
on account of existing law to turn
back this capital for productive use
In private enterprises?
Some idea of what has happened
may be cleaned from a study of the
facts about corporation income taxes
With the new high rates, industry
paid $1,O56, 100000 in the fiscal year
ending July /, 1887. This is nearly
q record for all time.
Now comes the Federal Government
and socks business and industry in
the eye with tax that is just about
double what it has been baying. In
other words to the ST ,056, 100000 of
corporation taxes, there now must be
added about $1,263 100000 for social
security and unemployment insurance
. taxes.
Purchasing Power Cut.
1t is true that nearly half this
sum comes out of the pay roll of the
workers instead of out of the en-
ployers entirely, but the two items
together come out of the stream of
purchasing power of the American
people, and that's large slice to
take suddenly in one year and with
out a gradual ascent or adjustment
from previous years.
From all this some people may
Infer that initiation is good thing