Evening star., 1944-07-24
RumI and Some Urqe
Postwar Tax Slash
In Planning Report

III RAINING kep0n
Reduced taxes to stimulate
purchasing power, and a public
works program designed to take
up the slack in periods of low
employment are proposed in a
report on postwar economy made
public today by the National
Planning Association.
Prepared by Beardsley Ruml
treasurer of r. H. Macy & Co, and
H. Christian Some, president of
Amsinck, Some g. Co., the report
embodies recommendation for a
national fiscal, monetary and tax
program, aimed at maintaining high
postwar employment under private
enterprise, while providing reliable
money system, banking structure
and credit mechanism.
Leon Henderson, former head of
the Office of Price Administration,
who now is identified with the Re-
search Institute of America, collab-
Grated on section of the report
dealing with the administration of
such policy.
Balanced Budget Proposed.
The report does not contemplate
the need for permanent budget
deficits, but proposes public debt
retirement in periods of overeXpan-
sion of private business activity. A
balanced budget is recommended at
some agreed on level of high en-
ployment and production and, for
the purposes of discussion, the au-
thors of the report start with an
arbitrary figure of 55,000,000 en-
ployed persons in the year "194x"
producing-in 40-hour week
$40, 600, 100000 income on the basis
of 1943 prices. They suggest the
amortization of the national debt
when this level is exceeded
The budget would be balanced at
$4,000, 100000 To care for such an
expenditure. the Ruml- Some report
would rely principally on a grad
uated, progressive individual in
come tax to raise $4,000 900, ,OO0-
as compared with the present in
divldual tax load of $1,000, 900 900.
Federal income taxes on corpora
tions which now produce approx
mately 00O0O0,0O0 would be
abolished and replaced by a fran
chise tax of 5 per cent which would
represent the value of doing busi-
ness in corporate form" The tax
on franchise and retained earnings
is calculated to produce $1,000
100000.
Budget is Outlined.
The report outlines this budget
"in an early postwar year, but after
substantial progress in reconver-
sion,' as follows:
Expenditures Tin billions,-Inter-
est on public debt. SIS, military and
naval, so, veterans, 20; unallocated
and miscellaneous, Is; agriculture,
10, all other Government expenses,
20; foreign reconstruction and de-
velopment loans. 10.
ReCeiptS-Individua income tax.
13,0 eXcises, 80; corporation fran
chise an dretained earnings. 10:
estate and gift. 0.5, and tariff and
miscellaneous, 05.
Abolition of the corporation in
come tax, the report holds, will tend
to lower prices, increase wages. do
away with double taxation, encourage
the distribution of earnings as divi-
dendS, and do away with the dis
tortion by tax considerations of
business judgment"
Income Tax Suggestions.
The individual income tax would
be assessed after $500 exemption
for each taxpayer and each depen-
dent, and normal tax rates would
begin at Is per cent on net income.
and scale to ceiling of so per cent
on all net income of S250OOO and
over.
No general sales tax is proposed.
but eXciSes would be retained on
liquor, tobacco and perhaps gaso-
line. The other excise taxes would
be dropped Revision of social Sc
curity taxation is proposed to stop
building reserves in times of under
employment
Federal and State taxation on
their respective obligations would
be done away with. The capital
gains tax would be retained in it's
present form for the time being.
Careful Spending Urged.
As to public disbursements, the
authors say that the Federal Gov
ernment should not spend merely
for the sake of spending or the Gre
alton Of purchasing power in gen.
eral. All spending should express
agreed public policy with respect to
the objective for which the expendi-
ture is made.
The report holds that it is not
practicable to provide high level of
employment solely through public
works, and says that spending on
such items as public construction,
and conservation and Federal lend
ing should be timed to periods of
@'W CIilplOS illCilG III VI OSI W lldSISll
expansion to high employment.
The acceleration of such op-
tional items should not be permit
ted to raise the level of regular
budget disbursements and should
disappear with high employment" ="
the report says.
Investment Spur Urged.
Fiscal and monetary policy must
be co-ordinated, the report holds,
and both should be prepared to COM
bat postwar inflationary tendencies
and to cushion any later trend
toward 4 relapse If there are signs
of an infiationary postwar boom,
the report adds, continuation of
some of the wartime controls. such
as regulation of consumer credit and
the rationing of scarce goods, prob
ably would be called for.
The report emphasizes also that
there must be spur to investment
that venture capital must be en-
couraged, and it suggests as one
approach that the Securities Act be
modified, not with the view "of
changing its underlying principles,
but of facilitating issues and reduc-