Evening star., 1938-03-02

ing long-term policy for GoDern-
n,ert relief, Senate committee last
tall found itself concerned 1Dith neW
depression. Weeks of public testi-
r,ony hare been directed, therefore,
at efforts to determine cause OF
current slump.
By the Associated Press.
Two witnesses told the Senate Un-
employment Committee today that
the crux of all plans for business re-
covery lies in the abolition of "puni-
tive" taxation.
Ralph E. Flanders, member of Com
merce Secretary Roper's Business Ad-
vlsory Council, asserted that the FAM
lily corporation levy in the new
House tax bill and the undistributed
profits tax make the expansion of
business and employment mex
cusably difficult"
From George H. Houston of Phila-
delphia, president of the Baldwin Lo-
comotive Works, came recommended
tion for repeal of the undistributed
profits tax and amendment of the
capital gains levy, both Of which he
classified as punitive"
Imprudent Distribution.
"The tax on undistributed income, ~
said the tall locomotive builder, lis
having and will continue to have the
effect of forcing an imprudent and
eXhausing distribution of corporate
earnings during periods of prosperity
without the accumulation of resources
with which to continue such distribu-
ton during periods Of depression.
Instead Of stabilizing security
prices it will intensity their fiuctua-
tions. This tax should be repealed in
its entirety"
Mr.. Houston testified that the capi-
tai gains ia frequently" keeps tax
payers from selling securities and thus
'throttles" free market.
Mr. Flanders, a Springfield (Ver-
mont manufacturer, said the bad
condition underlying the business
recession was stagnant bank de-
posts, built up in the main by Gov
eminent borrowing and spending"
Fear Of Individuals.
The manufacturer asserted that the
present 'low rate of turnover on the
highest volume of bank deposits this
country has ever seen" could not be
charged to business.
1t was caused, he said, by wide
spread unwillingness and fear to invest
by hundreds of thousands of indi-
viduals" rather than "the fears or
nalevolence of small financial
group"
He added that the Governments
efforts to reduce interest rates and
thus encourage investment were bal
anced by certain destructive policies
of Government. chief of which is its
'unwise vaciliating and threatening
policy" toward the utilities.
The utilities policy has shut of
what has been calculated to be an
Immediately available fund of at least
a billion dollars which would be glad
to flow into investment and employ
nent if reasonable safety were as
sured," Mr.. Flanders asserted.
Unwise Forms of Taxes.
Besides this. there are the three
unwlse forms of taxes:
The undistributed profits tax, which
kills or hobbies American enterprise;
the capital gains tax which keeps
venturesome money from use, and the
new third basket tax which strikes
at owner management of the small
and medium sized company. fosters
absentee management and gives the
preference to the large company with
Its tens of thousands of stockholders.
up until year ago it was my per-
sonal conviction that the unfavorable
sentiment which held back spending
and investing was to be laid about
equally at the door of industry and
government.
"As one citizen among many mil
lions, have now come to the con-
clusion that the full measure of re-
sponsibility must be laid at the door
of government for the state of mind
which induces us to hold onto our
money.
THE governmental attitude is wrong
In many respects, but most wrong it
would seem in this-that these rapidly
devised and ingeniously conceived ex-
pedients, such as the various types of
taxes already described, are all aimed
at trying to get somebody or some
Rrolp"