It might be hard to
imagine, but there was a time when all of the major media outlets were not socialist
propagandists for the State. This editorial from the February 19, 1949 edition of
The Saturday Evening Post magazine is an example. Titled "Industry Cannot Produce
If It Is
Taxed to Death," it makes the case. Which magazine or newspaper of today would print
something like, "The idea seems to be that you tax the corporations to the point
of extinction because corporations are rich, selfish and antisocial. Actually, the
corporation is a legal device to mobilize the savings of scattered individuals in
such a manner that they can be used to set up and equip our industrial system more
effectively than individual savers could do alone?"
[Table of Contents]
These articles are scanned and OCRed from old editions of the The Saturday Evening
Post magazine. Here is a list of the
The Saturday Evening Post
articles I have already posted. As time permits, I will be glad to scan articles
for you. All copyrights (if any) are hereby acknowledged.
Produce if It Is Taxed to Death
The American Ordnance Association,
which exists to provide liaison between the armed forces and the manufacturers of
ordnance, including weapons - or plowshares that might quickly be beaten into weapons
- dug up this quotation from General Eisenhower:
"While some of our Allies were compelled to throw up a wall of flesh and blood
as their chief defense against the aggressors' onslaught, we were able to us machines
and technology to save lives."
The United States Strategic Bombing Survey explained in July, 1946, that the
"one and only asset which they (the Japanese) still possessed was the willingness
of their pilots to meet certain death. But their courage was futile, because we
had better equipment than the Japanese had. In fact, it could be said that the only
reason we Americans have been permitted to occupy and develop our vast territory
without too much interference from outside is that we have throughout our history
excelled our contemporaries in applying industrial skills to the production of weapons.
The American Ordnance Association exists to urge the U. S. A. to see to it that
this superiority in know-how is maintained.
This started out to be an editorial on "capital formation," but, because the
mere phrase scares most people away, it seemed a sound idea to back into the subject
by mentioning the advantages of keeping a nation's industries up to date. It is
on our industries that we must rely to provide the machines which can save lives
by making it futile for an enemy to attack us, or, in case somebody attacks us anyway,
by killing more people per soldier than the enemy can manage. From there perhaps
the subject could be fanned out to include the advantage of maintaining a modern
industrial plant for peaceful purposes as well, with some mention of the fact that
the plans of many sincere and patriotic people make this all but impossible.
Although most people know that we depend on our industrial plant to provide the
better things of life, as well as to provide tools for our defense, there is so
little understanding of how an industrial plant is kept up to date that on every
hand we hear proposals to hamper industry's efforts to modernize and re-equip itself.
The usual suggestion for dismantling American industry is to slap an excess-profits
tax on it.
The idea seems to be that you tax the corporations to the point of extinction
because corporations are rich, selfish and antisocial. Actually, the corporation
is a legal device to mobilize the savings of scattered individuals in such a manner
that they can be used to set up and equip our industrial system more effectively
than individual savers could do alone. The earnings of corporations are paid out
in taxes, wages and dividends to investors. But corporations constantly need new
machines, new trucks, new buildings and equipment of every sort. To pay for these
things new capital has to flow into industry from the savings of profit-seeking
Because of tax policies which put a brake on investment, most" capital formation"
in recent years has been built up out of the earnings of industry. Winthrop W. Aldrich,
chairman of the board of the Chase National Bank, in New York, points out that in
the postwar period "less than one half of net earnings has been disbursed to stockholders
as contrasted with three fourths in 1929." Some new equipment has been provided
by depreciation allowances, but the sharp rise in costs has meant that, as a rule,
an industry has been unable to save enough to replace its worn-out equipment at
present prices. A stream of new money must pour into our industries from the savings
of individuals if the system is to remain able to replenish itself and expand for
new needs as they arise. The consequence of starving industry of capital by making
it unattractive for people to invest in industrial stocks and bonds will be disastrous.
But, we are told, industrial profits are at an unprecedented high and should
be taxed heavily to support all the pie-in-the-sky schemes now taken for granted.
If profits are high, it ought to be observed that they are paid in the same inflated
dollars that go to wage earners, pensioners, insurance-policy holders and everybody
else. Also a larger share of profits is being put back into the business than ever
before. This has to be done because the cost of replacement of old equipment and
other items is figured in those same inflated dollars. Again, a large hunk of these
so-called exorbitant profits consists of inventory figures at inflation levels.
To realize on this item of "profit" a company would have to sell out its raw materials
and stock on hand and go out of business. The effect of such a policy on "full employment"
can easily be imagined.
What we get back to is the old story that if our capitalist economy is to remain
free, industry must be able to offer investors a decent return on their money, and
tax policy and labor policy must bear a definite relation to this objective. The
present policy of hampering industries with crippling restrictions and then blaming
the industries for being crippled can only result in stagnation, lower productivity
and louder popular clamor for nationalization. We do not believe President Truman
or the majority in even this Congress wants any such result, but a misdirected desire
for social justice could incapacitate this great country to produce the very social
gains we want - not to mention the means of defense against possible future adversaries.
Posted December 18, 2023
(updated from original post on 3/9/2013)