WHAT PEACE CAN MEAN TO AMERICAN FARMERS 9 



sumption. Between these two extremes are to be found many other 

 taxes, but the most important revenue producers are the corporate 

 income tax, the individual income tax, and the general-property tax. 

 In this report, recommendations have been limited to sales taxes and 

 excess-profits taxes because they best illustrate the basic principles 

 that would be involved in an attempt to construct a tax system in 

 harmony with the full-employment objective. It is not the purpose 

 here to make specific recommendations concerning a host of compli- 

 cated and related issues arising in connection with other taxes. These 

 issues include questions pertaining to basic rates and their progres- 

 sion, whether the earnings of corporations should be taxed both as 

 corporate income and again as individual income when paid out as 

 dividends, whether individual income-tax exemptions should be high 

 or low, and whether improvements should be taxed as heavily as land. 

 It is sufficient to point out the need for a comprehensive revision of 

 the tax structure to the end that it may provide the greatest possible 

 incentive to private employment and be consistent with the need 

 both for equity and for adequate revenue. 



Once the fighting ends, the Xation will need to convert war indus- 

 tries (largely durable-goods industries) to civilian production as 

 rapidly as possible, and to expand its capacity to produce peacetime 

 nondurable goods. Durable civilian goods may be very short of de- 

 mands for a considerable period, while production of nondurable 

 goods can be expanded more rapidly. Tax policies during this recon- 

 version period should encourage expansion of investment and produc- 

 tion in peacetime products and speedy reconversion in the heavy-goods 

 plants. To check the danger of inflation, however, price controls and 

 taxes on consumption might be maintained for a time, especially on 

 products such as automobiles, radios, and household equipment, where 

 supplies will be shortest. But if after this period is past, mass unem- 

 ployment and deflation threaten, taxes should be reduced — especially 

 consumption levies and those most likely to restrict investment. The 

 main reliance for tax revenue should be upon such taxes as the 

 individual income tax and the estate tax. 



Encouragement of Competition 



Though certain forms of taxes may serve unduly to restrict produc- 

 tion and trade, the only ones levied for that purpose are some of 

 the tariffs and some of the State taxes such as those on oleomargarine. 

 But the record is full of both public and private actions aimed con- 

 sciously at accomplishing this purpose. Various forms of collective 

 action by corporations, trade associations, labor unions, farm organi- 

 zations, and marketing groups have sought and achieved some restric- 

 tions of competition that have had the effect of limiting production 

 and employment opportunities. Ajid even those practices which 

 might not have resulted in idle men and other resources have tended 

 to prevent a higher level of production by forcing the continued use 

 of labor and capital in relatively less productive fields than would be 

 otherwise available. Some of these restrictions have been put into 

 effect with the aid of Government; others have been accomplished 

 without Government aid and in spite of active Government oppo- 

 sition. 



Throughout most of the history of the United States, laws have 

 been passed to "bust trusts," and various public policies, court deci- 



