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![handle is hein.tera/taxfeaturs0007 and id is 1 raw text is: J,1JI11 14ULIUIUI,, ,U.i. i iJJk4.h
TAX FOUNDATION'S
MONTHLY TAx FEATURES
Copy t-ihlt 1963 by Tax Foutldatioa, ftic., 50 R krl+errer Plaza, Neiw York 20, N. 1'. Material tay be used iwith proper deldit.
January 1963
Vol. 7, Number 1
Lift Induced by Tax Cut
Seen Not Self-sustaining
A lai.i. tai redltioi iii 1963 that iin litina idluhced by a iax
i- i1i1s -i a foolialdy '- in lt arial, life stilus would
itllll if t Il lose vvte continue ly as hog as thel
s h upIiii ii inc ase d is io sabl l . w ci lt n l g i i i
s an in ig was Thelii, lie said, lies the
in d y 1Ia11 daiig r-1. E io if insuccessfil, lti-
ThtIA 1 Stiith, exinpi ieiit wtild beiiiriersillei,
P (I' S i of Ii. sice It is tliikelvy that tiams
niala'eT Ilarva I woulld late, be raised, or a tax
- , Gradu~ate School teduieticn rt-scinded while b)ti-
~J~~JII of Ih Ad- es conitled slack, or ait least
ss 1 iiili' iiiii iinti-lii conliid
tinistation, at whle elf ~rt IIIth) ,ed
tile 15th Natit;,;d solbstatital.
lax (ioifei une sponsiored by lie said that ligany aspects of
'Iia i niidatioii, file. tax ieftIi --thoul gh not all --
Plosior Snith said, hloweser, will insoke ihinediaie reneie
that an iiirease i l the deficit lines,. Ocr a pelodi of finae, ,e
ciaisled iy a redlclio in il! e po ied ot, fill Isulis of wise
eii iiaah' tax rate--oaiiciio n afi'irm should exlpand the
thilt VsOild It'store prfit mar- i eiiile base aiid restore or even
gills. at least teiiilioraiily -- increase tile ievenlie. lut, le
oii be ii'atiively sIiiall and said, tiie qiiestion in his iniid
iiiiil be jistilied. was: Iloi nich tax r ediuiio.
lie said thee was iothilg and incieased deficit should we
lislineti', aioti the present be willig to risk in ge ite he-
silalioi to slllort tle idea siued tax reforii?
Says Sluggish Investment
Outlook Causes Concern
\'uilshiaad ilisciitent with
ihii ecioiy's liiforiiance iii
19162 stenimled fiiiiii 'excessive
xlctatilons egeudered bly
' idtl- lpulidi'ed Kovernienial
'-.... i f a I,+'1i1i yiar for
Capital goods aiil tle itiiiilillent
Il-ulli t fill hilpliloiienit.
This sulwey of
file yecar was
made hy Miartin
It. (;ainshrlugh,
Chief l;collst,
National Indus-
t1 ial (COnfe'l enle
Iloardl nt Tax
Foi nd a t ion's
15th National 'IIax Coifeweice.
,\I . (;ailsli ugh noted that
ihlughoiu tfi tn I of 1962, fie
lalill sllfiled fitol all ailite
c .i' f io vie -exi - le(ria tio is ii-
ih id fly olffirial projections
ahlle t cn ll pl'l ate plii ils.
Aieloig il'se wrii', lie sal:
ptl~oae inlit s I}1'o11 laxes
v, ldxmet-d $56i billion (ae-
iWally about $50 billio ); and
thatl' ( iis Natimal Prntii
((;Nl') would a1ioach $585
billion iy yi'a-ien, or nearly
$25 billioo ahov e liie actual
Iltoii-t, lie added, also
sienine(i firin ''oilier, nore suh-
laitiv egaisus, threr in parti-
cular. Hle aimed theon as (I)
tile ill if el'Olloyei a t that
liing i)eisistently at 5/ piercent
or aboiie irOiglioiit life y'ear;
(2) the utnalanced Fcldial hud-
pel ul'iiie gun d iptw va ol lis
revival; aid (3) file unresolved
Iau e-If- a'nlenmi l em.
lie sail tlat f ili '1most Iis-
tulhing factor ini allprainig
the prospective routlse of e'on1-
alie activity in genilal aid in-
diisirial pioliaiii in plticuilar
for the opening half of 1961 is
life outlook for iii-sli'rl Ia)-
pivate Jliisiness'
lie said thai tie Imlimny
agra of roll'vrni ll' if iisi1iss
ecoilliliis v's i sinee ilis re-
coe'ry begail has been lie slug-
glls n se rC ileisllenl as ing
iii' lsal reeo;ery.
Mr. Gaihshrugh said that tIe
weight of evidence suiggests
firther molest evnJlisiotl in
19619, desiile any initmal contrac-
to ia capital outlays.
lie added: The llro tlveiic
piclre for 196:1 leids little sui-
port for contiuiIing iii the na-
tlion's tax bas increases originally
inlilised oil Anmerican hiislniss
ngearly a decaide ago to restraini
tile ihen incilpient capiltal goods
hooln.
Growth Criteria Have Limits: Wallis
The foul rfittia (,[fell Itself to
Iltllll i gi inl iic gio th have
ii'iaiis lW .itath i,'' \g'. Allen
WVallis, liesiliit. Unisersily of
lRocheeol' iold aiildes at Tax
IFunlaions 'ax (,ofei'eoce.
For crilteria.
ii he aid, .-i e of-
te lliid to nifas-
' i re eeo nse
growth : gross na-
tg m al sraduct,
indhst rialpro-
s ' ' ioln, Ot t ie
ler mi an-h a
loilked, and nioult r e n t of
: ';p itla : 1 1an l o m b in e d. A ll
,f Ihel. have %etionls liitiations.
Fioonl the slandlpohnt If alp-
pli sa s fll - totl stleagth of tile
Un'litedt Stites i war or defense,
gl(,%q oattilial Iploduet, lie said,
is a luseftil tnold, despite tile
fact it has a father high (.and
u hII nvk o ).¢l mlai'gln of[ error.
I ilosttial lurodgtiio, Ie' said,
is aii inroinlilel' nleasire iis
rilalise inioitance hi the ecoli-
oiniof iatioos vair% lirser ihiie
alitl 'Ilace.
Physimal oitpit per igan-hour
worked is perhais the best from
tii' standpioint of gailgliog toial
il%-,fai, lDr. Wallis said. Oiil )li
lier Iilii of caital aild I abor is
best for determninlg tic overall
eficiency of prodltisve elfort.
Growth, lie sail, is only olge
oial of ecoiniy policy. Ohers
lirlde ecololnie f[cedoin, sta-
bility, efhcrieiiry and etliality.
Sllle Iellii int for ceullOlllic
glowt i are, lie said: 'fti simpile
ileesIsilty of orderl'y government'iii,
honesly in relations aiong in-
dividuals, equality* of npportun-
ity ilailtelance of Coilmtitlio,
tiaihe between comiet is and il-
propdate tax policies.
Curtis Doubts
Tax Reforms
Will Be Made
hIiiits that specific, badly-
needed tax irforms cai be plt
inuo a big tax bill ill th is sessionl
of Conigre-ss wvere expressed by
Rtuli. Thomas II. (Curis (It.,
hmo.) iii aii addlis ),-fore ite
Tax Fogundation's I5i National
Tax Confeeice. Afier referring
Il spereiie tax iefoinis needed ioi
olinole errllilllic growth-and
notiilg t. )aralllllllt fired for
Felcial spendiig refoni, Rep.
(hirtis said:
Whelher they [specific tax
reonls can he pill together ilto
a )g tax bihl a i the next session
- - is a real ritaestilon.
I doubt it ...
becamle file Ad-
mniioratfoil's at-
leflionl is III
directed Iowaid
the aggregate
rather than the
sp~ecifics of tax
reform to pro-
inole ecoailie growth.
It! said that a school of
tihought has grown l p which
iidiscl iatl'y calls ally tax
differenlial a max preferential or
a loophole, anld attacks it'
lie saild that what is one
han's loolhole is another's
elity. It is ne'ensary, lie saild,
in being fail in tax law hased o
ihe profit hiaie,'' tll try in
ilaslire ecotoilie dilferences.
lie said lie slippiosed the Ad-
hluinlistraiol iiwould ti0t look
kindly ohi prolosals to reforl
Iax lawss ill ngleasurmre eclnonlic
dilfleretlc's ht nosv accurately
r le as l fre d ,.
i si, ili e is little 1)loilect
for this tylle of neeedlh tax re-
forl next year, except in isolated
Cases.1
The NMiss li ir'seltatise
als I delarud real Federal tax
refirign can conei only fioni ex-
n'idlituri' refoiin I ie said ile
prospects for this type of refori
in'1963 or 1961 are grim.
Note Forming of New
Tax Policy Committee
1orlilation of a new Federal
Tax Policy Coninitiee to rec-
onnnthelid clanges in tIe Federal
tam systeom has been annoltinced
ly Tax Foundation, Inc.
Chairmlan Rosiwell Magill,
formier Under Seeretary of the
freasilry, will head a five-nen-
)er erllnittee of tax experis.
Mf ereers are: Clarles A. Ag-
eliln, coniroller general of life
Chise Manhattan Ilank; Alfred
G. luehler, professor of public
flinane, Wharton School of Fi-
uaumce .aid Coumerce, Univer-
sity of I'eniiyania;
Alsi: Leoard E. Kust, gen.
erao tax eonnsel, Westighouse
Electric Corporation, and Leslie
Mills, partner, Price Waterhoise
mand (ioliany.
C. Lowell larriss, Coha11hbia
Unlvernily economins professor
will le eoninhtee researct li hec-
Ilur; Alfred Parker, the Founda-
tion's esxccttve seletary, will be
project director.
The roinilgllttee's recminuula.
tions are slated to he published
thls Spring while Congess is
deatilg a Variety of proposals
to prodluuce the belter tax syistem
promised for 1963.
Urges U.S. Spending Lid;
Fears $15 Billion Deficit
T hre is an iigent ineld for iotrol osir ithe incteasis ii le'deal
sp~ending, I)r'. RIaymnond J. Sallier, follael (haiianl of On: (Counlli
of Econaniic Adhises i sa-g d those attediiiig ithi 15th Naimal l'w
Cnonference Spoliiid y Tax Fiolltlatiloll, linc.
What we shluld do is to pilt a ceilins (o exsliititiigis fi - say,
two years at flti iscal 963t leve , iliat is, at aultl $91 billion.' I!I.
Sailier ad~ilsii lie saild hi
beilief tlaa $5si io- n fix i tii
Rely Less On I l i
cI i ile I t wilh a
Business Tax, bi '' .... 11)
slspeningtf - lltJhl
31 , ir appFu-ul-
Harriss Urges , $.. ballifn
ifAniother pill ofl
Ecolnmic glowth is he Iislt lis jlld.l4li'ul of
of a comllex of lmans,' ie- the fiscal outlook isast
lenits, Professor (. lowell lIar- is a fiied fri caution in the
riss of (nohtgia University told ailogti aiiand chia(tr of fax
attendees ait Tax Fouidatiln's reduction.
15th Namional Tax Cuifetenci Ir. Saulnir said it hail lb-
lie caitiined: No siigle filig coi- comiloiilare to point
accoints for lie irsilt, -ai r o that the Iiosprcive $1 iilli,
on change i plublic policy fiscal 1961 ilicit isn't as hlg as
should be exiected to wik are- tlii $12.1 1iillioi dliieiit of li al
arles. 1959.
Professor Ilaliss also said: This is pelfectly tile [bll)
One may driain (if tax ie- file no lv of ihe fiscal i11
foii oii a scale delirit,' he sald, lies il tile fl I
large eloiigu to thai it u-on-s at aii alsvaluni-l
asslle a big rise siagi u! a lsiliiss qcvl i' )all-
in tile glowth sio. Ihe 195(10 i it, lIi- Aiid,
rate. Nisiilh i- i s iig r ri-d in ithi lii t [fIll
les, in laxatimi, )ear folluvhig ilig 19511-:59 i,-
as in other as- cession's tiough. hllI- 1961 d,-
flees of illic lirit is gIcciing ig) the seioilnd
1) o I i i y , II iI r fill fiscal )ear fillihs ins u Il.,
choices aie geneirally maiginal-- 1960)-61 i-i'ssioiu's tiiitiuh.
lmewhfat nlore of les%, here or le$)f- ~ ;ldta i 11
oiiuie la 'iiu i lss l r I hi- sii-aki-i said thtil.- at.,i- ,.
there. The isuls ate less easily est Fliedal i-fiiii, lihet Ihan
foreseen thian we shohl like. fisal 1962's, is ini thin iiaL-
The speala' noted Iat the ing Il' fo svia it laks ii si,.-
effects of any gi-ve tax di'iend ielatisv io ithi 19.59 dti-6 i illi
upon other conditions; tat al igicessiviivs aiiil in is caui ii
ally one lilc ''lO-tax eogdi- ti g low.
lions vai)' widely fgon oili Coiii- Dr. Saulnier said that li dr.
try to another. Vsliing liical silugalioa. il hi,
llence, Ihe said, the li-sons oliinill, himdlr jusiili-s liax .-
i-e calli d findi studying taxes (iicioig at all. ili iaigl( l ,i
in tie pas, o b' romparing reilictio of tiot Ilaiu 211'
ifferet gatiial syste s today, billion ii1i ain tlit lui an .n l.
do not ecrissalil apply to the gery hasis'' T e icnsoli, oll..
fitiile or to tii i :crlloollies,' Ilik, liie added idiies no,1 IIl
Professor I ihriss said tlat ta einervicy at this tion-.
rais, inililii i d iiiise Oil Iailiaiiss,
will he high fIi as liig as ise
call see. li' added: Yet life
iulilic dois hav' sonie roon for
cholie ahouI whlich taxes Io use
nost heavily.
Noting that hasigtiss is our
chief agency for organizing ile
use of re-sollirces tO lrodlice,' and
that eeononli groril will col-
sisi predominanlly of %viat we io
thtrough Ilisiness,' he said:
'Front (iie poinit (t o ins- of
growlh, we would le swise in
making our iax hoies to iiiove
toward less reliance on taxes
which ire i1ounced on l)isiless
as sluch.
TF Honors Siam's
Long Public Service
Tax Foundation's aiiual Dis-
tiigiiislied Piilir Service awrarid
went this year to Colin F. Siaii,
Chief of Staff, Joiit Coa-gigiiice
oIl Internal Revenmue Taxaion.
Mur. Stagi has ieen a geililler
of tile Con mittee staff since
1927, aiid (:ii,f since 19:18. The
silver plaque read: Preseiied
to Colin Feiguson Stal, Chief
of Stafl, Joint Cougnmitige 1n In.
ternal Iteveiouie Taxati, Con-
il-ss of tile Utiied Siatr, for
. istiigoidiltd seriice to life
American eigople, for his out-
standing eontiihntions in tax lose
and aliaiistiration, and for his
dedicatli to the hlighest ide-als
of puiblic serice.
Suggest Spending Cut
Match Revenue Loss
Ideally. all net ii'seiii' i -ili
tions re'sulting final] l:fdh'lal ta\
rai rei-isiini shIihl h m th,,,I
by hnndiate and ith'nthal
F iFh'al spendlingt tlliutioll, ;it
Cordiig i, . Keilh Flunsm'i
Pisiilei it[ ilie New Yok ,l, .
E7xchange,
Speaking lhfge ihli- 15ili Na-
ionial Tax olmfugi'e ' 9'oll ill
b- Tan Fmulndation. ic., M1
Fuinslon said:
'It is absuid io take a 1) ...'iutlni
11,1 file c( '11 nt ,Calle of Fg.-dria
plnoje'cted in..
! ,leasm's hu;ift hnlh,
it ale fixed a.nd
Nor', hie ;fill
raln file Cowel)l I.
lion hel jllstilie,,
I Ib l Il. I'f) )l
iay be sifering finii a i-hi-
porati- iliad-qIgat' i'iia
whschicll Iie walihild siniph
by' Ilmling up a bit,41e anld
liggei Fedral ielicii If s1end.
lg and iax laie ellis aii-i'i' (icii
uctlrlt. lie Ulnged, hold si llu,+
at 1963's liiilgiagy Iev .
7+/wir niltirleg l ais t'ri-i fIlt,.i /u+,,
ilw , iiii jru , qi i Ii ..i.i..ii .iu
the? di~c~uniomj at the. F ,ru i i ',
151h ,N'tiou'll Tay\ C,. ,'f'+
hel Ir. I ilo Nrn, y'onh (:i1,
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