Evening star., 1948-12-14

Analysis Of March IS
Returns Awaited Before
,sConeress Units Will Act
'sis- By Darid Laurence
While there has been a lot of talk
aBout an increase In taxes, 1t be-
gins to look now as If there will be
no tax legislation until April or May
Of next year.
This is because congressional COM
mittees will want to know something
shout the tax collections for the
year 194S and an overall picture
will not be possible until after the
March Is receipts from corporations
are available for analysis.
Senator George Of Georgia, DEM
ocrat, who is to be chairman Of the
sll-important Senate Finance Com
hiittee, limited while he was In
Washington the other day that he
did not think information on what
must be done about changes In the
tax laws would be at hand till
March or April. Something of the
same point OF view has been ex-
pressed by Representative Dough-
ton. Democrat, who is to be chair
man Of the Ways and Means Com
iiittee, which originates tax legisla-
ton In the House of Representatives.
s-if, therefore, Congress does not
act until the spring Of 1949, the
chances are that no retroactive
rates 30 far as individuals are con-
cerned will be applied for incomes
earned prior to July l, 1949. Con-
gress has not passed q retroactive
tax bill affecting individual rates
since the Ruml pay-as-you-go plan
was adopted q few years ago.
-Est
al, Tendency for Caution.
LAS for corporation taxes, these
Are not now on a current basis
anyway. New taxes imposed during
lS4s would not be payable until
March is, 1850. Most corporations,
M course, viii set aside out Of cur
rent earnings in 1949 the necessary
reserves to meet tax payments In
1850. As q practical matter. how
ever, In most smaller businesses,
corporation taxes are paid out Of
sims earned during the year In
which the taxes are due rather
than the preceding year.
when Congress discusses tax
changes, moreover. 1t will be con-
sidering the needs Of the fiscal
year which begins July 1, 1949 and
runs to June 80. 1850. This means
that, for all practical purposes,
Congress has the first six months Of
ls4s to consider and pass legislation
with which TO raise the revenues
needed for the fiscal year that be-
gins July 1, 1s4s.
Already there is o tendency to-
ward caution with respect to new
tax rates. For one thing there are
signs that companies will not earn
during 1949 the money they did IN
1s4s, and it hardly would be sound
for the Government to assume q
continuance Of 1s4S receipts in its
calculations for the fiscal year be-
ginning July /, 1949.
Thus far the estimates Of corpora
ton earnings for 1948 include the
paper profits due to the appraisal
Of goods on hand at prevailing
prices, which are higher. Of course,
than those at which the stocks were
originally bought. This. factor Is
complicatings the true picture Of
profits and tax rates. su. sro.
Likewise II an excess-pro1ts tax
% imposed, Il will Immediately force
layoffs In certain capital goods In
dustries which have been benenting
from the spending Of the profits OF
industries and businesses that have
heen using their funds for -expan-
SION In order to increase production.
~ Sole Test Of Any Rate.
High-level employment, which In
terests the Government from the
standpoint Of tax receipts as much
as it does labor, cannot be con-
tinued II any substantial curtail-
ment Of heavy goods industries is
forced on the national economy. 1t
was the breakdown in the capital
goods industries which started the
wave of depression years In the sos.
" The sole test of any new tax
rate is whether or not it will pro-
duce the desired revenue. If en-
ployment falls of, there will be q
loss to the Treasury through the
Individual tax rates. If business
activity is curtailed due to the
stoppage Of capital goods activity,
the corporation tax receipts will
fall Of, too.
The problem is how to balance
the budget without using the tax
rates to kill the goose that lays the
golden egg. It is probable that q
slight increase in corporation taxes
straight across the board will bring
In more revenue than an excess
profits tax and will do less damage
to business and employment, It
would appear that congressional
opinion, insofar as 1t is volunteered
Sriyately, leans at the moment more
In that direction than toward any
Of the extreme proposals for taxing
Of earnings.
apne thing seems sure-there isn't
going to be any stampede to write
q tax law. ALI interests concerned
win be heard in due time and all
economic factors will be weighed
by a Congress that will 90 before
The people about Is months after
THE. next tax bill becomes law.
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