Evening star., 1943-07-04
80 Economists Agree
On Need Of Tax Boost
To Curb Initiation
BY VICTOR HACKLER,
Associated Press Stan Writer.


NEW YORK, July 3.-Eghty-nine
economists agree that Federal taxes
must be increased sharply and that
compulsory savings should be en-
acted at once.
Neither is particularly new idea.
But the fact that SO economists,
most of them specialists in the fields
Of public finance, money and busi-
ness cycles, can agree on program
to combat inflation-even a brief
point program-is something!
Prof. Frank D. Graham of Prince
ton got the idea of sending out a
circular. With the help of Prof.
Albert Gailord Hart of Iowa State
College, he sent memorandum on
adequate war taxation" collated
the replies and drew up recommen-
dations to which 80 of those who
replied could subscribe.
The Federal tax bill now is ap-
proximately 33 billion dollars. In
the memorandum which. started the
discussions, the suggestion was made
that the annual rate should be at
least As billions. This does not ap-
pear in the final recommendation
of the 80 economists. and Prof.
Graham said that was mainly be-
cause so many of them felt that the
figure should be still higher.
Program fer Taxation.
Here is the "proeram for adeulate
war taxation to round out the anti
imitation program:
Il. The Federal revenue system
should be adjusted Immediately to
yield much greater revenue.
%. To allow for possible under
estimation of the inflationary pres
sure existing in 1943, and for the
nearly certain increase of inf1ation-
ure pressure, provision should be
made for increasuring tax revenue
on short notice.
"3. The great bulk of the addi-
tional revenue should be raised by
increased taxation of net incomes
of individuals and families; and
most of the increase must of neces-
sity come from incomes between
$500 and $4,000. since this is
where most of the national income
lies.
q We recommend substantial
use of refundable levies compulsory
loans) as a means of taking excess
spending power off the market dur
ing the war with a minimum adverse
effect on incentives to work, and as
a means of providing backlog OF
postwar spending power without the
danger that it will simply burn itself
up in burst of ill-timed spending
at the return of peace
Going to Congress.
Four signers of the recommended
tions plan to present the program
to Congress. In addition to Profs.
Graham and Hart, they are Prof.
K. M. Williamson of Wesleyan Uni
versity, MiddletoWn, Conn, and
Prof. Ray B. Westerfleld of Yale,
Others whose names appear among
the SO are Profs. o. M. w. Sprague,
Harvard; Lester v. Chandler. Am
herst; Garfield v. Cox, University
of Chicago; Frank w. Fetter, Haver-
ford, Pa; Frederick c. Mills, Colum-
bia: Mabel Newcommer, Vassar;
Lawrence H. Seltzer, Wayne Uni
versity, Detroit; William G. SUIT
cliffe, Boston University; E. E.
Agger, Rutgers: John R. Commons,
Wisconsin; Alzada Comstock, Mt.
Holyoke; Harry D. Gideonse, Brook
lyn College; C. r. Whittlesey, Penn
sylvania; Ernest H. Hahne, North
western; Ralph E. Conwell, Wyo-
ming.
EXPLAINED in Statement.
Efficient conduct of the war de-
mands quick action to round out
the antiinfation program on the
side of public finance" says the
statement released for the group.
The sides of imitation control which
have so far been the focus of pop
ular sttention-price control in par
ticular-are means for dealing with
the results of imitation. We shall
obviously have far less difficulty
with the results of imitation if we
control its cause, which lies in the
huge excess of Federal expenditures
over Federal revenues. In fact, an
attack on the financial roots OF in
f1ation is essential to keep our
other imitation controls from col
lapsing.
The undersigned economists are
gravely perturbed by the lack OF
adequate action in this field.
1t must be emphasized that the
taxes payable to the Government
in fiscal 1942-43 under the Revenue
Act of 1912 do not exceed what the
Treasury proposed as minimum
in March. 1942-at a time when
expenditure estimates for the fiscal
year 1942-43 were 20 to 25 billion
below present estimates.
No Hardships Involved.
"It is feared in some quarters
that heavier taxation of the sort we
recommend will involve the country
in needless hardships. This fear
is groundless. 1t would be nearer
the truth to say that failure to
levy much heavier taxes will have
this effect. Irrespective of taxes,
the war itself necessitates a reduc-
ton of living standards for the
duration by reducing civilian sup
plies of tires. sugar, gasoline, fuel,
fats, meat, clothing. etc. Failure
to levy adequate taxes cannot con-
jure goods out of empty air to re-
lieve these shortages. But such
failure will add needless additional
wartime hardships to those which
are unavoidable
without adequate taxes, the pres
sure of excess spending power will
insure the disregard of law (as the
Office of Price Administration has
officially stated, and break down
our other imitation controls.
Would Spread Black Markets.
Far from enabling Americans to
be better fed. housed, warmed and
clothed, the leaving of excess spend
ing power free to break down our
defenses against imitation will re-
duce civilian supplies by encourag-
inc hoardinp of commodities slim.