Evening star., 1939-03-15

The news comes at a moment
when businesses and individuals are
filing tax returns. If ever there was
moment when any administration
or party, mindful of political psy-
chology, might have turned its at
tention to the most painful item in
the whole legislative calendar, it
vas this very month and this very
day.
But apparently the sentiment for
tax relief has not penetrated the
otherwise busy and preoccupied
leadership of the Democrats in both
houses of Congress. The argument
is still made that If some taxes are
reduced, then Immediately there
must be increases in other directions.
What seems to have been entirely
overlooked is that as deficits go
there isn't any material difference
so far as the Nations fiscal condi-
ton is concerned whether the deficit
is s3,l0O,0 100000 or 100000. The
problem of getting the Nation back
to recovery is the paramount issue,
and If reducing some taxes and not
offsetting them mathematically will
start the wheels of recovery, the
Federal Treasury could afford to
give tax relief as a business incen-
tive and more than make up for it
In ensuing years.
Revision Discussed.
Generally speaking, even the left
wing economists hereabouts have
agreed with the principle that gov
ernments ought to tax heavily in
prosperity years and do the opposite
in periods of depression. If there
is anything to the idea that deficit
financing is essential in a depres-
sion in order to maintain purchas-
ing power, then it is equally logical
to contend that deficit financing is
essential to maintain and even in
crease what might be termed the
"employing power"
For the last few days the discus
sions about tax revision have been
going on at the White House with
congressional leaders. The Presi-
dent told the press that the question
Of rearranging the tax burden was
still in the study stage and Speaker
Bankhead rather intimated that q
general tax revision" at this session
was unlikely.
II by general" revision is meant
O general overhauling Of the whole
rate structure, then obviously this
may be more than the Democratic
administration is willing to under
take at present, though, to be sure,
It would be one of the best things
the Democrats could do to earn for
themselves another lease of political
life. For unless business recovery
comes the voting in 1910 for the
opposition party will follow the
natural trend when economic adver-
sity hits the electorate.
Consolidation an Aid.
It is possible, on the other hand,
to consolidate the various corpora
ton taxes in uniform tax and end
q good deal of uncertainty and
confusion. 1t would require no
general" revision to accomplish this.
Likewise it would be a simple matter
to attach certain amendments to
existing tax laws to permit debt
ridden corporations to move ahead
and to allow for certain incentives
to business progress. II the ad-
ministration were ready to bet
somewhat on business recovery,
rates might readily be reduced in
various classif1cations and a larger
revenue collected than heretofore.
For as business improves the Treas
ury receipts will increase materially.
The taxing power is one of the prin-
cipal instruments that can be en-
ployed to bring about economic re-
covery, but a mathematical attitude
or inflexible position with respect
to the impediments to business re-
covery in the tax field will defeat
economic recovery and cause q gen.
eral reduction in tax revenues.
Midst all the negative comments
that have come out of the admins
tration, it is significant that Senator
Vandenberg, Republican leader, who
has his ear to the sground, an
nounces that he will offer a bill to
hold the social security taxes at
their present level Most people are
unaware that there is to be a so
per cent increase in pay roll taxes
scheduled for next January l unless
Congress intervenes. The increased
taxes are not needed to maintain
the old-age pension and unemploy-
ment insurance systems. and it is
a sign of the decline of the political
alertness of the Democrats that they
permit the Republicans to get the
Jump on them in this very popular
move.