The potters herald. [volume] (East Liverpool, Ohio) 1899-1982, 1950-03-02
Sales Tax Repeal
Would Mean
Big Price Cuts

| Washington LPA)-The possi-
bility of billions Of dollars in price
cuts for consumers-the first since
the war-has resulted from a
Swelling demand on Congress for
repeal Of the wartime excise or
sales taxes.
The movement gained real head
way after committee Of business
men and Leon Henderson appealed
to the House Ways and Means
committee for immediate repeal of
all the wartime sales taxes except
those on cigarettes, liquor and
beer.
Henderson and the businessmen
who employ him testified that re-
peal of the taxes would increase
jobs, payrolls, and business, and
help to reach President Truman's
goal of $500 billion economy by
1855.
Closely questioned by the com
mittee, Henderson estimated that
if the $2.2 billion in taxes were re-
pealed, 80 per cent Of the benefit
would be passed on to consumers,
making a direct cut in prices of
about So billion. In addition, he
said, other price cuts would prob
lably result from lower freight
rates, lower communication rates,
and in similar ways.
The testimony of Henderson and
the businessmen made a tremen-
dous impression on the committee.
Chairman Robert l.. Doughton Cd,
NC) became more excited than he |
has been since Henderson testified
before the committee nine years |
ago as Price Administrator to get
the taxes imposed. He interrupted
the witness so constantly with
steady stream of questions that
Henderson had difficulty testify
ing.
Doughton's big fear was that re-
peal of the taxes would add an
other So billion to a deficit already
estimated at $5 billion. Henderson
sharply challenged that, contend
ing that:
l. The deficit is not really $5
billion, but not more than So bill
ion, because about So billion is in
loans that will be repaid.
2. Repeal of the excise taxes
would bring in additional revenue
of S440 million from increased in
come taxes, increased taxes of $287
million on profits of corporations
resulting from expanded sales of
the cheaper commodities, and other
business.
8. Savings of $50 million would :
be made in unemployment benefits.
a. The government would savel
$50 million in its own purchases.
S. Increased corporate taxes of T
1914 million would be realized by |
the savings in costs to business in
freight charges, etc.
6. In total, the offsets to the
government against the loss of $2.2 |
billion in revenue would amount to
almost $12 billion.
Henderson emphasized that he
had urged imposition of the taxes
Turing wartime as an economic
measure to cut the use of scarce
wartime commodities and that con-
,inuation of those taxes today was
IN unjust discrimination against
he workers, the stockholders, and
everyone else connected with those
n industries. III
He warned that the taxes were
utting consumption of those COM
seriously, resulting in
Widespread unemployment. These
Henderson said, employ II
10000 workers. These workers
lave Jared worse since the war
han workers in other industries.
While other employment has risen,
t has dropped by six per cent in
he industries hit by the sales tax.
n 1S of the industries, employment
as dropped by 10 per cent in two
ears.
While employment as whole
as increased by two million since
he beginning of 1947, Henderson
aid, 10000 jobs have evaporated
4 the taxed industries. Every one
f the specially taxed industries
ired less workers in 1948 and
949 than in 1947. II
Contending that his industries
,anted to hire more workers and
O more business, Henderson said:
I'VE see the possibility to gain
II billion more business, which I
!, a modest gain of five per cent,
nd to pay 81 billion more for in
reased employment. We're for this II
Expanding economy we hear so
luch about-we can expand by the n
pproved route of lowered prices. :
nd if we reduce our prices, many
our competitors will be forced to
sduce theirs, which would be
ealthy for an expanding economy, m
,o."
Rep. Carroll Cd, Colo.) asked for
,surance that repeal of the taxes
ould not be used to provide a
for business" instead of NJ
rice cuts. He pointed out that in U
lstry had promised lower prices