Evening star., 1939-06-05
Hanes Urges
Business TaxAid
AsU. 5. Duty
Morgenthou Aide
Tells Committee
Changes Are Urgent
BACKGROUND

One OF main charges against
NeW Deal is that its policies haze
frightened capital and alienated
business. Treasury Secretary
Morgenthau has presented nsD
tar program to Congress to in
crease United States revenues by
1000, 900 year and to con-
tribute to recoUery Its 1Dilling-
ness to cut some higher individual
income Surtdr rates 1rdS seen as
an inducement to investors to
take normal business risks"
By the Associated Press.
John w. Hanes. Undersecretary of
the Treasury, told the House Ways
and Means Committee today the ad-
ministration had a duty" to make
any tax changes that might be
necessary to stimulate business.
Whenever we find" Mr.. Hanes, a
former Wall Street broker said,
that the tax system may be oper-
ating against the necessary incentive
and is interfering with legitimate
and necessary enterprise, it seems
plain to me that it is our duty to
correct the situation"
Indorses Morgenthau Plan.
Mr.. Hanes Endorsed in full the tax
recommendation made recently by
Secretary Morgenthau They in
cluded removal of tax irirtants''
such as the undistributed profits
tax, and the capital stock and ex-
cess profits taxes.
Testifying that the huge size of
Federal expenditures was due largely
to social security, unemployment re-
lief and other social laws, Mr.. Hanes
said the social reforms desired by
the people can be sustained and
developed only by the recovery of
private enterprise, which. after all.
is the backbone of Federal revenue. :"
There are, at bottom, only two
ways OF producing wealth." he con-
tlnued. One way is to conscrlpt
labor and capital and put them to
work under government compulsion
This way is unthinkable in Amer
ica.
THE other way is to provide the
incentive of wages, interest, divi-
dends and profits. This is the way to
which we are committed, the only
way we can think of taking.
That being the case, it becomes
our duty to examine carefully the
fiscal policies of the Government
with view to determining whether
they provide all legitimate and
necessary incentives to private en-
terprise in the production of wealth. {"
Urges Large National Income.
Mr.. Hanes also said that the
budget could not be balanced, at
present, by merely cutting expendi-
lures, but that a larger national
income was necessary. Stimulation
of private investment and enter
prise, he explained, would provide
the larger national income he said
was necessary to provide sufficient
Federal revenue to balance the
budget.
The Undersecretary also told the
committee that other actions be-
sides tax revision probably were
necessary on the part both of the
Government and of business to pro-
vide substantial business recovery.
But while suggestions made to
you by the secretary were not pre-
sented as panacea, it is my con-
viction that they indicate a course
of tax reform that would greatly
stimulate recovery and greatly i'm
prove the unity of the Nation" Mr..
Hanes concluded.
Cosed Session.
At a closed session before Mr.
Hanes was heard, the committee re-
affirmed its decision to confne its
hearings to corporate taxes.
Chairman Doughton, Democrat, of
North Carolina, announced the COM
mittee decided. however, that those
who wished might file briefs re-
garding income end excise taxes
These briefs, Mr.. Doughton asserted,
can be considered" by the Tax Sub
committee and the Ways and Means
Committee in writing its tax re-
vision bill
Representative Jenkins, Republi-
can, Of Ohio said at the open COM
mittee meeting that it was he who
preferred opening the hearings to
all classes of taxes.
IF that had happened,' Repre-
sentative Mccormack, Democrat, of
Massachusetts, commented, we'd
have no tax bill"
Members of the committee have
emphasized that tax measure must
be enacted by June 30, when the
excise or so-called nuisance" taxes
expire. The committee expects to
propose continuing the excise taxes
and in addition suggest several
rnrrorate toy reyiSions