Evening star., 1938-04-07

matically what a certain tax rate
might produce in the way of revenues
and then apply it irrespective of the
economic consequences and damage
done in dozens of other channels.
The undistributed surplus tax was
a monumental example of this sort Of
folly in making tax rates, and it has
taken a terrible recession in business
and widespread unemployment to show
the Congress the error of its ways
1t would seem that the Roosevelt
administration itself has not yet
learned the lesson, but coalition of
independent Democrats and Republi-
cans is ready to abandon the undis-
tributed surplus tax altogether. There
tax laws against unreasonable" accu-
mutation of surpluses for purposes of
avoiding taxation. Probably a similar
provision Will be written into the new
law at this session. but this is a far
different thing from assuming that a
particular percentage is unreasonable
and forcing a lot of businesses wholly
unrelated to each other to follow such
. rule Of uniformity.
Considerable Face Saving.
The Treasury has not acquitted it.
self altogether well. therefore, in the
matter of tax revision Its experts
know full well the abSurdity of some
OF the provisions of existing law. but
since the President has made the
mistake in the first instance, politics
demands considerable "face-Saving."
So the Treasury has yielded to ex-
pediency and the whip of the White
House, and so have certain administra-
tion Senators. The vote to retain the
undistributed surplus tax, as incorpo-
rated In the bill that passed the
House, will be a defeat for the ad-
ministration in the Senate. Far from
being an example Of good politics.
the administration will be putting its
own supporters "on the spot" by in
sisting that they vote for the House
bill. This Is because. in the coming
congressional elections a vote to retain
the undistributed surplus tax. even in
principle, will be regarded as vote
against unemployment and recovery,
while vote against the tax will be
regarded as vote to put idle workmen
back on their jobs. The issue will be
one of the most important in the cam
paign. The country is more conscious
OF taxation and its injurious effects on
business than it ever has been since
the Federal income tax became a law
Is years ago.
The difficulty in the past has been
that the public took little interest in
complicated tax rates or their effects.
To-Day the rates are not any. better
understood. but their effects have
been widely advertised because busi-
ness attributes to faulty tax laws
major cause of the present depression.
Vital Changes Proposed.
The Senate Finance Committee has.
In its report to the Senate. pointed
out the need to stimulate business re-
covery by better tax laws. Some vital
changes have been proposed Will the
administration crack the whip and
fight a tax revision that helps busi-
ness? This question has not been
answered finally, but administration
tactics thus far have been surprisingly
unappreciative Of the Nation wide
demand for a more intelligent tax
system. Some of the radical Senators,
like Senator La Toilette of Wisconsin,
are trying to broaden the tax base so
that persons of low income will pay
higher taxes. What Mr.. La Toilette
and his followers have overlooked is
that the tax base has already been
broadened to danger point by the
pay roll tax levied under social Sc
curity' laws and by indirect taxes in
recent years, especially by State sales
taxes
The amazing thing is that tax bills
still are written and rewritten while
few members of Congress think of or
propose ways to cut the need for taxes
the expenses of Government.
(Copyrisht. 1889