No Column This Week

December 10, 1962

In a world drifting toward economic chaos, the weekly problem of choosing a topic, to the neglect of all other topics, sometimes becomes insoluble. Take this week, for instance.

With the Administration talking of a tax cut of $5 billion to $10 billion in 1963, though the outlook for the current fiscal year is already for a deficit of $8 billion without a tax cut, I get to ruminating about the gross and glaring inequities in our income tax. When Treasury officials have been questioned about these in the past, their excuse for retaining them has been, “We need the money.” Now they say they don’t want at least $5 billion of it. But nobody suggests that this might be a good time to end some of these inequities.

Take, for example, the gross unfairness to people with irregular incomes. An official of a small bank with a steady net taxable income of $10,000 a year pays over ten years, on his $100,000, a total income tax of $26,400. But a writer, inventor, or actor, who had no taxable income for nine years but $100,000 such income in the last year, may be forced to pay an income tax on it of $67,320. Yet nearly everyone would prefer a steady and predictable income to an irregular one of the same amount. Then there is the cynical heads-I-win-tails-you-lose policy in taxing capital gains and losses.

But I’ve been writing too much about taxes lately, so I’ll skip that.

INFLATION IN BRAZIL

Then I think of the rampant inflation in Brazil. Prices there have risen more than 50 percent in the last twelve months. Even last August the cost of living had already increased to ten times that of 1953. It now takes more than 700 cruzeiros to buy a dollar. People are rushing to change their money for anything. Brazil got into this inflation by the most approved New Frontier method—budget deficits. The budget deficits were also brought about by the methods most approved by our own progressive thinkers—losses on socialized enterprises. The government has also ordered a year-end bonus equivalent to one month’s pay for all Brazil’s salaried workers, and a new and higher legal minimum wage to go into effect in January.

One wonders whether the Brazilian example will cause our tax-cut-happy, big-spending, deficits-for-”growth” theorists to have any second thoughts. One wonders whether the inflation, socialization, and confiscation throughout most of Latin America are causing any second thoughts to the daydreamers about the Alliance for Progress. One wonders whether the Brazilian inflation will even cause anybody to ask whether the International Monetary Fund, under which inflations and devaluations have been occurring with unparalleled frequency, serves any useful purpose at all.

CAPITALISM IN RUSSIA

But then I think of the Russian situation. The U.S.S.R. idolators here have been telling us for years that Russia is growing faster than the U.S. and will soon leave us far behind in the race for production unless we too adopt socialist planning. The only people who begin to have doubts are the Russians themselves. Things are going so badly in Russia, particularly in agriculture, that Khrushchev has decided in desperation to imitate capitalism. Why shouldn’t we “use anything rational and economically advantageous that the capitalists have to offer,” he asks defiantly. So he announces one of the most sweeping reorganizations of the Soviet economy on record. He wants plants and industries to try to maximize profits. He proposes to tie managerial compensation closely to these. Communist radicals even recommend the introduction of a rate of interest on invested capital in Russia, in flat disregard of the Marxist dogma that interest, like profit, is simply exploitation of the workers. I might write a piece on the theme that while the Western radicals want to rush us toward Communism, the Russian radicals are moving toward capitalism, and in a few years East and West may pass each other going in opposite directions.

But as I can’t make up my mind which of these subjects to take up this week, I won’t do a column on any. There’s too much to write about.