The Daily Alaska empire., 1944-09-28

with remarkably dsinterested drafted primarily not from the standpoint of business" but from that of the national welfare whole It rests on sound basic principles First, "the tax system must impose the
 possible restriction upon expansion of produc- ton and employment, second, taxes should be falr among persons" and third taxes must be adequate"
 While most persons would accept these basic principles. they lead to some important conclusions that not embodied in our tax laws before the war We must that enough revenue is raised, in Iorder to ns justfable confidence in the integrity of the Federal Government, in the soundness of the dollar, and in the safety of the Federal debt as an investment This committee is convinced that the fifteen years of uninterrupted Federal deficits should be brought end after the war
 The committee believes that heavy taxation of corporate earnings is extremely and peculiarly dam aging to employment because it takes vital and enormous funds out of the stream of business opera tions just when they most likely to be used and where they can effecually be used to increase production and create more jobs It proposes, in order avoid double taxation, that the postwar tax rate corporate earnings be no more nor less than the normal rate individual incomes (which the committee places at from Is to 20 per cen and that this tax be regarded tax withheld by the cor poration behalf of it's stockholders. The commit tees aim is tax system under which all corporate earnings would come finally to be subjected to taxes just heavy and heavier than is placed upon all ether types of personal income. Among some of the important proposals of the committee in the interests fairness is allow all business to carry forward losses and apply them against subsequent earnings for period of six years, and to adopt some income averaging device to remove the inequty suffered by individuals who, for one reason or another, have fluctuating incomes from year to year.
 On so complex and controversial subject as taxes questions will necessarily be raised concerning some of the committees premises and proposals. $140000 100000 average national income Cat ls43 prces) in the years immediately after the war while possible seems unduy optimistic basis for cal ilatio can made for the method proposed by the commit for harmonizng corporation and personal income taxation, it has the disadvantage, which members of the committee themselves recognize that may raise the question once of penalty taxes on undis- tributed profits prevent undue accmuations. Yet it is almost impossible to frame legal definition of these that would be fair to all corporations and not discourage maximum industrial expansion Again though a strong in logic and equity can be made for the committees proposal eventually to treat capital gains and losses like other income provided the tax payer can average out this income well as his gains and losses the proposal involves administrative com pications would increase the violence of fluctua tions in Government revenues.
 The committees plan too lightly puts aside the case for sales taxes for existing excise taxes of the arguments used against these would be valid only if they being proposed in isolation and not, they are, simply as integral part ot total tax system including heavy progressive income taxes
 The question may be raised, indeed whether the C. E. D plan would not exempt from direct and even substantial indirect taxation large proportion of the countrys income and voters. Out of its expected Sl40O 100000 national the plan contemplates that the major part SIT 6000000O0 will consist of personal income not paying tax at all This would place an excessive economic burden on the remaining income which must pay the whole tax, at the same time it would tend politically to encourage eX- pendtures rather than economies.
 But all these questions and possible reservations
 merely point to the great inherent difficulties in the problem with which the c. E. D. research committee has attempted to grappe. The plan marks definite contribution to the subject. We are likely to have much better postwar tax plan than would have been possible if this and other thoughtful private studies had not been made.