The Hardin tribune-herald. [volume] (Hardin, Mont.) 1925-1973, 1942-08-13
History's Biggest Tax Bill
Can'tM Meet War Demands
Required Savings, Smaller Tax Exemptions
Seen as Partial Solution to
Initiation Threat.
By BAUkHAGE
Ne1rs ANALYST and Commentator.

fd IO'siThtFItuO.
, the department to answer. Morgen-
thau her said he would stand be-
hind Bells prediction.
1t is true that the house cut the
tax bill as submitted by the treas
ury. The treasury asked for IS. 700,-
900. 900 and got Sc, 200. 900, 900 from
the house, The senate is being urged
to restore the cuts. But the treas
ury program itself was far too
small, the experts say. At present
calculations, the governments in
come for the fiscal year l942-43
will be around "a billion dollars.
whereas its outgo will be in the
neighborhood of II billions.
If after Pearl Harbor the govern
ment had asked for the maximum
it needed the country would have
been only too glad to submit. AS
my correspondents say. the coun-
try didn't need to be walked up,
Washington does.
Critics of Mr.. Morgenthau and his
program say. too little and too
late"
They say too little" because the
difference between outgo and in
come for the fiscal year ending in
1943 will be at least SO billion dollars.
Non-Negotiable Bonds
They say too late" because in
sufficient measures have been taken
to check imitation and one way inla-
ton can be checked is to get right
after the spending money and make
it saving money by forcing the peo-
pie to invest in non-negotiable bonds
that can't be cashed in until after
the war. A lot of people are going
to- need spending money again when
peace comes until industry is con-
verted back from war production to
civilian production.
AS n man connected with the
Federal Reserve board said to me:
There is one thing that very few
people realize. When the govern
ment or anyone else borrows from
the bank, new money is created;
that makes imitation. There is plen-
ty of money in existence now to pay
war expenditures and avoid the fatal
error of borrowing from the banks.
THE difficulty now is that the dol
lars which are the most dangerous
in bidding up prices and causing in
flation are the dollars in the pay en-
velopes Of the workers of industry.
And these dollars are not, as far as
we a estimate. the dollars that are
buying bonds.
And another thing. The taxes
don't reach these dollars. either.
What We may as well realize is
coming. though not coming as soon
as it should. is: One. compulsory
savings although we won't use that
unpleasant word compulsory. 1t will
probably be a requirement to buy
bonds not redeemable until after the
war and so staggered that they
won't all hit the treasury at once.
1.-TWO. a smaller tax exemption so
thai we will get the loose dollars
from the lower income brackets.
There are more Of those dollars to
get.
Three, there will have to be
some leniency for the fixed salary
man who is already saving; the av-
erage middle class that puts money
into savings regularly in the form
Of mortgages on homes or farms or
plants. money into life insurance pol
icies. money into pension plans. That
is savings. it is not creating inla-
ton. But that man with the high
taxation those in his income brack-
cts have to pay has to 60 to the
bank and take the money from the
savings which he has there to turn
it over to the government.
Canada has faced this problem.
The United States will have to. War
production is ahead of schedule, fs-
cal thinking is tagging behind"
We can see, a year after Mr.. Ec-
Giles said SO. that price ceilings are
not enough" Increased costs are
such that the packers. as the can.
ners before them, have announced
that they just won't stay in business
if they have to operate at a loss.
The price Of the finished product
has a ceiling but the raw materials
and wages have no ceilings. Some
h0dv has to corral fboco JoJ1,re
Urban residents rank highest in
the proportion of college graduates
in the population with ST. per cent
as compared with AZ per cent for
rural-non-farm and 1.3 per cent for
rural-farm groups. according to in
formation collected by the depart
ment Of commerce in the 1910
] census.