The Washington times., 1938-03-21
Everybody Talking Tax Cuts


small business Maybe; though complete repeal of this
tax seems nadvsable to u.s. We to remember that
Standard Oil of New Jersey had about $3000OOOOO
in its treasury and that other large corporations have
held onto overarge rather than pay out reason
able dividends.
Bernard NJ Baruch feels that the inheritance taxes as
now levied sometimes have depressing effect on gen.
era business in throwing large estate properties on the
market for quick sale to meet taxes.
Everybody in Short is talking tax cuts pro or con-
There one kind of tax which we wish there were
more talk than there is. We refer to
GIFT TAXES
taxes on gifts during the lifetime of any wealthy
welto-do person.
The Roosevelt Administrators tax program has had
two obective The main has heeu to raise revenue
of The secondary aim has been to correct some OF
our wealth madistrbution, by taking it
SDrendin0 from the too-wealthy and handing it to
NIL uou1th 5000 900 or 1000 900 reefers in wads Of
~ V around $50 month each. For all the COM
nants and the waste this has redisrbuted some wealth.
and has thereby kept buying power up The dollar
value is measured by it's speed Of circulation Its velocity
But getting back to gift taxes-lets imagine MIL
honaire of, say co. with typical mlionares family He
has son of 35 who is in good law firm largely because
of his fathers influence and who
One WnU to SDeed is married and has two children
unn 7.,. He has daughter of 30 who is
ppp WI married to young doctor with
fair practice and has one child The third member Of this
family is boy a. who is still bit Of problem child; ne
was college athlete and college lush when not in train
ing, and hasn't settled down yet.
Suppose gift tax laws drawn as to encour-
age the father to break up good part of his estate among
his children
The young lawyer in the course of his practice runs
across chances invest money in business if he had the
money Not all of these investments would turn out WELL
probably but if the young lawyer could invest that would
mean more money in circulation and less in taxexempt
bonds in his fathers vaults.
The daughter and her young doctor husband would like
to live in better house better street and have an
other baby: he could use additional equipment All this
would help his practice and would also circulate money
AS for the problem child the father ought to feel
free to tell him that his money would be forthcoming
when he showed signs of turning into responsible
citizen, father to hang onto the boys share OF the
estate until then.
By this means, our sample millionaire would par
tally make his will during his lifetime, and would
have 10 years or 50 to wait around and if it would
be wise to break up the balance
Gut 1GfeS OS. of his estate along those same
14n r lines on his death. Meanwhile,
D0"' ~ large sums of money would be
sphoned out of taxexempt bonds and into the hands
Of young people who would spend for goods, serv-
ices, productive enterprise. That would be better
and more normal placement of the money than gifts
to foundations-which gifts should NOT be tax
exempt.
Our gift tax laws do not encourage this sort of re-
distribution. They encourage wealthy people to keep
their estates in tax-exempts. When heavy tax has
to be paid gift it freezes lot of the generosity
that inspires gifts.
We seem to be voice crying in the wilderness
on this subject everybody else is talking about
other kind of tax reduction. But believe this
would be one kind of tax reduction which would go
to achieve the New Deals aims to redistrbute wealth
and maintain mass buying power
The gift taxes now run about two-thirds of the
inheritance taxes. We think this ratio ought to be
lowered. We think of nothing that would better
spur the breaking up of large estates and the pushing
of those estates cash assets into active circulation