Evening star., 1939-06-19

With Incentive Taxes
Back Profit Sharing
System os Essential
To Capitalism
By the Associated Press.
Senators Herring, Democrat, Of
Iowa and Vandenberg, Republican,
OF Michigan In a report to the
Senate today urged the Government
to experiment to a reasonable de-
gree with incentive taxation" de-
signed to encourage industrial ex-
pansion.
Until Government adopts more
cooperative attitude toward busi-
ness they said, I'VE can expect to
see an indefinite period of business
uncertainty, continued unemploy-
ment and semi-depression condi-
tions."
The Senators, as a Finance SUBJ
committee, made a 10-month study
OF an incentive tax program and of
employe prof1t-sharing plans. They
held profit sharing essential to the
ultimate maintenance of the cap
italistic system"
Senator johnson, Democrat, of
Colorado, the third committee men,
Der. disagreed with some of the con-
| clusions and did not sign the report.
Job Declared Up to Business.
Capital in the final analysis paws
or Will pay the entire cost of pro-
vlding for the unemployed" the re-
port said, land Congress should not
sit idly by awaiting the inevitable
lmpoverishment of our capitalistic
! system -
"A job has to be done, and done
promptly, and business alone cannot
accomplish it. ="
The committee recommended spe.
clflc tax credits for increased en-
ployment when the extra EMPLOYEES
are engaged in other than capital
expenditure projects, and a program
OF tax exemptions aimed at en-
couraging economic development.
THE savings to taxpayers" it said.
would be used to put men to work
directly by business instead of being
paid by the Government and dis
bursed on public works which will
not add to. the productive facilities
OF the Nation. Certainly we cannot
| long continue to ornament the Ma
ton and at the same time encourage
oosolescence of our producing
plants"
Special Bonds Suggested.
The Senators found profit sharing
applicable over far wider field
than has yet been undertaken" but
said they do not believe it is prac-
tlcal to apply incentive taxation
to the profit motive"
They suggested, however. that
payments to employees from accumu-
lated profit-sharing retirement
FUNDS De exempt from income taxes
and that the Government issue spe-
clal bonds in which profit sharing
funds might be invested. They de-
clared instability of security values
and low interest rates made it diff
cult to invest such funds safely.
The committee found 72S COM
panies operating profit sharing
plans. 374 OF which disbursed more
than sl36 900 900 in 1887.
Terming prof1t-sharing business
democracy" the report said:
Wages will never settle the labor
problem, because the saturation
point will never be reached.
wage increases create the same re-
suit AS the serving of red meat to
animals at the zoO-satiSfaction for
the moment, more ravenous appe-
tlte later. The workers in
come must be automatically related
to the rise and fall of the price
structure. If this is done, a proper
balance will always be maintained.
On this basis. and with such flexi-
bility. the peaks and valleys of un-
employment. of industrial progress
and prosperity, of labor unrest will
be ]eveled and stabilized.
351-Page Report.
blend the wage scale with a prof.
it-sharing differential, and the same
human being who was previously
| concentrating his attention on wages
and constantly fighting for higher
wages will discard the combative
spirit and move in cooperative di-
rection-his self-preservation IN
stinct previously centered only on a
fiat wage scale will cease"
The 35l-page report declared that
no employer could hope to hand
over a portion of his profits to his
workers as an alternative to union
ism, and added:
I'm the midst of a tendency gen.
orally to condemn private business
as selfish and reactionary and un-
sympathetic, the committee takes
pleasure in pointing to the accom-
panying record of proving that there
has been a vast, voluntary expert
mentation with various types of
profit sharing which demonstrates
the existence of widespread social
mindedness in American business"
Asserting that profit sharing had
two major objectives-O insurance
Of employment income. or job Sc
curity, and (O financial security in
old age-the committee recommend
ed the adoption of a plan under
which both workers and employers
would contribute. A stipulation was
included that the trustee should be