Evening star., 1943-11-30

NOW the prop D"io Ls"rehce'
lem is before the Senate, which
must decide how taxes shall be
increased.
A sales tax has been proposed,
but 1t is the subject of bitter con-
troversy. The Treasury says Fed
eral sales tax could easily raise
$4,000 900 900, but that congressional
groups would certainly insist on
exemptions for food and clothing
and other items needed by low-in-
come groups and the result would
be sales tax of about 100000, 900
and a lopsided effect on the ma
tional economy.
Points to Doubled Incomes.
Other sources of taxation have
been tapped and nearly every group
feels it has reached the saturation
point. Yet Mr.. Morgenthau points
out:
In the fiscal year 1899 individ-
uals had incomes, after personal
taxes, of s65 ,OOO,O0O,OOO: In the fis-
cal year 1914 it is estimated that
individuals will have incomes of
S126,000, ,0O00 900. after allowance for
all present taxes. That is, after pay
ing taxes, incomes of people in the
United States will have almost dou-
bled since 1899"
From the foregoing it would ap-
pear that the saturation point in
taxation has by no means been
reached and the Secretary of the
Treasury insists that I'VE are not
paying all the wartime taxes we
can and should pay-we are not
now fighting an all-out war on the
fiscal front"
Congress, on the other hand, sees
that certain reductions have been
made in the estimates of proposed
expenditures. Thus, instead of a
deficit of s6S,OOOO 100000 for the
fiscal year ending June 80, 1914, we
shall have deficit of 1000 ,000, 900.
The budget revisions," says Mr..
Morgenthau, do not alter the fact
that we can pay much higher taxes
they do not in any degree affect our
moral obligation to meet now all of
the costs of the war that can be
met by current taxation, and they
do not affect in significant degree
the serious inflationary dangers
that face us for the balance of this
fiscal year, the succeeding fiscal
years as long as the war shall last,
and in the postwar period"
Pressure Policy Indicated.
The foregoing expression by the
Treasury indicates that its tax pol
Icy is to apply maximum pressure
to get tax money now, whereas the
attitude of Congress is to assume
that the big war budgets may sud-
denly be cut down due to favorable
developments on the military side.
But there Is another reason for
the confusion on tax policy. The
Congress and the executive branch
OF the Government have never sat
down in a nonpartisan way to work
out an overall tax policy with
definite set of sound principles to
govern the fiscal situation.
Thus approximately 40 per cent of
the budget needs is being raised by
taxation and go per cent by borrow
ing. Time was when one third by
taxes and two-thirds by borrowing
was considered satisfactory in many
quarters. The Treasury now evi-
IDENTIFY wants to raise the proportion
OF tax payments to so per cent, 50
that borrowing and taxes will be
equal in yield.
What do the Nations economists
say? What do the bankers say
whose business it is to study infla-
tionary trends because of their
heavy investments? When, at any
public hearings. has there been an
effort at conference between all
interested parties so that a def
mite set Of principles might be
agreed upon?
Perhaps this affords way out of
the dilemma. Otherwise, merely the
vague statement that the Nation can
pay more taxes than it is paving
will not suffice, because everybody
knows the present administration
has refused to consent to laying
heavy taxes on the groups which
have received the largest total in
comes and has merely applied the
maximum to the middle or upper
brackets. Also Congress has hesi-
tated to spread the tax burden.
So, statistically, it will always be
possible to show that the capacity
of the Nation to pay taxes is greater
than the yield. If tax policy could
be agreed on between Congress and
the Executive, it would be a con-
structive assurance that the Nation
would be spared the damage of a
serious imitation.
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