Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-12-05
Professor Asks
Tax Shift Power
For president
By J. A. O'LEARY

standby authority to lower or
raise taxes quickly. as changing
business conditions require. was
suggested to a congressional
committee today by Prof. Ever
ett E. Hagen, Of Massachusetts,
Institute of Technology.
One of the opening witnesses
before q Joint Economic Subcom-
|mittee studying the relationship
Iof tax policy to general economic
conditions, Prof. Hagen conceded
his proposal is unprecedented.
AS an alternative. he proposed
that Congress could retain the
power to trigger the tax changes
by passage of a joint resolution
after having established in ad-
vance the level of unemployment
and business activity which
would make tax changes advis-
able. He emphasized the i'm
|portant thing is to be ready to
move quickly if economic con-
|ditions change.
Prof. Hagen said the trigger
for tax cuts should be pulled If
unemployment reached as mil
lion for three months, or If the
rate of residential construction
plus business expenditures on
plant and equipment dropped by
IS billion.
Another Fav0rs Earlier Relief
Prof. Alvin Hansen of Harvard
told the subcommittee he thinks
the tax relief should come much
earlier than when the number of
unemployed reach As million.
He pointed out that would be an
unemployment rate of z per cent,
and said by that time forces
might be at work in the economy
which would run the unemploy-
ment to 10 per cent before the
tax relief could take effect.
Gerhard COIN, chief economist
of the national planning associa-
ton. also recommended that
Congress prepare a tax reduction
program for use when economic
conditions require 1t, but saw no
need for immediate tax cuts,
which some members of Congress
are preparing to advocate in
January.
If present favorable economic
conditions continue" said Mr..
Colin. present tax rates should
give us an approximately bal
anced administrative budget and
a substantial excess Of receipts
over payments in the CONSOLE
dated cash budget in 1857. Even
though a balanced budget is in
sight. however. I would recon-
mend immediate tax reduction
only If I were convinced that
economic activities are faltering
and that an immediate support
of purchasing power by tax re-
duction is needed. At the pres
ent moment ! can see no such
need"
Mr.. Colin said, however, that
looking over a period of four or
five years he would guess that
a tax cut Of IS or So billion may
be possible and advisable for
supporting sustained economic
growth.
Other Witnesses Heard
Other witnesses at The opening
session we're:
Donald B. Woodward of the Wick
Chemical Co.. who listed three
aspects of taxation which are
important to economic growth.
They were encouragement to
American business investment
abroad through special tax rates,
facilitating efficient corporate
operation. and removal Of pen
alties on the saving process he
said have crept into the tax
structure.
Edwin B. George Of Dun &
Bradstreet. Inc. who said there
are inequities at every point of
the scale in the present tax struc-
|ture. He proposed a seven-point
package plan for improvement.
His first recommendation was
heavier reliance on personal in
come and estate taxes with re-
duction of excise levies and inte-
grafton Of the corporate and per-
sonal income levies. He explained
however, he would oppose this
first recommendation unless
other proposals in the package
also were adopted.
His other proposals included
income tax withholding on divi-
dends, income averaging, carry
over Of unused exemptions and
reductions, cuts in the high
brackets and corporation rates.
and heavier taxation Of capital
gains. He also proposed ex-
tension of the corporate tax
carryback to five years, a re-