National Chamber of Iiiiiiiiinti' 1
lead Reviews II. S. Economics m
In a REPORTERS' ROUNDUP interview, Clem D.
Johnston, President of the United States Chamber of
Commerce, speaks out on corporation taxes, tariffs,
waste in civil service; and offers suggestions on balancing the national budget.
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C... JA\W . _ AWk WLmw
Clem D. Johnston (c
was interviewed by ■
right) John Madigan
Jack Doherty of the
NEWS. Moderator was
bove), C of C Chief,
lower photo, left to
of NEWSWEEK and
NEW YORK DAILY
Robert F. Hurleigh.
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REDUCE TAXES—INCREASE TREASURY INCOME
(Madigan): Mr. Johnston, it came as no greal
surprise to the correspondents here in Washington
when President Eisenhower said that he would like
to see the corporation and excise taxes, originally
scheduled to drop April 1, extended in their present
lorni. Whal is your reaction?
It did not come as a surprise to us, Mr. Madigan. We do
view it with regret. Although we realize that business has to
pay its full share of the taxes and we have to somehow
balance the budget, yet we in business feel that perhaps we
have already exceeded the real productive limits of taxation
— that perhaps a lower rate over a given period, say five
years, would actually produce more revenue for the Treasury
than the higher rates that now exist.
(MaOIGAn): "Regret" is a word awfully close to
"alarm." Will von bring pressure on various congressmen and senators to try to stop this extension?
No, we are going to try using persuasion in an attempt to
educate the general American public to the fact that high
taxes tend to discourage initiative and venture capital and,
therefore, actually produce less revenue for the government
in the long run. We are not contemplating at the moment
any active campaign against this tax rate.
Madigan) i You have a legislative representative
at the Washington Chamber in constant contact with
Capitol Hill on all pending measures. Do you plan
lo thwart this proposal through appealing to the
public rather than lo the gentlemen who must vote
We will appeal to both the people and Congress. We are
going to try to persuade them that the long-range interest
of the country is such that we should not have this confiscatory tax rate of 52 per cent on corporations, followed by
individual income taxes. Some of the top brackets are 70 to
80 per cent—up to a present maximum of 91 per cent—on
what's left of that same money.
BUSINESS NEEDS INCENTIVE
American business somehow has to provide jobs for at
least 600,000 additional men each year; that's the net increase
in our labor force. It requires a business investment of about
twelve to fourteen thousand dollars of venture capital, risk
capital, on the part of somebody to provide one job for one
man. Therefore, business has to have an incentive not all
drained away by taxation.
I Madigan): Do you mean that some of 'f
expansion capital would be taken out of lhe marlc
if these existing taxes continue?
It is already rather clearly evident that some of that cap!1
he people are retire exDethin>
from business at an early age; people who would noria^ -itXp r^en.
is leaving the market. Also, some of the
form new enterprises and provide jobs for men are now siff
ply finding it convenient to coast.
And there is a big market now in tax-exempt securit''
businessmen in these high brackets are finding that a ''
per cent tax-exempt bond is a preferable investment to a s
eight, or ten per cent common stock.
ill anneal '
(Huri.eigh) : Now you say you will appe'
lhe public and to Congress. Would it not be |"i''
wiser to try to persuade the administration, whi^J
effect is the instigator of this continuation of
Yes, we will certainly try to persuade the administr31, c "ad th,
also, and we have already been in discussion with then1 s?mfn,'ttee
individuals. I think they accept our general idea that o**, L f' We
long period of time a lower tax rate would actually pr0"j| ^.^ade
greater revenue. They are faced with an immediate nece!S tji defe
of somehow balancing the budget. al defer
(DOHERTY): Is it possible that this whole ar»
ment over corporate and excise taxes mighl I"'
tirely academic since we are going to have
Democratic Congress? Might they not enact '%
enough votes to override a veto — a tax cut f°r,,
people, on individual income taxes, rather tha"
I think of course that is strongly advocated by the ''j,
unions. Such a cut would, however, have to be accomP.*, tro~i.',|,Ils
by some increase in excise taxes — something resenih'"'^ r- ^ble rj
national sales tax — if we were going to get enough W' ji of th ',ert
because there is simply not enough revenue if you are * a nten m> '
to tax only the so-called rich. Secretary of the Tre»h $i0n*ervi
Snyder brought out that if we were to confiscate outriH11^ assi'«! a
entire income of all the people in this country makin£.||j, ar,,j ed
$10,000 a year, you would only get three and a half "\jf irnat^,1
dollars for the Treasury. That is less than the pr1
Secretary Snyder added further — and showed the tu>j
— that if the entire income of everyone making $5,000 •']
and over were given to the government, the income '
government would be less than ten billion dollars.
FACTS FORUM NEWS, February,