Evening star., 1941-04-27
Taxes Expected
To Help Block
Initiation
individual Incomes
To Beer Brunt of
Proposed Levies
BY FRANK MacMILLEN,

NEW YORK, April 26.-It's not
Just taxed you'll be when Congress
sets its seal on Treasury proposals
now pending to raise S3,600,OOO ad-
ditional revenue next tax year
you're going to be vaccinated against
imitation.
When Secretary of the Treasury
Morgenthau this week proposed TO
Congress the most important Fed
eral fiscal legislation in peace-time
history, economists saw in his plans
not solely a revenue measure de-
signed to meet part Of the expect
ed SIG, 900 100000 to be spent in the
year from next June 80 for Federal
activities and defense.
Highly significant, these theorists
of money and taxation thought, was
this division of the proposed addl-
tional tax burden:
l. From individual incomes-s1,-
500 100000.
q From business incomes-s1 ,000,-
900, 900.
3. From excise taxes on things
consumed (most Of which will ulti-
mately come from the consumer di.
rectly or indirectly)-s1,2 200 900, 900.
Danger Point Foreseen.
Some time before the next Cow
ernment fiscal year ends ir June,
1912, economists here think, the ma
chimes and men of America will be
fully at work, primarily on the null
ti-billion dollar arms drive.
1of, &c
point for inflation-an ever rising
spiral of costs and prices, like a
puppy chasing its tail round and
round up an inclined ramp
The heavy bite" which the Gov
ernments proposals put on the
pocketbook of the average citizen,
these economists suggest, is designed
primarily to stop this process before
it gets well started.
When men and machines are fully
employed in the arms program, they
point out. pay rolls will be biggest
in the entire history of America, but
factories, absorbed in making tanks,
guns and ships, will not be turning
out their normal quota of automo-
bileS, refrigerators and gadgets.
Workers, with unaccuStomed fat
pay checks, will be eager to spend
for the things they can use. They
can be counted on to pay higher
prices for the scarcer items. That's
where the spiral starts.
In this process, economists say, the
people are really competing. though
| they fail to realize it. with the Gov
ernment for the output of the ma
tion's factories. and the most direct
single method to stop it is by taxa
ton.
Spending Is Prevented.
II the money is Siphoned from the
individual pocketbook into the Fed
eral purse by the tax hose, it can
no longer be spent in competition
with the Government but will 60
directly from the Treasury into
needed armament production.
That this result is not sheer
theory was pointed out by one OBJ
server who calculated that the tax
proposed on the income of a family
in the $4,000 year earnings bracket
was about the same as the cost Of a
| loW-prlced new automobile.
For lower income brackets. SUBJ
stitute for automobile clothing, gas
oline, sporting equipment. liquor
or some other item and the Nation
wide effect will be apparent, this
observer suggested.
In its widespread ramifications,
economists here thought, the pro-
posed boosts in individual income
and excise taxes might be more
important in the long run than the
hike in levies on corporate incomes.
They pointed out rise in taxes
on business had been widely fore
seen. While not minimizing the
readjustments entailed, they noted
that the stock market, the safety
valve for readjuSting the national
outlook on profits. had been func-
tioning since last fall to move prices
of securities down gradually into
line with the new situation.
Cause Hardly a Ripple.
AS consequence. when the new
tax ideas were presented to the
House Ways and Means Committee
by Secretary Morgenthau they cre-
ated hardly ripple in becalmed
Wall Street.
A faint upward furry which had
been under way earlier in the week
began to subside but that was about
all.
Wall Street appeared more inter-
ested at the moment in the progress
of the soft coal stoppage, which had
begun to make its pinch felt in some
key industries, especially steel and
railroads.
A drop wider than had been ex-
pected here in the operating rate
of steel mills was forecast by the
Office of Production MANAGEMENT
in Washington, which calculated
next weeks schedules at IS per cent
of capacity. A month ago the rate
was at full theoretical capacity. but
successive shut downs of blast fur
naces as coke ran short brought cur
toi i1y,oap