The Republican. [volume] (Oakland, Md.) 1877-current, 1939-06-15
LOOKING FORWARD
By FRANKLIN MAILMAN
Publicity Director, Republican National Committee

Glory Hallelujah! Let there be re-
joicing throughout the land!
President Roosevelt has ended his
Shutdown strike against business.
Somewhat grudgingly, but neverthe-
less affirmatively, the President has
given the sign that he is willing to
have Congress undertake the task OF
undoing some of the damage inflicted
on business by punitive taxation.
Secretary of the Treasury Henry
Morgenthau, at long last, has APP
peared before the House Ways and
Means Committee and called attention
to the necessity of revising the Fed
eral tax laws along lines which Re-
publicans of Congress have advocated
for the last three years.
Thus the Republicans have again
demonstrated the wisdom and con-
structive nature of their criticisms of
certain New Deal laws. Now Mr.. Nor
genthau, as he did several months ago
in respect to the Social Security pay
roll taxes, admits that the Republi
can position was well taken and was
not, as New Dealers are so fond of
saying, just obstructive tactics.
1t Was TugwelPs Idea
One of the ''tax irritants" which
Secretary Morgenthau now agrees
should be eliminated is the tax on I'M
distributed corporation profits. 1t will
be recalled that Professor Rexford
Guy Tugwell first proposed such tax
alton in his book Industrial Discip-
line", written before the New Deal was
inaugurated. DR.. Tugwell, it also will
be recalled, aspired to make America
over" His idea was to subject industry
and business to government discipline
the planned economy" idea. Some
people now call it the planned pow
erty" idea, since such schemes are re-
sponsible for the present 100000
unemployed and distressingly low
level of farm prices.
Anyway, DR.. Tugwell sold his tax
idea to another academic brain-trust-
err, the late DR.. Herman Oliphant, who
was general counsel of the Treasury.
DIR. Oliphant sold the idea to Congress
and in 1886 it was written into the law.
The Republicans of the Ways and
Means Committee did all they could
to prevent enactment of the undistrib-
uted profits tax, but their warnings
which were accurately prophetic
were brushed aside.
Look At The Record
Not to say "we told you so" but to
keep the record straight, it might be
we'll to call attention to the objections
raised in their Minority Report in
1896 by the House Republicans against
this tax. They follow:
Il. 1t will discourage and possibly
prevent the accumulation of adequate
rainy-day reserves and constitutes a
direct threat to the security of bust
ness, employment and in investments.
'2. 1t will cause corporations to re-
strict the distribution of their existing
tax-paid reserves, which can only be
rebuilt under penalty.
"3. 1t will discourage business re-
Mobilization and expansion and have a
retarding effect upon recovery and I'M
employment.
a. 1t will hamper the growth of
small corporations, impede the devel-
opment of new enterprises, and foster
monopolies.
"5. 1t puts a penalty on prudence
and bounty on improvidence and con-
stitutes an unwholesome interference
with the exercise of sound judgment
in the management Of business.
sc. 1t will accentuate the extremes
of future booms and depressions.
81. 1t will Cypress businesses bur-
dened with debts and will result in q
restriction on corporate credit.
SO. 1t will drive capital out of pro-
ductive enterprise into tax exempt
securities.
80. 1t violates every sound princi-
pie of income taxation, is arbitrary
and oppressive in its application, and
will be unequal and discriminating in
its operation.
40. 1t will cruelty financially weak
business enterprises, while permitting
the strong to minimize or entirely es-
cape the tax.
al. 1t will create inequalities and
unfair competitive situations which