Evening star., 1963-04-30
Cut in Taxes Necessary
To Continue Upswing
By SYLVIA PORTER

~ ~ ~ Wv ~N~
financial centers. there is rising
confusion about the timing as
well as the details of the ad-
ministration's tax reduction
reform program-the White
Houses primary legislative tar
get for 1868.
The situation was confused
enough before the economy be-
gan to perk up. From the start,
the Presidents reform propos-
ais were poisonous" and most
of them are dead. His submis-
sion Of q multi-billion dollar
hike in spending along with q
substantial tax reduction pro-
gram has aroused concern about
our record Of budget deficits.
Now comes this economic re-
bound.
Business Is raising its plans
to invest in new factories and
equipment and the lag in this
vital area of spending has been
a key explanation for our eco
nomic sluggishness since 1857.
Consumers are spending freely
for goods and non-goods and
every new survey emphasizes
they intend to continue. AS the
economy enters its 9th month
of advance, 1t is gaining re-
newed vigor.
Why. then. in the face Of
certain budget deficits and an
increasing public debt, should
Congress vote tax reductions
for individuals and corpora
tons? Here are four basic rea-
sons why:
Cd Despite the fact that busi-
ness is increasing its invest
ments in new plants and equip
ment, the record $40.1 billion
total just projected by McGraw-
Hill for 1868 still is short" for
what it should be II we are to
keep our industries fully COM
petitive. Instead Of running
around z per cent Of our gross
national product. Douglas
Greenwald, McGraw-Hill's chief
economist, figures it should be
around 712 per cent - which
would raise the 1868 total to
$44 billion and greatly spur our
economy's growth. Businessmen
admit that over 81 billion of
their 1963-64 spending directly
results from the investment in
centives they were given last
year in the form of liberalized
depreciation rules and q tax
credit against purchases Of new
plants and equipment. Now tax
cuts would keep them increas-
ing their investments.
(2) Good as the economy's
performance is. 1t still is not
good enough to cut into our
unemployment rate and idle
plant capacity. Consumers will
boost their buying of goods If
more dollars are left in their
pockets. Corporations will boost
their investment in plants If
their sales to consumers in
crease and more dollars are left
in their cash registers. A con-
tinuing upturn after 26
months Of advance Is hearten-
ing. but the pace still Is not
strong enough.
90 Our tax structure is OBJ
solete. geared to war and infla-
ton rather than today's reali-
ties. Were we in q recession, the
cuts would be urgent. As it is.
Congress can vote q program
with elaboration and move us
into a period Of sustained up
turn.
"a Expectation Of tax re-
ductions has been a factor in
improving confidence. Shelving
the program could jolt conf
dence and curtail this new up
swing.
The fundamental argument for
tax reduction always has been
that it is needed to spur our
growth. create enough profits
and paychecks to provide the
taxes to bring the budget into
balance. The argument is as
valid today as ever.
Distributed, 1868, BY the Hall Syndi-
cate, Inc; AL Rights Reserved