Evening star., 1941-05-21
Opposes Direct Tuxes
On Consumption
Writer Urges Defense Costs
Be Paid by Corporations
And From Savings


And From Sovines
To the Editor Of The Star
Those who are now talking about the
need to cut down on the amount Of
money available for the purchase OF
non-defense goods to prevent imitation
and to make more money available for
the purchase of defense goods forget
that there can be no threat of imitation
until our men and machines are fully
employed, and they forget that cutting
down on the non-defense spending to
increase defense purchases is asking
us to make the choice between guns
and butter" at time when we can
have many more guns than we are
getting at the present time and still
have a lot more butter, too. They tell
us that we are spending only Is per cent
of our national income for defense pur-
poses and assume that In order to have
more defense purchasing We must have
reality we could easily increase our nom
defense purchasing by at least 80 per
cent, which would be roughly S24 000,-
100000 The present $4,000 100000,
which is Is per cent of our present in
come, would then be only slightly over
IL per cent and, if at some future time
when our armament program reaches
its peak and We do have to curtail the
non-defense spending because of the
actual shortage of man power to operate
the productive facilities, we can in
crease our defense purchases up to
$36 900 900 900, or what would be equiv
alent to As per cent of our present in
come, without reducing non-defense
purchasing below the present level.
One can but be astonished at the
utter blindness Of those who talk about
taxing consumption at the present time
in order to promote defense. We need
taxation and plenty of it. In fact, we
need much more than the tax experts
have proposed. but it should be upon
corporation profits and savings and not
a general tax on consumption or even
excise taxes on luxury products. If we
have excise taxes they should be upon
such things as automobiles and electric
refrlgerators which are competing di-
rectly with the defense industries for
men and materials and which easily can
shift their production to the defense in
dustrles. The same electric motor which
runs an electric refrigerator easily could
be adapted to operate a torpedo and
the same men and machines which are
now making automobiles could make
scout cars and light tanks or even air.
plane parts. But the men who are
making furniture or dishes, for example,
are not using materials which are needed
for defense, nor do they have skills
which are important for defense pur-
poses. Therefore. there is no reason
why we shouldn't have even more of
those things than we have at the present
time. When the defense program reaches
its peak and the need comes for these
men to be shifted and taught new
trades in the defense production then
we can easily 60 without them without
too much sacrifice, because We will have
a SOPPiy VI llcduy vi IldllO. AS
the defense production reaches its peak
we can apply excise taxes to the articles
which complete with the defense indus
tries the most and which would lberate
men needed for defense production in
exactly the same way that a stiff tax
on electric refrigerators and automobiles
would today.
~ y, -
find an answer for at the present time
is whether we are going to have short
age of men or shortage of machines
or Of raw materials in the defense and
non defense production. If We are 60
ing to have idle men and idle machines
because Of shortage of raw materials
such as steel and aluminium then we
should push the expansion of the IA
cilities producing these things at all.
speed. If We are going to have a short
age of men and still have plenty of
machines in the non-defense industries
there is no reason why these industries
should expand their existing facilities
and surely by taxes and other means we
should discourage or actually prevent
such expansion because it will compete
directly with the defense industries both
for materials and skilled men.
These problems are vital to any tax
program because they indicate the OBJ
jects which the tax should achieve
They indicate that we should have
specific excise taxes not upon luxury
goods but upon those which compete
directly with the defense industries
They indicate that we should have no
general sales taxes or other taxes that
fall primarily upon consumption If
the facts are, and I think there is
little chance that they can be other
wise, that we will have a sufiiciency
of productive facilities in the non-de-
fense industries, then the place where
the main force of the tax should fall
is upon savings and upon corporation
profits which go mainly into re-invest-
ment in new productive facilities
1t would be far better to use double
or even triple shifts in the non-defense
industries rather than to increase those
facilities because such expansion of the
non-defense industries would constitute
what might well become the worst form
OF initiation which we could have Such
expansion would compete directly with
the defense industries and would alb
sorb the idle men. 1t would give us
the symptoms of capacity production
when in reality, without that expansion,
there would have heen an abundance