Evening star., 1942-04-29


curbing imitation when their own
savings plans really work against in
fiationary trends is a mystery.
If the President had said that
S25,00O was a proper base after taxes
and after deductions for any savings
either in insurance or war bond pur-
chases up to a certain limit, the
plan might be more widely favored.
Then there is the question of phi
lanthropies and deductions for
charities. If the $25, 900 limit is in
sisted upon and out Of that sum
must come all charities, the result
might be Injurious to many hos
pitals, churches and colleges as we'll
as community chests. The present
law permits IS per cent deduction
for charitable purposes. A man with
a $4,000 income would be allowed
about $1,000 as charity deduction
but there are men with incomes of
100000 or over who contribute an
nually much more than that sum.
Transition Hardships Seen.
It Is true the Government could
take over all the work hitherto done
by the charitable institutions or that
individuals with lesser incomes
might be prevailed upon to con-
tribute more heavily, but there can
be no doubt that charitable institu-
tions are in for some serious days
during the transition period. Ger
tainly some plan whereby the sal
ary reductions would be less abrupt
or else unlimited deductions would
be permitted for contributions to
bona fide charities will be needed If
the social structure Of the Nation is
not to suffer.
The Presidents plan for curbing
imitation urges that debt be paid OF.
But II the idea is sound for in
dividuals it is even more important
for business to get out Of debt.
Elimination Of private debts"
says the President. "and an accumu-
lation Of savings will provide a form
of insurance against postwar de-
preston" ...
But when q business which seeks
to pay OF its debts finds that all
profits above 6 per cent on its capi-
tai are. for instance, taken up in
taxes by the Federal Government,
how can there be any substantial
reduction In debt?
There is no doubt that businesses
which have bank debt or capital
debt would be better OF to pay it
down to the lowest possible point
as a protection against future con-
tingencies. There is no doubt also
that businesses which have de-
bentures or bonds outstanding, on
which q certain sum must be paid
annually under sinking fund agree
ments, would like to comply with
the Presidents suggestion. But how
can they do 1t under the very tax
proposals being urged by the Presi-
dent and the Treasury experts?
Could Inspire Thrift.
Some form Of deduction for debt
reduction would be an incentive to
thrift and would strengthen partic-
ularly the small business. Thus far,
though not so intended, of course, by
the New Deal, its tax laws have
operated In favor Of big businesses
and the well-heeled financial insti-
tutions which got their capital In
pre-New Deal days. Any company
that has sought to raise money to
compete with big business since 1888
has had to face obstacles and handi-
caps not present before that year,
80 that the total amount of private
financing in recent years has been
voefully small in comparison with
a decade before.
Now when there is a greater gross
income for more businesses and the
time has arrived when small busi-
nesses can begin to compete with
the larger concerns, the administra-
ton has brought forth a plan that
will deal a solar plexus blow to the
Idea Of free competition. There are
some New Dealers who do not really
believe in the competitive system.
They want to see the State furnish
the capital and some of their at
tacks on big business seem to be
designed to bring about the absorp-
ton of large enterprises into a wide
system Of public ownership. The
fate Of the small businesses does not
seem to have impressed itself enough
on the present administration, for
while lately there has been authori-
zation to furnish Government loans
to small businesses, a much better