| Show Business in the Picture By PRESTON GROVER GROVER GROVER- WASHINGTON The The shift In congressional attitude toward business is well illustrated by the eagerness of a senate tax committee committee com corn to listen to plans for coddling business instead of punishing punishing punishing pun pun- it Two years ago the undistributed profits tax was enacted as a combination combination com corn punishment and reform measure It was WM argued that big corporations were piling up excessive excessive ex ex- idle reserves instead of paying them out in wages and dividends which would swell consuming consuming consuming con con- suming power and increase taxable taxable taxable tax tax- able income So a tax was imposed imposed im im- Irn- Irn posed on earnings kept in corporate corporate corporate cor cor- reserves to compel a corporation corporation corporation cor cor- either to pay taxes at once or pay payout out extra wages and dividends which could be taxed in the regular income brackets Corporations protested that the law penalized thrifty managers saving against a rainy day and at the same time made it impossible impossible impossible sible to s save ve money for plant expansion and improvement So many complaints were made that last year it was almost wiped out by the simple device of reducing the tax virtually to nothing Seek Step Out Spurs Now a special senate committee Is learning from experts how to apply taxation to encourage business business business busi busi- ness to step out with new vigor They talk of incentive taxation to encourage such things as plant expansion and modernization as aswell aswell aswell well as to encourage such work work- er-benefit er programs as profit sharing and pension trusts Just where it will wind up Is something else again but the situation situation sit sU- contrasts significantly with the sock em attitude of 1936 Alfred P. P Sloan Jr chairman of the General Motors corporation told the committee that a blanket reduction of taxes would be the greatest piece of incentive he could think of in that line Incidentally Incidentally Incidentally Inci Inci- dentally that has been the theme song of most of the industrialists appearing before the committee Throughout the first and second depressions the greatest sluggishness sluggish sluggish- ness has been felt in the capital goods industry industry among among the machinery machinery ma machinery chinery makers and the tool makers makers makers mak mak- ers the very ones who would first be put to work if j of consumer goods began demanding new equipment Already a basketful of incentive incentive incentive tive tax methods have been pro pro- posed Sloan suggested a tax re reward reward reward re- re ward to companies installing new and more efficient equipment Americas production plant is obsolete as measured by today's technology he told the commit commit- tee Today the tax structure and its administration tend to discourage age the substitution of the new for the old Installing new equipment not only would stimulate the capital goods industry producing the equipment he said but would help the plants which bought it to lower costs of manufacturing c consumer goods Thus at one blow purchasing power would be increased on two fronts Other proposals include tax re rewards rewards rewards re- re wards for companies setting up trust funds for pension or similar worker benefits At present only those companies which contribute an 85 per cent share to pension funds can offset the donation from taxable earnings Presents Many l Problems Already the congressional tax technicians are more concerned about difficulties of putting incentive incentive incentive in taxes into effect than about what they might do to revenue although that of course ultimately will be the primary consideration Badly applied an incentive tax might unbalance competition among rival companies companies com com- panics and in the end disrupt business even more seriously than the undistributed profits tax One thing is certain More government revenue must be had and it can come only from two sources One is from sterner and broader levies and the other from increased national earnings which will turn out more revenue under present rates |
