"If this tax cut won't go through Congress, then no tax cut will," Otto Eckstein, associate professor of Economics, said yesterday, commenting on President Kennedy's proposed $13.5 billion slash in tax rates. Only one of seven professors interviewed, Arthur E. Sutherland, Bussey Professor of Law, failed to support the President's proposals.
Sutherland described himself as "delighted as a taxpayer, but bewildered as a citizen of the United States" by the tax proposals. The prospects of increased government spending accompanying lower taxes caused him to wonder "how we can solve our problems without imposing sacrifices upon ourselves."
Seymour E. Harris '20, Lucius N. Littauer Professor of Political Economy, disagreed. He termed the proposals "necessary and beneficial--the best that could be hoped for in the given situation."
John V. Lintner, Jr. professor of Business Administration, emphasized that the proposals constitute a "long needed change in our fundamental tax structure, not just a quickie tax cut." The present tax structure, he said, was established in the late 1940's to offset post-war inflationary pressure. He explained that basic economic problems have changed since then. The present tax structure is "simply inappropriate...taxes are too damn high."
Kennedy's implication that the present tax structure makes deficits almost inevitable was confirmed by J. Keith Butters, professor of Business Administration. By preventing full recovery from recessions, the high rates result in a level of national income unable to produce the revenue needed for a balanced budget.
The rationale behind the present reduction in rates is to stimulate the growth of both national income and employment, Butters said. The President hopes that eventually a "balanced full-employment economy" will produce the revenue needed for a balanced budget.
The professors interviewed generally agreed that the proposed tax cut and reforms would be a step in the right direction. But they were cautious in making quantitative estimates of its effect on employment or income. But Eckstein, a fiscal policy expert claimed that the tax cuts by themselves could not bring full employment. He said that "favorable results in the private sector," would also be necessary "to restore the economy to full employment in a few years."
Conservative Demands Met
Eckstein pointed out that the proposals proposals go more than halfway," in meeting conservative, demands. He cited the relatively mild measures proposed for 1962, the large reduction in high income tax brackets, and the cut in corporate tax rates in evidence of this.
Samuel H. Bees, professor of Government, feels that, Congress will pass "the entire bill pretty much as it is presented, 7 and judged that passage is virtually certain by the certain by the end of this session. Lintnes, however, guessed that "there is a fifty-fifty chance the bill will not pass at all.
Greye, doubts were expressed on how successful Kennedy will be in securing the reforms which he says will compensate for $3.5 billion of the $13.5 billion total out. Even with the death of Oklahoma's Robert Kerr, the Senate oil king. Hutters remained skeptical about the adoption of significant reforms in of depletion allowance, the most flagrant of the existing leopholes. "About 20 other people would have to die too," he remarked.