Evening star., 1938-03-03
The New Tax Bill.

Inc administration 5 tdh Dill, lIle OuI-
come of weeks and months of investiga-
ton by congressional committee and
Treasury officials, makes many changes
In the existing revenue laws. AS an
encouragement to business-the kind of
encouragement that is so greatly needed
If there is to be the expansion which
means e-employment-the bill falls
considerably short of the right article.
Abandoning the policy of taxation for
revenue purposes only, the New Dealers
undertook in their fiscal legislation to
use the taxing power of the Government
to carry out their ideas of social reforms.
The taxing power of the Government is
q terrible weapon if it is lifted against
the citizens for punitive purposes. 1t
can strike them down as effectively as
any bomb; it can paralyze their activ-
tiles. The use made of the taxing power
bv the New Dealers has been paralyzing
to say the least.
In the face of the demands of business
men, little as well as big, the administra-
ton in its new tax revision bill clingS
to the principle of the undistributed
profits tax, although those corporations
with net incomes of $4,000 or less are
exempt from this form of taxation. The
new bill does not place limitation on
the taxation of capital gains that will
effectively raise revenue from this source
by encouraging, rather than preventing,
capital transactions and the investment
of new funds in productive enterprise.
Further, the new bill contains new
tax, the purpose of which seems to be
penalty, to be imposed on closely held
or family corporate business organiza-
tions.
AS an encoura cement to business the
bill both in content and in spirit, there
fore, is disappointment. Under the
whip and spur of the administration
organization the measure probably will
be pushed through the House prac-
tically without change, although it will
be attacked vigorously. The admins
of the undistributed profits tax be re-
tanned in the revenue laws, is clearly
engaged in a face-saving effort. The
tax has been found wrong in principle.
If so, it is equally an unsound tax
whether applied to very large corpora
tions only or to all corporations.
The exemption from the undistributed
profits tax of all corporations whose net
incomes are s25,0O0 or less leaves about
ten per cent of the corporations subject
to the tax. However, that ten per cent
does about ninety per cent of all the
corporate business in the country and
employs approximately ninety per cent
of the workers of all the corporations.
The undistributed profits tax has the
effect of preventing accumulation of
adequate reserves, which may be used
when times are hard to keep a business
going and workers employed. 1t is a
threat to the security of business and of
the workers And still in this new bill,
1t Is to be applied to those corporations
which do the great majority of business
and employ the great majority of
workers.
The Republican minority of the House
Ways and Means Committee, reporting
against the enactment of the new tax
bill, does not mince words about the
depression which started last summer.
1t lays the blame for that depression
at the door of President Roosevelt and
his policies, especially his tax policies.
1t dubs this new condition the FRANKLIN
D. Roosevelt depression" and as such
1t will be known, they insist.
Although the depression has been
with us for months says the minority
report on the tax bill, "the Presidents
only recovery program seems to be a
resumption of the spending of huge
sums out of the Federal Treasury, a
continuation of the futile policy of
treating the symptoms instead of the
disease The report insists, as have so
many advisers of the administration,
including Mr.. Bernard Baruch of New
York, that the only thing that will
bring recovery from the depression is
continuous and unwavering encourage