Evening star., 1940-03-20
Suggests Tax Credit
For Hiring Employees.

To the Editor Of The Star
The tentative proposal to cure or al
leviate the unemployment situation by
a tax on more than average" use of
machinery and the payment, out of the
proceeds thereof. of benefit to an en-
ployer who substitutes man power for
machines. is interesting as a basis for
discussion. While I have not seen the
text Of the bill, it seems to bear a re-
semblance to the processing tax which
We had several years ago.
Leaving aside the discussion of consti-
tutionality, it would seem that the great
difficulty would be to determine what
is average" use of machinery. Such
a determination is almost impossible;
at any rate it is impracticable except
at enormous administrative expense
Suppose such a law had been in effect
when the wheelbarrow was invented?
What. would have been the effect on
construction costs and the purchase and
renting of homes?
I have endeavored to construct a sub
stitute proposal. Allow a manufacturer,
contractor, merchant or other employer
of labor an economic recovery deduc-
ton" from gross receipts of a sum equal
to one-half Of the cost during the pre-
viouS calendar or fiscal year whichever
the employer uses in his returns) of the
n or al
Excluding executives and supervisory
employes) as compared with the pre-
vious tax period. This would preclude
extra credit for increased pay roll ex-
pense due to salary or wage increases or
an increase in the number of executives
and supervisors or foremen.
For example, if a manufacturer or
other employer hires in 1910 so more
employees than he had in 1899, thereby
increasing his pay roll by 100000, he
should be allowed in his tax return for
1910 an additional deduction Of $4,000:
therefore, the net result would be that
he would be allowed $150,0OO deduction
from gross receipts due to the fact that
he had paid out 100000 more than
the previous year, because of an increased
number of employees. The reduction in
the tax payable would, of course, depend
upon the applicable surtax rate, ranging
from $4,000 If the rate were per cent,
up to $37,500 if the rate were IS per
cent. Each year would be the basis
for the succeeding year, or one year
might be selected as basis for an an
nual special deduction for a limited
number OF years, say three years or five
years or whatever number of years may
be deemed by Congress as necessary to
restore normal employment and eco
nonlic conditions.
However, this brings us back to the
basic fact: Any manufacturer would be
more than glad to employ additional
personnel to produce more goods, pro-
viding he gets orders for such goods.
Obviously, he cannot be expected to
increase personnel and increase pro-
duction and store the goods on shelves.
Obviously. there must be a restoration
Of confidence in the business world,
theve must be freedom from labor agi-
tation, less one-sided administration
of the National Labor Relations Act,
cooperation by labor in the interest of
increasing employment rather than OBJ
tanning wage increases for those already
employed, at least until reasonably nor
NAL employment conditions are re-es-
tablished. This does mot mean reduc-
ton in hours at least under present
conditions. There must be restoration
Of confidence on the part Of potential