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77 Pol. Sci. Q. 1 (1962)

handle is hein.journals/pclscceqry77 and id is 1 raw text is: Volume LXXVII POLITICAL SCIENCE QUARTERLY EMERGING ATTITUDES TOWARD FISCAL POLICY PRESIDENT Kennedy's proposals for tax reform have been indicative of the period of rapid transition through which fiscal policy is now passing. Aside from the recent request for executive authority temporarily to adjust income tax rates (a proposal which stands little chance of approval by Congress), the key feature of his pro- gram has been the tax credit which, as originally planned, would have permitted business firms to deduct directly from their tax bills a variable proportion of new investment. The plan has now been altered to provide a straight 8 percent credit for all investment activity. Nevertheless the possi- bility of varying the deductible percentage depending on economic conditions, makes the tax credit device potentially the most promising new weapon in the arsenal of stabilizing devices since World War II. It would permit regularization of investment outlays and thereby encourage stability of the economy-at-large. Yet the proposal runs directly counter to the tenets of political liberalism which perennially have favored stimulation of consumption spending and have tended to view tax relief for business as an inequitable sop to the interests. New lines have been formed over this issue. Paradoxically, the business community has been resisting what may well be regarded as a powerful stimulus for private initiative and the free enterprise system, while the liberal movement has been split, with the unions and many liberals opposing the tax credit for the traditional reasons. The de- tached observer can only be struck by the sharp contrast between the extraordinary changes in fiscal practice and in- March 1962 Number 1

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