Evening star., 1941-07-13

Underlying forthcoming discussions IN
Congress on the mammoth tax bill
framed by the House Ways and Means
Committee are issues with more rami-
hed and significant implications than
have accompanied any measure hereto
fore proposed to finance the Government
either in peace or war.
The issues fall in general into three
broad claSSifications
First they involve methods of distrib-
uting as equitably as possible, and with
minimum of injury or special advantage
10 particular industries, individuals and
politically powerful groups, the largest
possible share of the burden of financing
the extraordinary defense program.
Second, they include devices to facili-
tate maximum production of defense
materials and TO prevent infationary
price advances.
Third, they embrace fundamental
clash of PHILOSOPHERS between the theo-
rists of the New Deal who believe in the
constant use of the taxing power as an
instrument for social and economic con-
troll and those of the old school who
hold that its function so far as possible
should be confined to the raising of rev.
enue for purposes which are not bur-
den upon or an interference with the
system of private enterprise.
Largest Tax Bill in History.
The $500 OO0O0O of new and in
creased taxes included in the House
Committees bill, the largest total in
single tax measure in history, represent
an attempt to approach the Treasury's
goal for the raising by taxation of two
thirds of the cost of the Government
during the emergency period. The fixing
Of any ratio between amounts obtained
By taxation and by borrowing is recog-
hized as purely arbitrary.
Ordinary revenues in the fiscal years
1918 and 1919 during the first World War
amounted to only % per cent of total
expenditures. The fact that the public
debt now is very large whereas it was
very small at the beginning of the earlier
war, offers a compelling reason why a
larger proportion of expenditures should
be met from taxation in the present
situation. The precise ratio must de-
pend in part upon the size of the budget.
each new increase in total costs making
1t more difficult to reach an aggregate
of tax revenue approaching the two
thirds mark.
Administration officials propably will
feel fairly we'll satisfied if little more
than half of total expenditures during
the next two years is met from taxation
on the basis of the present tax program.
n will be impossible to avoid a rather
large increase in the public debt with
. consequent greater annual interest
charge.
The basic controversy over the distri-
button of the tax burden among classes
Of individuals, corporations and indus
tries Is between those who would impose
the bulk of the new and increased taxes
among the middle and upper income
classes according to the principle of abil-
(ty to pay and those who would attempt
1t the same time to spread direct and
indirect taxes over a greater part of the
population.
Lower Exemptions Opposed.
The former group favors very stiff ex-
cess profits taxes to prevent profiteering
from defense contracts and to check in
hation, high taxes on all corporation
earnings and very substantial increases
IN individual surtaxes and estate and
gift taxes, the taxes on incomes and
corporations being designed to promote
Q distribution of wealth and to control
economic currents Members of this
group are reluctant to lower exemptions
On individual incomes
Except where it is desirable to impose
taxes on commodities to restrict civilian
consumption or prevent imitation, the
tendency of this group is against excise
taxes, especially on common articles of
foods. clothing and other necessities. In
particular, this group is against any form
Of general sales tax on the ground that
such a levy is regressive in character
rather than progressive, meaning that it
applies more severely upon smaller in
comes, that it is difficult to avoid pyra-
miding of the tax in the form of higher
prices on finished goods, that it is defia-
tsonary upon business in general in nor
NAL times, and that the administrative