Evening star., 1941-07-13
Record Tax Program Includes
Curb on Non>Defense Spending
Measure Represents Compromise of Wide Conflict
in Theories of Public Financing;
Bill Largest in History.
By Arfhnr WhippIe Crawford

fppbe
difficulties would be great 1t is felt by
this group that the present tax system
already is more regressive on low incomes
than is desirable.
Those who hold these general prin-
ciples DO not form cohesive group, in
asmuch as there are many cross currents
which confuse the issues. The Treas
urys recommendations were in general
accord with these principles, but in the
view of some of the New Deal theorists
did not hit hard enough at large corpora
tions and individual earnings and af-
fected too wide a range of commodities
outside the range of competition with
defense materials.
Wide Differences Of Opinion.
The bill as drawn by the House COM
mittee also purports to follow these prin-
ciples, but falls farther short of complete
accord with them than the Treasury
proposals. The House committee bill
and the Treasury plan to lesser extent
have been viewed as having been framed
with too much consideration for political
effects. Neither lowers individual ex-
emptionS and the committee bill eases
the burden Of taxpayers in the lower
brackets and on corporations as against
the Treasury proposals.
The group which is critical of both the
committee bill and the Treasury pro-
posalS and also of the more extreme ideas
of i,,o
the large business organizations 'and
economists of the old school.
While there is wide difference of
opinion as to proposals in detail among
this group, there is common feeling
that while taxes should be greatly in
creased upon individuals and corpora
tions, excessively high rates should be
avoided and there should be an effort
to spread the tax burden among all
classes
In line with such a policy there Is
strong sentiment for lowering of in
dividual exemptions and for a general
sales tax. As an argument for a lowering
of exemptions it is pointed out that only
about 5000 900 persons out of 100000
filing returns and 47000000 gainfully
employed have been paying income taxes.
A general sales tax or extensive excise
taxes are held to be justified both as a
method of reaching the entire popula-
ton and of restricting non-defense con-
sumption. A general sales tax is asserted
to be relatively painless method of rails
ing revenue. Among those favoring 4
spreading of the tax burden there is in
sistence also upon greater economy in
non-defense expenditures.
Surplus Income Hit.
Special excise taxes, a general sales
tax and income taxes all would have the
effect of restricting the amount of sur
plus income available in the hands of
consumers for purchase of commodities
and services and thus release materials
and workers for the manufacture of de-
fense materials.
The seizure by the Government of extra
profits resulting from the defense pro-
gram is regarded as an important method
of preventing general inf1ationary price
rise. The diversion of these profits to
the financing of defense purchases helps
to guard against the creation of new
private purchasing power which would
tend to outrun the production of non-
defense articles and thus stimulate an
advance in prices. If all excess profits
are taken from corporations in taxes,
there will be less excuse for demands for
substantial wage advances or for abnor-
NAL dividends to stockholders, either OF
which contribute to imitation. If the cost
Of living increases in spite of various
control devices, wage advances may be
inevitable, with possible embarrassment
to the corporations. 1t is not easy to Ak
rates at the exact point at which they
will check imitation without injuring busi-
ness.
The use OF taxation as an instrument
for social and economic control Is ad-
vocated by New Deal economists on the
ground OF what they regard as basic
changes in economic life during the pres
ent century. These changes are stated
to be the disappearance OF the frontier,
decline in the rate Of population
growth and the end OF world expansion
into new areas. Theories Of economists
OF the old school were predicated, the
(See TAX PROGRAM, Page C-3D