The Waterbury Democrat., 1941-04-02
By JOHN .. FLYNN

Written for NEA Service)
 The most important problem con- fronting American business sand for that matter the nation-is that of taxation.
 It must be remembered that the boom which is developing is the result of one big customer coming into the market. That customer Is the government. And the govern ment has no money.
 The government can get the money 1t spends in only one way, and that is from the people. It can tax them or 1t can borrow from them. And if 1t borrows, in the end that can be handled only by taxa- ton. It must tax today or tax to- morrow.
 The amount that will be spent is very great. have tried to follow the governments appropriations and authorizations for defense. They amount to about $30O00, ,000, ,0000 for ourselves and $7000, ,O00, 900 for Britt ain. These huge sums will be spent in the coming two fiscal years. And almost all of this money will be borrowed.
 However, there will have to be some increase in taxation. How much this will be 1t is difficult to say. Government official are talk ing about an increase of $1 ,500, ,000,. 900 6 year for the next two years which, while seemingly large, is but 8 drop in the bucket.
 PRIVATE INVESTMENT
 vS. INCOME TAXES
 However, these bills muse be met, and people probably will yield to them without murmuring. The ser- ious side of the tax problem is not so much the burden on individuals as the effect on our economic so- ciety as 6 whole.
 Let me give an example. MT. B. IS an executive with @ salary of $l00,O00. He must pay Q tax on that of $44,844. That is @ heavy tax. But after all, he will still have left $55,000 for himself, so we need waste no sympathy on him. Having said that, the average advocate of soaking the rich disrnisses the mat ter.
 But the important thing is not the effect on MT. B. Look ct 1t this way: MT. B has saved $50,000 in spite of the taxes. It is lying in the bank. He wants to invest 1t. He can get an industrial bond which will pay him 3 per cent. That will give him $500 Q year. But that extra $l 800 will be taxed at Q still higher rate. On that $1,5o0 he will have to pay 68.2 per cent or $l ,023 in taxes. He will have for himself only $477. That means less than per cent interest.
 Now, why should he invest mon- ey at per cent when he can in- vest 1t in @ public bond which will yield him from 2 Ia to 3 per cent? In fact, he would probably not be willing to invest his money per cent to all, for there is vate invest ment. A drop of three or four points in the bond would rob him of his interest for three or four years. The upshot of all this is that MT. B is out of the market as a private in- veStor.
 SMALL YIELD FROM
 RISK INVESTMENT
 It is even worse in the case of risk nvestment-the investment of money in new enterprises where there is a large element of risk, or where a man might have to wait number of years before his dividends begin to come in.
 No man will invest in such en- terprises for 3 or 6 or even 10 per cent. However, such investments simply do not exist for such @ man. Because when he makes an invest- ment he must always remember that he has a partner-Uncle SaIn--who will take the lions share of his profits.
 If he wants to make Q risk in. vestment to yield him 6 per cent he would have to find some enter prises that would actually pay 20 per cent. Uncle Sam would take IA per cent of 1t, leaving him 6 t,er cent. But there are no 20 per