Soaked Out

As Congress continued hunting for the tax billions to pay for rearmament, Manhattan's National City Bank warned that the popular game of "soaking the rich"--and the U.S. corporation--has about reached its practical limits.

"Corporate taxes," said the bank's Monthly Letter, "are already so high as to . . . encourage extravagance and inefficiency and to discourage initiative." As for soaking the rich, there is not much left to soak. Income taxes now take so much from "larger incomes that if the Government expropriated all taxable income over $25,000 a year it would yield less than $1 billion a year over present taxes." National City thought a practical solution was a general sales tax levied at the manufacturing level. "If we are to pay the costs . . . without inflation, taxes will have to be increased where the bulk of the money is . . . in the lower ranges of incomes." . . . Even Britain's Laborites are beginning to doubt whether upper incomes can be squeezed any harder. Just before leaving for the U.S. (see INTERNATIONAL), Hugh Gaitskell, the Socialist Chancellor of the Exchequer, warned the Trades Union Congress at Blackpool: "If you took away from everybody in England all excess income above -L-2,000 [$5,600], it would bring in only -L-53 million [$148,400,000]."

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