Evening star., 1943-01-20
Holds Salary Limit Not
Question of Finance
Economist Expresses Doubt
Concerning Social Benefits
Of SIS, 900 Ceiling

VT 9Zo, ,uOU Aeilinq
To the Editor Of The Star:
When the usual reader learns from his
paper that one OF the leading questions
facing the next Congress is limitation OF
incomes to 5000 net, he is likely to
shrug his shoulders and conclude that
here is one thing he doesn't need to
worry about He never expects to receive
$4,000 year. He knows few If any
people, having such incomes. He feels
that, when men are asked to risk their
lives in the Army for $500 per year, the
man who can stay at home and have
$25 900 to live on is decidedly fortunate
which obviously Is true. However, he
is likely to overlook the fact that the
only logical way even to make a start in
the direction of overcoming injustice is
to limit each individuals income to $500
per year. 1t would be still more logical
to compel every one to take his turn at
the front. OF course, at present, the sons
OF the rich and the sons of the poor are
both alike in the Army, taking equal
risks
Nevertheless, the typical man on the
street is likely todeel that, if the war can
be paid for merely by having the rich
sacrifice a few luxuries. that seems an
eminently sensible way to finance it.
Not being statiStician, the average man
scarcely can be expected to know that
persons having net incomes OF $25, 900
or more, after paying large sums to State
and local governments, are already taxed
half OF their remaining income by the
Federal Government. If they now are
compelled to pay everything above s25,-
900 net to help support the war, their net
additional contribution will probably
amount to around one-third to one-half
billion dollars, and this will cover war
expenses for only three or four days out
OF the year. The rest Of us, perforce, will
have to pay for the other 361 DAYS.
Obviously, therefore. the issue Of taxing
away all income above S250OO net is
not primarily a question of finance. 1t
therefore must be considered from other
standpoints
Those opposed to limitation of income
usually base their arguments mainly
upon the ground that high incomes are
rewards'for competence But why should
competence be rewarded? On the basis
Of abstract justice, much Is to be said in
favor of the communistic doctrine that
the least competent should receive the
n hiul7 iyor to-
partially, their other deficiencies. Why
should man be penalized for having
stupid parents?
The fact remains, however, that many
economists strongly oppose any limita-
ton on incomes. On what do they base
their arguments?
They point out that. to date. those
nations in which competition has been
most free are the ones in which progress
has been most rapid, wages have ad-
vanced most, and the common people
have enjoyed the greatest prosperity
The essential characteristics of free COM
petition are:
l. The Government lays down the
rules Of the game and thereafter avoids
interference except to assure fair play.
3 Rewards for success are very high
This encourages every competitor to use
his talents to the fullest extent
1t obviously is true that If, after the
game is played and the prizes won, the
Government steps in and confscates the
prizes, the players cannot be expected
later to enter into the contest with the
same vigor as before.
But this Is wartime. Does not patri-
otism now furnish sufficient incentive to
make each man do his best? Such does
not seem to be the case with laborers,
for they have everywhere been striving
vigorously for wage advances, in many
cases striking to enforce their demands
Are all laborers unpatriotic and all
captains Of industry super patriots? Now
is when efficiency in management Is most
needed. A decrease Of even two or three
per cent in the efforts of management
probably will more than offset any
revenues gained by the Government
through income limitation. To assume
that, II rewards are taken away, man
ayers In general will not curtail their
efforts more than two or three per cent,
stretches ones faith in human nature
very far.
The average man also is likely to over
look the fact that, in capitalistic
society, most of the funds needed to
finance industry come from the savings
OF the wealthy. If the Government. by
taxing away the incomes of the rich,
makes such saving impossible. private
industry will not be financed. The rea-
son that, today the average Workingman
in an hour earns three to ten times as
much as his grandfather, is that he now
works with equipment costing $4,000 to
Sl0,O00-an amount equal to his total
earnings for several years. However, the
money to pay for this equipment did
not come from the savings OF working
men. 1t nearly all was saved out of the
high incomes Of the wealthy. If the
Government always had taxed away the
savings Of the latter class, the working
man still would be getting a dollar day
instead Of dollar an hour.
But why not levy the tax and let the
Government do the saving? This ques-
ton brings up the crux Of the whole
issue. When the Government does the
saving, it owns the industries of the
Nation, and private enterprise is out.
Furthermore, there is as yet no indica-
tion that a socialistic state can function
effectively without dictatorship
Perhaps, after all, this question of
limitation Of private incomes is a matter
of consequence to the average citizen.