Evening star., 1947-06-19

may be for this impression, the
Presidents message plainly says
that tax reduction now Is wrong
because the added money, In the
hands of the citizens would increase
prices through stimulated demand
for products In short supply. He
intimates that II the country faced
a recession or defiation, he would
feel differently.
Many economists have been pre-
dieting q, recession for the second
half of this year. They may be
proved wrong as to the time Of its
occurrence, because. President Tru-
man has set In motion the biggest
single infiationary influence since
the war--the use OF Government
funds to bolster the European
economy. This has its effect In
forcing upward the prices Of goods
in demand.
Export Trade Booming.
Americas export trade, largely
supported by United States Govern
ment funds, Is booming and prices
here are kept high by the ex-i
traordinary world demand. Unless
those markets are maintained
through more Government money,
they are in danger OF collapse
and II the collapse comes, 1t will
not be called a recession, but q
depression"
. Mr.. Truman has failed to grasp
The significance of the infiationary
action of his own administration
and he has brough out no practical
plan to revive world trade on a
sound basis. He says that there
are 5000 000, ,000. 900 of liquid funds
in Americas corporations and
among thrifty individuals. Such a
sum could make an excellent reser-
voir for loans to finance an expand
ing world trade. But these loans
should be properly secured. II they
are not to be paid back and the Gov
ernment is to give away the money
then they should be called grants.
The Congress will never approve
grants in any large amounts.
This means, therefore, that the
administration must bring forth q
plan that, will encourage private in
vestment in world markets. Perhaps
the American Government may be
willing to guarantee the interest on
the debentureS of the World Bank.
Perhaps some other plan to attract
investors will be devised. But GER
tainly If the loans are not sound for
private investors, they should not be
voted as loans by Congress either /
s5 Veto Leaves Bitterness.
Mr.. Truman has left lot of Bit
terness and resentment In the wake
of his veto. He missed a chance toI
place the world situation In true
perspective. Instead he resorted tol
the maneuvers of the politician and
the demagogue. Reaction to his
message will grow. Here, for example,
Is letter written to Chairman Mil
likin of the Senate Finance Com
mittee by Harold Koch. an able
economist. Mr.. Koch, who sent aI
copy of his letter to this correspond
ent, writes:
Il can only feel shame that the
respect for the presidency of the
United States has fallen so low that
the incumbent in vetoing the indi-
vidual income tax reduction act OF
1947 bill can say that the (average)
family earning $2,500 would receive
an increase of only IL per cent In
take home pay
THE Presidents figures are evi-
IDENTIFY taken from the Senate FL
nance Committee reports table for a
married person with two depend
ents. Such person, having four
exemptions and net income of
50 500, would be taxed sos under cur
rent law. while under the conference
bill he would be taxed for years
after 194D $66.50, which is a savings
Of $3.50, or exactly 30 per cent, even
if less than $50 as the veto mes
sage also stated.
Assuming that the net income
of s2,500 is the gross income, the
increase in take home pay is little
less than l.2 per cent, forgetting
other deductions. But the shame
fully misleading nature of the ex-
ample used lies in the fact that,
making the same assumptions as
above, the man under current law
Is paying only SOS out of an income
Of s2,500, or less than 4 per cent.
In other words, his take home
pay already is over 96 per cent. If
the Congress were to pass bill ex-
empting this average family from
income tax entirely, the increase inl
his take home pay over that under
current law would only be about a
per cent, small percentage at
which one could just as readily
sneer." e... ..
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