Evening star., 1940-07-24
British Tax Boost
Indicates Trend
For U. 5.
Heavy Burden Seen
As Offset, for Price
Inflotion Threat
BY PAUL ID. GESNER,
Associated Press Business Writer

latest drastic boost in war taxes on
individual incomes, levied directly
on pay rolls, was taken in some Wall
Street circles as a hint Of what
the United States eventually may
do If the huge defense program
threatens to bring about an imitation
spiral of rising prices.
Congress recently raised the levy
on individual incomes to help pay
the defense costs, but the increase
was mild compared with the levies
England has imposed on the earn
ings of her people.
The British tax schedules. as seen
by some tax experts in Wall Street,
were designed in large part to check
further increase in prices as war
industry booms along. BY digging
into workers incomes. 1t was pointed
out, England will skim of a large
part of the increase in pay rolls re-
sulting from the feverish wartime
production and thus reduce potential
demand for goods and services.
AAlCCS SOuSAVlCus
All over Europe in this war ana
the armament race preceding it the
tendency was to jack up taxes swift
ly, partly as means of controlling
prices. Guns were manufactured at
the expense of butter and silk
shirts for the working masses, as
economists summed it up.
The speed of tax boosts in this
war, it was said, may be traced in
large measure to experiences in the
World War. Then waf expendi-
lures were financed more extensive
ly on loans, including the big Allied
war loans from the United States.
The result was a great rise in prices
as national income and consumption
increased, leaving a postwar load
Of debts and deflation troubles.
Whether a war industry boom here
would bring in its wake another
silk-shirt era is questioned In flnan-
cial quarters which have studied
the worldwide trend toward heavy
income taxes.
Already national income in this
country shows signs of entering q
period of rapid increase as the Gov
ernment spends the billions au-
thorized or projected for military
equipment. The Nations income, it
is estimated, for 1910 may be. the
largest since 1929, topping $73,000,-
900 900 compared with $69, TOO, 600 900
last year and with the 1929 figure Of
$81 ,700, ,000, 900.
Increases Approved.
Uncle Sam next year will have
his hand out to collect part of the
increase. Congress already has ap-
proved one schedule of tax in
creases but the supposition in finan-
cial circles is that the biggest in
creases are in the future, probably
after the November presidential
elections.
Commodity prices and living costs
in the United States show only a
moderate increase over q year ago.
Part of the rise In staple prices at
the outset Of the conflict last Sep
tember has been eliminated In the
meanwhile. Cotton, grains and other
basic materials and foods are not
much above the pre-war levels.
The drag in prices in this country
is attributed partly to loss of the
Continental European market, caus-
ing the surplus of food and raw
materials to back up on the Western
Hemisphere markets. In addition,
the Allies were cut of from war
credits in the United States so that
armament buying, except In air.
craft, was limited compared with the
scale Of purchases here in the
World War.
However, economists haven't ruled
out the prospect OF rising prices once
defense spending attains sufficient
score to utilize excess factory ca
pacity, manpower and reserves of
raw materials. When-and if-that
happens, they contend, the Govern
ment must consider tax increases
as means of curtailing mass con-
sumption Of goods and diverting
national income away from butter
and silk shirts into guns and air.
planes.