Evening star., 1948-01-18

,aSONlQg peQluQ AQVOCaCy Oh SOAu8
~ needs the rich mans money In q
g Government taking more than halt
of any persons income "inhibits In
dividual effort SO severely as to
amount TO sitting 1t in most situa-
tions."
BY reducing higher surtaxes, hi
said, the Government stands te
gain, not lose revenues.
The Treasury, apparently feeling
it had to reply, recently issued 9
study of "The Tax Treatment o1
Earned Incomes" in which it ex-
amined the question of taxes re.
ducing incentive.
Offsetting the adverse effect ol
high taxes on incentive, according
to the Treasury, are considerations
based on the high demand for In.
come by many individuals who
desire to maintain relatively fixed
or even increasing levels of con-
sumption and saving! II taxes take
larger proportions Of their incomes
the incentives Of these individuals
to work tend to be increased rathe,
than decreased. They will try with.
in the limits Of their abilities, ener.
gies and opportunities to earn more
and maintain the desired income,
after taxes"
The study conceded, however
that there Is no doubt that thu
response Of some individuals to high
taxes is q reduction In effort.
MANS Proposed Scale
The National Association Of Man.
ufacturers Is advocating q tax revi.
sion which would start with a rat4
Of IL per cent instead of the present
10 per. cent and progress to a tor
rate. Of so per cent on taxable in.
comes in excess Of $100, 900. In addi.
ton it urges a couple Of measures
which would be beneficial to ths
white collar worker.
Don G. Mitchell, president o.
Sylvania Electric Products, Inc, ant
chairman Of the Taxation Commit.
tee Of the NAM, asserts the need o!
venture capital cannot be met, ex.
cept In small part, out of the say.
ings Of the low-income groups.
There are, in fact" he told thu
NAM at its convention last month
"only two sources from which We
may expect the bulk of the neces.
sary venture capital. These are re-
tanned corporate earnings and say.
ings from the middle and upper in
comes"
'Mr. Mitchell, citing Commerce
Department figures, says the de-
ficiency of capital formation since
1890 amounts to $125 900 900 600
However, not all Of this has to be
made up. For example, machine
tool which normally would be re-
placed after five years, but which
is used for 10 years need be replaced
by only one machine, not two.
President Truman in his state-of-
the-Union address to Congress saw
the need as not so great. He said
$50. 200, ,000,000 would be needed
"over the next few years."
Policy Is Challenged
Reverting to the MANS insistence
on tax cuts for the upper brackets
it should be recorded that such 9
policy has not by any means passed
unchallenged.
For instance, Stanley H. Rutten.
berg, assistant director of research
for the CIO, testifying before the
Senate Finance Committee at the
first session Of the Eightieth Con-
gress, quoted Business Week maga-
zine as saying that an answer to the
tax problem must be found in this
question: Should the tax system
be designed to encourage consump-
ton or to minimize restraints or
enterprise and new investment"
Mr.. Ruttenberg's answer was SIM
ply this: at does little good te
encourage such new investment If
the low-income individuals do not
have sufficient money to buy the
items thus produced" The guiding
principle of a sound tax program,
he said, must be first to reduce taxes
upon low Income individuals, GER
tainly not to lower taxes upon the
wealthy or on corporations.
Mr.. Truman concurred in the
argument that the low-income
groups need relief, recommending a
credit of $40 for each taxpayer and
an additional credit for each de-
pendent to offset the increase In
the living cost. And to make up for
this tax loss, estimated at $3,200,-
00O, 900, Mr.. Truman suggested that
corporations, can well afford to carry
heavier share of the tax load at
this time.
Would Help Corporations
This runs counter to the program
of the Committee for Economic De-
velopment. The CED did not urge
a ceiling of so per cent on individual
tax rates. It's long-range program
calls for an initial rate of lis per
cent instead of the present 10 per
cent, hitting the so per cent rate
at the $150,000 bracket and gradual
ing the scale on up to top of IT'S
per cent on incomes Of $1,000, 900
or more.
But the CED would provide more
relief for corporations and there is
a substantial body of opinion believ-
ing this would provide capital more
speedily. 1t would place the cor
poration tax rate at 80 per cent in
stead of 38 per cent and drop 1t to
Ills per cent when revenues permit.
1t also would alleviate the double
T. -