Evening star., 1947-05-30
On the Record
Tax Reform Needed
More Than Reduction
Proposed Cuts Fail to Recognize Two
Main Sources of Income
By Dorothy Thombson

II seems to me that what we need Is not so
much income-tax reduction as reform The
proposed reductions do not recognize that there
are two main sources OF income derived In diff
ferent ways, and that the taxing of the one at
the present level is more unjust than the tax
ing OF the other. refer to the difference be-
tween income earned by the expenditure Of
personal effort-for salary or fee-and In
vestment income.
Mr.. Harry Silverson, until recently q naem-
Der OF the Committee on Taxation Of the New
York Bar Association. explained this difference
In testifying before the Senate Finance Com.
mittee. He pointed out that today the person
whose only income Is the sale Of his services
IS in position where he can neither provide
for his old age nor for his dependents In the
event OF his death. We are, therefore, creating
social Insecurity and dependency that bodies Ill
for our democracy.
Businessman's Position.
The businessman Is In q better position than
the man in professional or salaried career.
Despite steep surtax rates, the businessman
operating through q corporation-can set asids
enough In productive years to meet his later
requirements. He need draw only enough from
the business to cover living expenses and per-
sonal income tax thereon. Other businessmens
only If they are more than $4,000 in excess Of
their salaries
successful business increases in worth The
death of the owner does not remove the source
Of income for his family, who may operate or
sell 1t.
The businessman can also establish a pen.
sion trust for all employees including himself.
His accumulation in the pension fund is tax
able only when the pension is drawn.
Such worthy measures of protection are not
available to the salaried or professional man.
What such an Garner pays is capital levy rather
than income tax.
Incentive to Work
Mr. Silverson asked why some equivalent to
the pension fund provisions of our tax law
cannot be established for these earners He
suggested that every taxpayer, not otherwise
cared for should be permitted to set aside an
nually out OF his net earned income fixed
percentage to be invested only in special type
OF nonassignable low interest or noninterest-
bearing United States Government bond This
would be available to him only in emergency, on
retirement, or to his heirs at his DEATH Only
then he or they would pay taxes on 1t.
This would stimulate incentive to work, en-
courage early retirement, provide real social
security instead of relief, reduce the amount
annually required for interest charges on the
public debt distribute ownership Of it more
widely. stabilize tax receipts by shifting por-
ton of collections from peak years to depressed
ones. and supply reservoir of purchasing
power In bad years while absorbing excess
spending power in inflationary times.
Thrift again would be an American virtue
II any possibility were given for It's exercise.
At present the salaried or professional man
has to 60 on until he drops dead of overwork,
fearing even that release because when his
earning power stops his family can starvs
Released BY the Bell Syndicate Ine)