The CED Tax Scheme

...sre notsbly reticent...

...The decision to shift this load upon the lower incomes was a logical necessity of the theory which they adopted...

...The combined effect of the rste reduction on high incomes and the substitution of a withholding tax of 20 per cent for corporate tares will accordingly be twofold...

...grasp, on the ether hand, fat a solid phalanx tisapssas1 of prsfeaaars aad businessmen, all of whom, without a single dissenting voice, stead solidly hack of the view that a reduction of taxes on the wealthy ia a condition precedent to prosperity...

...A. P. I.erner of the New School of Social Research, is discussing bssic economic issues of the day in terms that will be intelligible to the layman...

...In om way it really seems unfortunate that the C.E.D., so anxious to art in the public intereat, ahould have dived down deep into research, statistics and theory snd come up with this self-serving gospel ss ths road to national sulration...

...without that hypothesis it would be necessary to explain the program before us on quite other grounds...

...The Fortune group wm not snanimoas...

...There fat no private interest of the Federal government that conflicts with the general interest of society...

...We suggest resders clip these short articles snd save them...

...that it haa followed the lacaaUve tax phlaeoophy exsjoaadsd by Prof...

...We might try asking oar neighbor to adjust his rate of spending...

...Individuals and business corporations can do this too...

...In a period of Ive years, no doubt, much has been learned about this subject and many new arguments and additional data must have been found te Issues such unanimity of opinion...

...In fsct thst is why we hsve s Federal government—-to look after matters thst concern everybody and are not merely the affair of some individual or sora* group or some region in our society...

...Harold U. Greeea ha hot bsmk /VeeWann, Jtko mnd rexes, paOhaaod earlier this year aaeWr its auspices...

...They will form a useful primer of modern economics...

...Similarly, if in time of depression we ask our neighbor to spend ¦ more in order to create prosperity, he will give us the same raspberry he gsve Herbert Hoover...

...1. ik* Umwmri tm* C—mtttsa gives some of the gnragreusd ef ito plsaa, exnlaiaiae...

...benefit of postwar profiteers Who will gain from;war created scarcities...

...It is of course possible for governments to vary their spending without changing their taxes,"by covering the differences through increasing or decreasing their debts...

...to en-roaraga employment by increasing, the incentives of the rick it really begs the question to shew, in eriti-risus of their progress, that it is fervors ble to this group...

...Although the excess profits tax rste might be reduced to a level which will step waste it should not be repealed at this time for tin...

...That a plan more favorable to the small man was not devised must therefore be attributed to the theory that additional incentives for the wealthy were the means of attaining prosperity...

...In view sf the svowed purpose of the C.E.D...

...I say reticent rather than inadequate or wrong 'because these plans, although they assert this relation, make practically no effort to demonstrate the causal nexus...

...He hasn't any money to spend...

...My giving this group a larger prospective share of postwar income, it is argued, they will be stimulated to provide jobs for all...

...estimates thst ordinary postwar ex pen ditures (making no allowance for social security, relief, public works or W.P.A...

...tiaas differ fttnm thone of the put hocanae they treat Uxea as a part of employment policy, nod it te tree that ha puhlli opinion as well as is economic asslysis am advasce hss recently keen made in the theory of fiscal policy in relstisn te output and ampWy meat...

...Stste and local governments.are In exactly the same posit . Within limits they can increase their spending by increasing the taxes, or they can decrease their spending while decreasing the taxes...

...The cut proposed, hswever, greatly favors the high inromr groups becsuse the C.K.D...

...T *HE major objection to the C.E.D...

...assss of these gMstisnsI botk th* philosophy underlying th* tax prspsaals aad their practical effect...

...But this is of little use because the taxpayer will be made to spend less when the government spends more (by taking it from him in taxes) and he will spend more when the government spends less (by reducing his tsxes) thus cancelling most of the effect on the total rate of spending...

...If it is hsrd to buy goods at reasonable prices, because the demand is greater than the supply, and prices soar, we know that there is too much spending, and we have inflation —or, the ratt of spending it too high...

...1 N Walter A. Morton ss Prsfeeaar of Iiiiisw at the IJMverssty ef Win n I Ms ks th* aatssw of a am i rase Masties asrlnamg a hook •*> Brisks* Inane* in th* postwar years...

...Or if he has some, he will hold it back for more stormy days...

...This is the second note...

...lads that a reduction to a little below th* IMP level weald stimulate pros peri tyr This argument sssass tinged with expediency far if rates were already te* high in IMP why will a reduction te that level now hav* sack bcmeficial reonlts...

...This is the second basic principle of full employment...

...to be consistent with this theory, they had no alternative but to do what has been done...

...When total spending is too high, we could ask, "why don't you spend less snd check inflation''" But he would not stay even to thumb his nose...

...will be about twenty billions sssuslly, thus enabling the budget to be balanced by catting present taxrtion in half...

...Wa have been toad quite of tea recently that present la...

...It is furthermore inaccurate historically to say that tax reductions ia the past were divorced from economic policy . One need only recsll the Mellon plan of'the Coslidge ers...

...ThR C.E.D...

...Fortunately, the Federal govrrament is ia a different position aad can help...

...Sons* of th* Fortune green believed that a reduction in the rates on high Ineiasas existing at that these would stimulsts knslniss...

...During Am war all rates have been raised, aad now the C.E.D...

...Qual distribution of Income: their danger is gthat instead of putting hoarded money back into circulation, t*«se proposals will increase the boards, and slow...

...That theory, however, hss led te conclusions quite esotrary to shoes arrived at by the (.ED...

...Yet in their puMishsd work, the C.E.D...

...This exclusion, «.ik« It has tan mmmtA is iu design to get • aclled h swings* 8Pb*Im umd ¦ peaitiv* program, kM nMiuni in • eertaia kcmibseee to their interests...

...Now that we have established the context of these two phrases, let us see what we can do about it...

...it is rather the occasion for business leadership to assume s responsibility commensurate with its great power...

...And we ourselves might try to get there first...

...The high income groups are aided by the repeal of corporate income snd excess profits taxes, and by a reduction in the rates on- the high brackets...

...has not adduced much evidence, argument or data te show that the tax policy they advocate will do what is claimed for it...

...On the contrary they appear to take this connection for granted, treating it as a self-evident truth, rather thsn ss s postulate which must be proved...

...Rich with the profits of wsr, this is not ths time to seek special privileges st the expense of the small business msn snd the ordinary citizen...

...If it is hard to sell goods at reasonsble prices, so thst business is bad and unemployment is high, we know this is so because people sre not spending enough -or, Ike rate of spending it loo low...

...Repeal of corporate taxation would destroy one ef the basic controls over monopoly power...

...He would rush over to the stores to get the goods he needs before someone else hss gotten them or before prices hsve gone sny higher...

...and its economists believe thst the present high rates are detrimental to the incentives of the wealthy, and hence conducive to unemployment...

...in that It hss tended to Justify the New Deal program of distributing purchasing power widely among the pop alalias, instead ef the previous conservative doctrine of increasing the wealth of the few snd hoping that their prosperity will percolate down te the masses...

...Wheress the immediate beneficiaries of the repeal of corporate taxes would be the holders of equity securities and •teck speculstors, the ultimate beneficiaries would be practically all of those in the high income brackets...

...In the next article we shall consider what measures the Federal government can take...

...There is, however, * dfference in the area of agreement between the two groups of thinkers...

...Similsr proposals have been heard since th* Ferttmi Mound TaMs in May IMP...

...f kig hamasM, tkwugh ito appeal to the general mtWic it tM chains that It win premises postwar job...

...it will reduce the total taxes said out of profits and rut the burden of the big taxpayer, making it necessary to increase the share of taxes paid out of wages and salaries, and by the small taxpayer...

...Although the titles of the plans lead one to look for a detailed presentation of the theory of employment, one finds that Groves devotes barely one page of his book to this problem, and the C.E.D...

...Anyone will arkaowledge, for example, that a plan could have been devised which sit hough removing corporate tsxes might hnve raised the same revenues from personal income tsxes on the higher braeketa...

...For messures to keep the total rsts of spending st the right level we must look elsewhere...

...V-__¦ _t down the industrial process, making Isrge scale deficit Inaneing s permanent necessity rather than s teen porary expedient...

...proposals is that th'y are a resurgence of the Mellon ism of the 1920's, ¦ben what is needed is further emphasis upon a more...

...By Abba P. Lerner The first principle of full employment is that the total rate at which money is being spent on all goods and services must be neither too low nor too high...

...The crucial question is therefore on the esussl rels-tion between this tsx policy snd employment, and on this issue the writings of the C.E.D...

...The professed defense of this policy thst it abolishes doahls taxation of corporate income seglects the fast, ¦»( Mt income alone but the possession of property is an indication of ability to pay...

...If that too should fail an, ws csa d* nothing but wait for ialatiams and depressions to come to their own natural ead—if that akembi happen before they bring Mr whole civilization to an unnatural sad...

...Jobs and Dollars Full Employment—Second Lesson (In this series of non-technical notes, Prof...

...Th* ¦miging tax prwgrass nnii^intly smbedieg the de-gfr...

...and that if the burden fas lifted from property income, it must be home by that derived from other soarres...

...Indeed they seem to agree °nly upon om thing: that reduction of Uses on them-•elves would be a splendid thing...

...The Federal government represents all */ as sad must consider the welfare of ths economy at s whole...

...snd the full dinner pail argument for the protective tariff in Mark Hanna's day...

...A prsvisejs article by ham em asp sets of tax pfcuss by Big em sanies MPeeeod ha The Mow Usdor *f Angsmt M, 1*44, memos th* hss sang fas ins—tine Tax Aifiimsn...

...We cannot rely en private individuals to correct an excess or deficiency in total spending...

...THERE is snly om piece left te leak the Federal government...

...It is stated rather positively thst the corporate Ux * more repressive than individual income taxes, but businessmen themselves, in a recent survey, are in •aubt about this view...

...Businessmen too have private reasons for the rate at which they spend money...

...But such s plan, the C.E.D...

...Bars assertion by the C.E.D...

...Mass unemployment is sorb a terrible Bods) scourge that m om, I feel sure, wsssd spars any tax plan which gave reasonable promise ef creating psstwsr prosperity...

...That is why the Federal government, and only the Federal government, can be expected to take the necessary measures to keep the rate of spending st the right level to avoid both depression snd inflation...

...The repeal of corporate taxes, while ostensibly benefitting ail stockholders big and small, is especislly helpful to the big taxpayers because they receive the bulk of all dividends...

...But we cannot expect individuals or businesses or Stste or local governments to depart from the principles of privets prudence snd, solvency...

...Even If the manager of a business were inclined to help, he could not sscriflee ii)i proms oi ma aiocunoiuers in sucn Sltruistic projects...

...If indeed s new gospel is needed by big business today, it is not the gospel of incentives but the gospel of duty...

...the reduction of tsxes on high incomes by Hoover sod Mellon when the Crest Depression broke upon us...

...It to SI) which appear mors like th* repetition of a faith in their idas than an excursion into economic snalysis sen TmE C.ED, plan is by no mesas estirsly new...

...Experience, on the Bt*er hand, shows that employment is furthered by a wide distribution of income in the hands of our e*tisene who spend far consumption, build homes with tkstr savings, or (in the postwar period) mix their •*» labor and initiative to promote the service Industries...

...theorists believed, would raise th* marginal rates on the high incomes to levels which would ssake risk-taking unattractive...

...aix pages (p...

...of its hope, intention aad desire to create Jobs, moreover, is not proof thst the tsx plan proposed will have this consequence...

...The CED Tax Scheme By Walter A. Morton WhKN Mm CwiiiKil ft* ffrMaaaic Iv»veW.»«,t ««, organised IfMir «f Mm nations leading business .HraU)*, ksbwr, s^btuituro sad th* public were ds-iPjsrsMly mdmi»i turn Ms iimiIi...

...Would it net have added to th* value of their presentation if they, like the Fortune groupt could have had even a single dissenter in their midst: just om John the Baptist to prepare the wsy for mot* liberal ideas, just om Apoatle to the Gentiles who preached to them the doctrine of high taxes end social responsibility even though it might not have been welcome to their Mrs...

...The C.E.D...