Evening star., 1949-01-18
American BANKRUPTCY
Held Possible Under
N% Payroll Taxes
Would Aid Communists
In Wreekins Stability,
Robertson Points Out

In Wreekins StobiIity,
Robertson Points Out
By David Laurence
Payroll taxes could conceivably
bankrupt America and do exactly
what the Communists want donl
to undermine American stability.
This in substance is the view ex.
pressed by Senator A. Willis Rob.
ertson Of Virginia, Democrat, in 9
speech just delivered.
Before there is a resort to force,
said Mr.. Robertson, I'VE may ex.
pect an all-out communistic effort
to wreck the democracies of the
world financially. In Europe that
effort takes the form of physical
sabotage Of economic rehabilitati ton
In this country it takes the form
Of creating discomfort, stimulating
demands for public spending which
are extravagant even though they
are not directly socianstic, and in
flltrating our national life by gov
ernment action and competition
which either is socialistic or which
inevitably will hamper individual
enterprise.
without impugning the motives
Of many Of those who are advo-
eating so-called social legislation
therefore, I think it may be in
order for us to examine the pos
sible effect on our way Of life OF
some current proposals"
Analyxed Proposals.
The Virginia Senator then ana.
lyzes the recommendations Of the
President for larger taxes on pay
rolls. He adds:
If the old age and survivors
insurance tax goes to- the predicted
So per cent and the unemployed
tax stays at 3 per cent and pro-
posed disability insurance plan costs
3.5 per cent, as estimated by the
Social Security Board, this amounts
to a combined rate of nearly 16
per cent on payrolls. To that must
be added the cost of whatever addi-
tional benefits are provided under
the old age and survivors insur-
ance program.
"At one hearing before the Ways
and Means Committee on the sub
ject some economists placed total
Of such payroll taxes at 20 per cent.
IF the tax should reach that rate
and with Mr.. Ewing's proposal that
the tax apply to incomes up to
$4,000, the half paid by employees
would 60 as high as $40 month in
addition to all other taxes"
MIR. Robertson said that before
embarking on any such program
Congress should determine whether
or not the people of the Nation
can finance 1t without ultimate
socialization Of our economy"
Most important of all, Of course,
Is the impact Of the payroll taxes
on prices and on the costs Of pro-
duction. The assumption that pay
roll taxes can be added without
hurting the economic system Is IA
lacious. Senator Robertson makes
the point this way:
Increased taxes on business have
been proposed on incomes as we'll
as payrolls. The imposition of pay
roll taxes has a three-way effect:
"(D In adding to the cost OF pro-
duction they will reduce the level
of profit when the present sellers
market turns to q buyers market,
as eventually 1t will.
"(2) They increase the cost Of the
finished item to the consumer and
tend to nullify other efforts to
reduce the high cost of living.
"(3) Payroll taxes are charged as
a cost Of doing business and are de-
Quoted from gross income before
computing the net taxable income
and thus reduce the Governments
income-tax revenue, each $1,000,-
000, 900 Of such taxes resulting in a
loss Of about $500, 900 900 in income
taxes"
Points to Britain.
The Virginia Senator referred in
this connection significantly to the
socialism Of Great Britain when he
said:
"The United Kingdom now owns
fifth Of all industry of Great Britain.
The British injection of socialism
into its private enterprise system
has recently been extended to the
field of medical care. If it takes a
British patient as long to get well
in q government hospital as it does
in this country, the plan Is going to
be expensive. Recent statistics in
this country show that the average
patient spends 80 days in a Federal
hospital but only seven days In a
private hospital"
The whole problem of payroll
taxes will become one OF the most
controversial issues of the present
session of Congress. The expense
of social-welfare legislation has been
enormously figured on a one-year
basis. But the progressive increases
required in future years may we'll
bring serious question concerning
the integrity Of the dollar. Its pur-
chasing power will be more and
more devalued If the taxing power
from social-welfare legislation is
stretched to the limit while the
$252, 900 900, 900 national debt re-
mains virtually unchanged for an
indefinite period of time. 1t seems
utterly unlikely that America can
pay 20 per cent of all payrons for
social welfare and pay other taxes
high enough to yield a surplus over
expenses to pay off the national debt.
Besides, there is evidently no serious
intention to limit or reduce future
expenses.
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