M
FRiDAY, AtIOUST 30, 1963
THE MICHIGAN DAILY
z
1Rh~AYS AUGUST 30, 1~63 THE MICHIGAN DAILY
to a 'Dynamic'Economy
the principal means whereby new
technology gets put .into, operation
in producing more and better
goods per unit of input.
Thus anything that raises' the
rate of investment tends to speed
up the growth of our potential
output...
Help Investment
-further structural tax reforms
which the President has proposed
have, the same purpose of stimu-
lating private productive invest-
S ment funds.
These include substantial
changes in the taxation of capital
gains and of natural resource in-
dustries, new provisions for in-
comhe averaging, and the reduction
from 91-65 per cent of the top
bracket individual income tax rate.
However. investment is affected
not only by the structure but also,
by the level of tax rates...
In calling for reductions in cor-
porate tax rates, and in the pen-
alty rates at the high end of the
individual tax scale, the President'
is deliberately proposing to make
private investment more attrac-
tive.
As you know,-he has proposed to
reduce the corporate profits tax
rate over a two-year period from
52-47 per cent, adding another
$2.5 billion to corporate profits
after taxes.
Combined with last year's
changes, this will amount to a re-
duction of nearly 20 per cent in
corporate tax liabilities, offset only
slightly by revenue-increasing tax
reforms.
Reductions of this magnitude
will provide businesses with sub-
stantially increased internal funds
to finance' added investment, and
they will increase the gain to be
secured from such investment,
thereby sharpening the incentive
to undertake it.
The President's tax program is
not merely a program designed to
Improve the utilization of our
existing productive potential. One
of its central purposes is to speed
the growth of that potential.
Of course, the greatest stimulus
to investment will come from ex-
panded demand itself, of which in-
creased consumer spending will
form the largest part.
If tax reduction were confined
to business taxes, it might have
little effect on investment; but
combining the reduction of in-
dividual and of business taxes
will produce an impact greater
than the mere sum of what would
be the separate effects of either
by itself ...
Taxes and Deficits
The , discussions of the past
months. have produced a con-
siderable consensus in all walks
of life that taxes need to be cut
to expand total demand.
' But many who agree with this
id principle shrink from advocat-
ing this course because it means,
at least temporarily, increasing
further our budget deficit .
The American public-rightly or
wrongly-dislikes federal deficits.
But if we want to get rid of them
we need to understand why we
have- them--whyin 6 of the past
7 fiscal years we have had deficits
ranging up to the $12.4 billion
deficit of fiscal year 1959.
The reason is not that tax rates
have been and are too low.
In every one of those years
there would have been a surplus-
usually a very large one--if the
economy had been operating at a'
4 per cent of unemployment, even
larger if the unemployment rate
were below 4 per cent.
The way to have avoided these
deficits would not have been to
have raised taxes nor to have re-
duced total federal expenditures.
This would only have further
reduced total demand, the level of,
output, and tax revenues.
We have had deficits because
our economy has not been operat-
ing at a sufficiently high rate for
business and consumers to earn
the incomes which-when taxed
at existing rates, or even at lower,
rates-would balance the neces-
sary level of federal expenditures.
Many businesses have found that
a price set too high will nroduce
smaller revenues than a lower
price which will stimulate de-
mand. Something analogous holds
for the federal budget.
. This thought produces hoots of
laughter from some of our critics.
If tax reduction of $10 billion
will raise the level of, employment,
step up the rate of growth, and
even eventually balance the bud-
get, why stop at 10 billion? If $10
billion is good, wouldn't $20 or $50
billion be better?
Reductio ad absurdum is fun,
but not always a sound farm of
argument. And the reason in this
case is quite apparent.
When total demand in the econ-
omy is inadequate to buy all that
we can produce we have an op-
portunity to make some pretty
cheap gains.
What we propose to give up is
unwanted idleness for ,vorkers,
unutilized capacity of producers;
what we will get are goods and
services to raise our future capa-
city to produce.
But if we were to reduce taxes
excessively, so that demand would
expand beyond our capacity to
produce, we would be inviting a
renewal of inflation .. .
Ann Arbor's Friendly Bookstore
Tax Action
The tax bill currently con-
sidered by Congress is roughly
similar to the recommendations
of President John F. Kennedy.
Income tax scales would
range from 14-70 per cent in-
stead of the present 20-91 per
cent table. Corporation taxes
would be 48 instead of 52 per
cent.
The healthy state of the
economy and Congressional
sentiments have resulted in
some changes in Kennedy's pro-
posals: upper - income levels
have been given more of a
break and lower-income groups
slightly less relief than origin-
ally recommended.
But the net revenue loss from
the current tax bill would be
about the same as that put
forth by the President: $10.6
billion.
-
For Michigan Daily Subscriptions
Call NO 2-3241
THE WORLD'S FAIR--A Chinese dancer concludes her act in
the variety show at last fall's World's Fair, held each year on
the second and third floors of the Union.
SInternational Center Serves
1800 'U' Foreign Students
.~
.
A good way to meet some of the
University's 1800 foreign students
is to amble over to the In'crna-
tional Center-and take it fro:u
there.
For the center, located right
next to West Quad on the south
side cf the Michigan Union, is the'
social and activities home for stu-
dents from other countries (in
fact, more than 100 different
' countries are represented here)..
James M. Davis. director of the
IC, coordinates four major service
functions for foreign students.
one is its ounselling program.
The center has three professional
counselors to deal with financial
problems, visas and extensions of
stay, housing difficulties and per-
sonal troubles.
They also assist other campus
organizations in serving and util-
izing foreign students, and advise
nationality and area clubs about
their own activities.
Another aspect of the Interna-
tional Center is to arrange speak-
ing engagemenft in nearby com-
munities for foreign students.
It encourages the students to
take advantage of these oppor-
tunities to inform Americans
about other cultures, but avoids
conflict with the students' aca-
demic demands.
A third function is to deal with
* foreign visitors who come to the
University during the year for a
short time. The IC sets ulplocal
programming and housing for
these visitors, who are frequently
professors and governmental offi-
cals.
rourth, the center attempts to
help foreign students in the often-
touchy Ann Arbor private hous-
i "g situation.It- keeps a list of
local landlords who are willing to
r rent to foreign students and in-
Vestigates reasons why somerent-
ers do not.
U' support
In fact, one of the major rea-
sons for the University's support
for a fair housing ordinance in
Ann Arbor is the humiliation for-
eign students sometimes incur
when seeking a place to live.
The center also awards about 70
s holarships a year to needy for-
ei n students, 'clears' them for
local employnment and acts, as. lid,-
loon with the state department,
United States information Agency
and the Immigration and Natur-
alization Service.
The center co-sponsors, with
International Students Associa-
tion, an informal tea each Thurs-
day afternoon as another means
of furthering American-foreign
student contact.
ISA Structure
ISA itself has a number of com-
a Mittees w lhi ch' sponsor social
events and political discussions,
music-listening nights, art " shows
and photography exhibitions.
Composed of about 500 members
(ahout a third of which are
The association also plans a
number of special short-run tours
and local hospitality programs,
organizes an intramural sports
league and publishes a monthly
newsletter which is sent to all for-
eign students on campus.
Besides the ISA, a number of
countries represented here have
their own nationality clubs with
their own set of programs and
activities.
THREE REASONS WHY YOU'LL LIKE OUR
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THE OLD GRADS KNOW
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*The cuties in, the picture, we'll have to confess, were put in to catch
your eye. But girls do like men who are nicely groomed !
INTER SPORTS FUN
SKI JACKETS and PARKAS
STRETCH SKI PANTS
SWISS SKI SWEATERS
SKIS and BINDINGS
SWISS SKI BOOTS
ICE SKATES-MEN and WOMEN'S
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