Evening star., 1943-10-19

cent on any dividends which may be
poratc taxes. If American business
Is to be able to furnish employment
to the millions of men and women
who will be joblesS when the war
endS. it must be left some margin
for reconverGion and expansion pur-
poses. Encoura cement must be
given to risk or venture capital if
new and potentially large industries
are to be developed.
Doughton Quoted.
IS. AS Chairman Doughton has so
well pointed out, you can shear a
sheep indefinitely. but you can skin
1t but once. We believe that
further increase in taxation at this
time would threaten the future
solvency of American business and
bring about the liquidation of the
middle class, which has always been
the backbone of our country"
Meanwhile, the Treasury sub
mltted three weighty documents to
the committee to bolster its argu-
ments against a Federal sales tax.
The Treasury asserted that a sales
tax would exert mhationary as we'll
as deflationary pressures, adding
The tax would conflict with the
operation of the Governments
stabillzation program because of its
price increasing and wage increas-
ing influences. Business costs would
be increased in many cases. If the
tax were permitted 10 raise farm
parity prices, it would be ineffective
in reducing the spending of farm
groups"
The committee. meanwhile, wound
up public hearings and prepared to
work out some new revenue plan in
closed session.
The situation shaped up about
like this:
l. A vigorous but brief drive for
national retail sales tax begged
down SO badly that even its pro-
ponents were pessimistic.
2. Lawmakers ignored the admin
loIldlIon program.
Members Skeptical.
3. Many committee members be-
lleve no more than four to five bill
lion additional can be channeled
into the Trea sury.
4. Congressional emphasis turned
further toward Government econ
omy to avoid raising taxes.
NAM Opposes Increases.
The National Association of Manu-
facturers, at Yesterdays session, took
firm stand against any further
tax increases at this time. On the
other hand, Frank D. Graham,
Princeton University professor, pre-
sented recommendations he said
were prepared by SO economists for
adequate war taxation" which in
general supported the administra-
tlon's sl0,500000,000 program.
Mr.. Graham gave the committee
this outline of the recommendations
l. The Federal Reserve System
should be adjusted Immediately to
yield at an annual rate of at least
s45, 900 100000.
2. To allow for possible under
estimation of the inf1ationary pres
sure existing in early 1943 and for
the nearly certain increase of in
f1ationary pressure during 1943, pro-
vision should be made for increasing
tax revenue on short notice by as
much as s10,00O,OO0, 0,0OO above the
s45,o00, 100000 goal.
Incomes Seen as Source.
3. The great bulk of additional
revenue should be raised by in
creased taxation of net incomes of
individuals and families, and most
.of the increase must of necessity
come from incomes between sl.50O
and $4,000, since this is where
most of the national income lies"
4. To make increased levies on
personal incomes effective. the group
recommended (A) reducing tax
avoidance by applying war time
rates to interest which is tax free,
by eliminating the inequities which
were associated with separate re-
turns by husband and wife and by
closing other loopholes; and (B,
reducing tax evasion by campaign
to get fuller reporting of income,
particularly from farmers and other
self-employed persons.
5. I'VE recommend substantial use
OF refundable levies compulsory
loans as means of taking excess
spending power off the market dur
ing the war, with a minimum ad-
verse effect on incentives to work
and as a means of providing a back
log of postwar spending power with
out the danger that it will simply
burn itself up in burst of ill-timed
ISDendinp at the return of peace"