Evening star., 1941-09-21
Business Takes
Calm View Of
Big TdxBiI|
Leaders Of Wall Street
And Industry Relieved
By Moderation
By FRANK MacMILLEN,

BY FRANK MacMILLEN,
ASSOCIATED Press Business Writer)
NEW YORK, Sept. 20.-If anyone
had predicted few years ago that
Wall Street. and financial and in
dustrial leaders generally, would sc-
cept with scarcely a quiver a record
breaking S3.500,0 100000 Federal tax
bill he would have been considered
legitimate material for the psy-
chiatriSt
But that's just what happened this
week.
Even when the bill was proposed,
early this year, students of corpora
ton profits shivered.
When the bill was finally sent to
the President, who signed it today,
the financial community emitted
something that resembled a collec-
tive sigh of relief
The stock market staged a brief
but active rally.
Comment generally could be sum-
med up in the phrase:
1T might have been worse"
Business Week. often a good mir
ror Of opinion in its field. said:
Extremes Avoided.
ignoring both radical demands
for punitive corporation taxes and
reactionary demands for punitive
consumer taxes. Congress raised
rates all along the line, with sur
prisingly equitable results. when you
consider the pulling and hauling at
every point"
Business will pay 40 per cent Of the
big bill directly in corporate income
and excess profits taxes and another
25 per cent Of the money will come
in the form of excise taxes from
things sold by businesses. Some Of
the latter will be passed on directly
to the buyer, others probably only
partially. some not at all.
This presents no very encouraging
picture to business and financial
men.
Yet these were some of the offsets
which operated to get the bill a
fair reception:
l. Many observers here had pre-
dicted that the new taxes would be
designed to throw a larger share
Of the whole burden on corporation
incomes, less on individuals. That
failed to happen. The relative pro-
portion Of business taxes and indi-
vidual income taxes remained about
the same as in the existing law.
Revenues Tn Marc
2. The rising curve of defense
expenditures, far outstripping taxes,
was loading many industrial con-
Germs. especially the big ones. with
SO much work that even the higher
taxes would only partially absorb
soaring gross revenues.
3. Gasoline and tobacco. long IA
vorite sources of excise revenue. were
not further taxed. Some of the
largest concerns in whose securities
Wall Street deals are in the oil and
tobacco field. Soft drinks. which
some Wall Street guessers had fig
ured for inclusion in the excise list,
were not added
But there was plenty of Worrying
about the always unpredictable ef-
fect OF taxes on sales volumes and
consumer resistance and whole in.
dustrles which have never before
mad to contend with the problem
were beginning to wonder how thev
would be affected
Some new products now TO be sub
lect TO tax either on the manufac-
turer or when they are finally sold
al retail, included business and
store machines, electric, gas and
oil appliances, washing machines
sporting goods, electric light bulbs.
furs and jeWelry.
On the theoretical side. manv
economists were wondering how the
hgher individual income taxes bore
on the ever-preSent problem of a
War-Stlmulated rise in prices. the
familiar imitation"
Regarded as Inadequate.
Ihe lowering of exemptions to
reach taxpayers not formerly di-
rectly taxed was regarded as a sten
IN the right direction, though few
here thought it was sufficiently wide
to be very effective.
1t was pointed out that a major
part of the $500, 900 900 a month
the Government is spending on arm
ament-and the rate is rising stead
lly-turnS up eventually as wages
Tor the part Of the population which
still IS not subject to income tax.
Ihls flood of purchasing power.
IL was pointed out, coming at a
time when civil goods are growing
scarce, tends to raise the prices of
all kinds of goods.
Many have advocated stiff war
time taxation extending through the
entire population as a means of
drawing off some of this spendable
money.
Failure to go far in that direction
IN the current tax bill led to revival
OF discussion of rival theory, the
enforced savings idea, which has
been advocated here by disciples of
the British economist, John Nav.
nard Keynes.
This envisages forcing people Ia
lend part of present earnings to the
Government. Thus they have less
to spend for civil goods, the Gov
ernment more to spend for arms,
Later, when the arms drive is over.
the Governments repayment of the
money would let people spend again
Tor civil goods at a time when thev