DEFERRING DEBT REDUCTION

Now that the Republican members of the Senatorial finance committee have graciously allowed their Democratic colleagues to amend the original measure, the tax-reduction bill seems destined for smooth sailing in the upper chamber. For, despite the fact that the new tax schedule embodies all the essentials of the unsuccessful Mellon plan of last session, there is no organized opposition to its passage.

The persistent campaign, which the press has waged for over a year, in behalf of a sweeping reduction of taxes has created the general impression that the present rate of taxation has been hurting industry, and that Administration economy has so greatly lessened federal expenditures that high taxes are no longer necessary.

In the general solicitude for the burdened taxpayer, however, the burdened treasury has been quite forgotten. The internal debt, a legacy of the late war still amounts to a sum over twenty-three billions. Thus far the debt has been steadily retired, but this has been due chiefly to the super-taxes on high incomes, which Congress is now proposing to abolish in part. These exactions though admittedly heavy, have proved more annoying than crushing; Industry reached its highest peak of post-war prosperity last year, thus showing conclusively that the present rate of taxation is not putting too much of a strain on business. The government can turn the prosperity of the times to advantage, by keeping taxation at its present level.

The restoration of the normal balance of the financial structure depends upon paying off the war debt as quickly as possible. Reduction of taxation now means the extension of the latter for a correspondingly longer period of years. And the financial experience of France is a potent warning against dallying with indebtedness.