U.S. SUNATOR EXPOSTS TAX=CUT MYTH a en ann a ato te
This wock we take the umusual step of roproducing the text; slightly shortoned as per I.F. Stono!s Weekly vorsion, of an American Senator, Albert Goro, Gore, of Tonnessce, was described by I.F. Stone as the tho last agrarian radical loft in the upper house. He speaks for the ‘little man! bat, © essonce of his romarks as woll as throw ing considerable light on American scono can be applicd to British conditions as well.
"It seoms to me that neither equity nor economics dictates a reduction in rates paid by big business, I do favour and support the reversal of the normal and surtax rates so that the rate for small business will be cut to 22% As for big businoss, it seems we could dismiss oquity considerations quickly....Corporations wo know are largely owned by the affluent. The poverty-stricken do not own General Motors or A.T. & T stock, A study now underway at the Wharton School of Finance at the University of Ponnsylvania shows ‘that 1% of individual taxpayers own about half of all corporation stocks held by individuals.
"Since the rich and the vory rich are given such generous tax red= uctions in this bill, there aro no equity grounds for reducing corporation taxes. The fact is that we have been roducing the effective tax rates for corporations quite steadily and regularly during the past few years. There wero rapid amortization changes during the Korean war, accelorated depreciation enacted in 1954, adminstrative changes in depreciation enacted last year approved by the Treasury this yoar, tho investment credit onacted last yoar and tho further libcralisation of this crodit in the curront tax bill.. Of course we have retained the Same stated rates, but tho effect of these rates has been drastically altered, thus materially the rates actually paid.
"Corporations got about $2.4billion in tax reduction under the 1954 Internal Revenue Code. Last yoar they got another $2.25billion as a result of changes in depreciation and enactment of the investment credit. What is “d*fective corporate tax rate? In 1946, corporate taxes amounted to about 33% of profits plus consumption allowances (i.e. depreciation, investment credits, etc.). Today the comparable figure is about 29%, This is an effective tax reduction of about 10% Not only have we been cutting tax rates in a disguised form, but thése cuts have not really beon offective —- or they have been inefficiont — © in promoting investment and cquipment. Ye have concrete proof of this,
"The most optimistic statements I have scen about the effects of the $2.25 billion tax reduction given corporations last year have been’ to the effect that this cut has induced $1.2billion of increased spend= ing for plants and equipment. This is an efficioncy of 50%...The upshot of all this is that we give corporations a tax cut of $2 to induce them * to spend $1 for plant and equipment..." He finished his speech by pointing out that, far from croating more jobs, in the past 10 years almost 1 million jobs had boen lost despite increased production.