Evening star., 1937-11-30
HARRISON PLEDGES
REVISION IN TAXES
Speaker on Radio Forum
Hits Profit Levy as
Recovery Barrier.

National Radio Forum arranged by
The Star and broadcast over . Ma
taon-wide hook-up Of the National
Broadcasting Co.:
Taxes are . necessary function OF
government. Without taxes, govern
uent cannot exist.
Prom the Federal Governments
standpoint. taxes may be placed in
three principal categories: First, those
bAssd on ability to pay, such as in
come, estate and gift taxes. Second,
taoss based upon the principle OF ben
sfitA received from the Government,
such - social security taxes. and third,
luxury taxes, such as those on liquor
and tobacco.
From the first group the Govern
nAent receives about so per cent OF Its
revenue, from the second group about
10 per cent and from the third about
IS per cent. The remaining comes
from miscellaneous taxes.
The amount Of revenue received by
the Government Is dependent largely
upon. the principle of ability to pay.
Ths amount received from this source
depends upon two things, the rate,
and the base upon which that rate
applies For instance. on income taxes,
II the net income decreases substan-
TALLY even very excessive rates avail
nothing in bringing in additional rev.
enue. The same applies to estate
taxes. II the value of stocks, bonds
and other property declines 50 per cent
in value, no more revenue Is secured
even by a very excessive rate. In other
words, tax rates may be fixed at such
an excessive point as to diminish the
revenue of the Government instead of
increasing it.
Sees Recovery Retarded. -
At the present time, believe we
have at least two so-called ability-to-
pay taxes which have reached a point
OF diminishing rather than increasing
the revenues The taxes to which
refer are the undistributed profits tax
and the tax on capital gains. Not only
do believe that these taxes have an
adverse effect 50 far as revenue is con-
cerned, but I believe they have re-
tarded industrial progress and con-
tributed to the unemployment situa-
ton.
In recent years the Federal Govern
ment has expended large sums to aid
employment. These enormous ex-
penditures, to meet the emergency Of
depressed economic condition
throughout the country, have made it
- fo;v ,~f;
taxes, but to increase and add new
taxes. While the policies adopted by
the Government for relief to the un-
employed have ameliorated human
suffering and brought relief to mil
Mons. the problem is still. with us, and
X the unemployment problem is to be
solved, and solved soundly and per-
manently, it must be through the
wholehearted cooperation of private
business. I believe, therefore, that an
Incentive should be given to business
TO take up as much as possible of the
slack OF employment. We cannot give
this incentive by excessive or punitive
AKes. II such = tax is imposed upon
IN industry as to make it impossible
fpf 1t to pay its debts or to expand its
business, serious consequences result.
Business expansion will not only
bring about increased employment in
the construction Of added plant
facilities, but it will also bring about
substantial and continuous employment
IN the operation of such added plant
facilities. As new people are en-
ployed In new industries, to that extent
persons are taken from the relief rolls
and necessary governmental expendi-
lures to aid unemployment thereby
lessened. And as private industry
prospers more revenue comes into the
Government and less money goes out
in relief. II private enterprise can
thus take over. to a considerable ex-
tent, the problem Of unemployment,
the time will soon arrive when the
revenues Of the Government will equal
It's expenditures.
Some Doomed by Tax.
II the cooperation Of private busi-
ness Is to be obtained to the fullest
degree, then the Government must give
encouragement to private business.
New industry cannot be created and
Did industries cannot continue to be
operated without adequate and sum-
eient capital. Too rigid or unreason-
able regulation of business, or too
burdensome or punitive taxes dis
courage, shackle and often destroy
business.
Every good citizen will appreciate
that adequate taxes must be provided
for the efficient administration of
Government. Only in exceptional cases
should the purpose be Of a social or
punitive nature. have no doubt that
the country today is suffering from
fear and uncertainty, occasioned, may
I say, to some extent by certain pro-
Visions Of our tax laws. OF course,
many uncomfortable methods have
been created by the taxpayer to avoid
or evade taxes, and it would seem that
As taxes are broadened or increased,
the number Of devices and methods
and tricks employed increases pro-
pnrtionately. However, I have no
doubt that the vast majority of our
taxpayers are fair to the Government
And do not resort to such practices.
As it i the duty Of the taxpayer to
&sal fairly with his Government, it is
Hkewise the duty Of = public servant
10 be fair toward the taxpayer. II
aa1oss who formulate . Government
Selicy. either through legislative en-
Netnsnt or administration, have made
eanistake which works iniustices t.
H. taxpayer or injuriously affects
Government receipts, then the mistake
should be acknowledged and corrected
Newsver high and laudable may be
Aia purposes Of certain policies, and
howsver attractive they may appear
41Lsorstically. sometimes. rs a practical
natter, the injurious effects art
1E0ater than the benefits sought.
believed In Taxing Reserves.
when in 1886 the Congress enacted
- so-caIled undistributed profits tax
Twas one Of those who believed that
tlAs effect would be to put . stop to thu