TAX ON PROFITS

Evening Post, Volume CXXIV, Issue 107, 2 November 1937, Page 12

TAX ON PROFITS

UNITED STATES POLICY

PROCESS OF PUMP PRIMING

The announcement in a New York cablegram of October 29 denying reports that the United States Administration intends to reduce profits and capital levy taxes will come as a disappointment to many. Quite recently Mr. Robert Laffan; Stock Market Editor of the "Wall Street Journal" cabled to the London "Daily Telegraph" stating that "those who desire more pumppriming activities by the Government are going to find opposition from Mr. Morgenthau,: Secretary of the Treasury. The latter is aware that there is a drive on within the Administration to seek additional spending, and he is determined to carry out economy so fatas is practicable." Mr. Laffari reported that an extra session of Congress was considered a likely probability by some members of the Administration.

"If this were accompanied by some modification to the undistributed profits tax law," he added, "it probably would be considered a constructive market development. There is the likelihood that the tax law will be, changed at the first opportunity, but the belief is that the changes will-not be of sufficient scope to be generally beneficial. Nevertheless, the Administration has the opportunity to influence favourably j I business and financial sentiment if it, j were willing to seize that opportunity. STATE OF BUSINESS. "Many business leaders have been issuing favourable statements about the business Outlook. In private, however, the views of business men generally are less certain than they sound in publication." , ■ This was hardly' to be wondered at, Mr. Laffan' added, because powerful forces were operating on both sides Of the economic situation, and the Government keeps shifting its tactics in such a way as to cause.much confusion. Several business leaders confidently believed,that the turnover of business would give a good account of itself for the next six months to. a year, but longrange opinions were lacking. This un- ; certainty was,eviderit in the stock market, where gold shares have been meeting' with renewed demand. "Some wealthy individuals believe it is time' to start giving more attention to the possibility 'of inflation," Mr. Laffan remarked, "but hesitate to buy many types of common stocks since they are not suitable inflation hedges. "Business activity is expected to go somewhat lower before it gets better or finds bottom. Steel activity will taper further." .