Evening star., 1939-06-21

gone conclusion David Lawrence.
that the Senate will adopt the
House bill though there may be a
few changes The whole problem
seems to have been brought to a
happy solution Notwithstanding
several weeks of jockeying between
Capitol Hill and the White House.
Nobody will ever know-and it
doesn't seem important, except
Observation-Disclosures the Presi-
dent really wanted to have any tax
revision at this session or at the
January, 1910, session. Certainly,
there was a drift toward complete
inaction until Senator Pat Harri-
son of Mississippi, chairman of the
Senate Finance Committee, took
an aggressive position and insisted
on action at this time.
Perhaps, too, the demand for
tax changes was far more extensive
than the administration was will
Ing to concede, and. until some of
the drastic demands were with
drawn, there could be no COM
promise.
Whatever, on the other hand
impelled action this month, there
can be no doubt that the press,
by its reiterated references to the
tax situation, created in Congress
q favorable atmosphere to the
amendment of existing tax laws.
Many of the changes are particu-
larly helpful to business without,
at the same time. really causing
any loss in revenue. Thus, when
a reorganization of corporation
is in prospect and the tax laws be-
come a barrier, the rehabilitation
just doesn't materialize, and the
Government loses the tax revenue
while the country loses the benefit
of the economic readjustment
which reorganizations usually
mean.
Sensible Change.
The House bill introduces a sensi-
BILE change in that corporate reor-
ganizations do not face taxes on
imaginary profits derived from the
buying in of their own securities
that once sold at par but are away
down in market price. The grant
also to corporations not necessarily
in process of legal reorganization
of the privilege of buying in their
own notes or bonds for a three-year
period following a private showing
for the Treasury of unsound finan-
cial condition is a help of incal-
culable Importance to industry and
especially to employment generally.
Many business goes under nova
days and workers are thrown out
of employment because there is no
way to meet the tax laws which
levy heavy taxes on the reduction
of debt through settlements with
outstanding noteholders.
The best thing about the House
bill is that it reveals Congress as
aware that the complaint against
the tax laws proceeds from other
impulses than a mere desire to avoid
the payment of taxes. Most busi-
nessmen do not object to paying
taxes if they have an opportunity
to earn them. Some of the pro-
visions of existing law actually de-
ter business from earning money
by handicapping certain concerns as
against others. Once Congress is
ready to consider taxation from the
basis of stimulating economic re-
covery instead of from the stand
point of reform theories which are
Nffny, Lnf
ment can be derived that further
changes in the same direction may
be made.
Dangerous Undertaking.
The comments by the President
himself about broadening the tax
base are significant. This does not
mean, however, that Mr.. Roosevelt
will recommend that persons of
relatively small income will ever pay
direct taxes, but merely that, unless
the lower incomes are tapped, there
can be no more revenue of any sub
stantial amounts. Politically it is
a dangerous undertaking for any
administration.
But 1t will be long time before
any bill to broaden the tax base is
passed. AS matter of fact, the
tax t,rdens of the people of small
inc are larger now than they
can Indirect taxes bear heavi-
est on the people of small incomes.
The purchasing power of the Ma
tion would be adversely affected by
any drastic change in the tax laws
which took more money from the
poorer people.
The best example of the way the
tax base can be broadened and in
jury done to the economic struc-
ture is the social security pay roll
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