Forced Savings and the Pending Tax Bill
Consideration by Congress, late this year or early next year, of a plan for forced savings more productive of revenue than the Senate Finance Committee's 5 per cent Victory tax—which includes an element of forced savings'—has been foreshadowed by the committee's insertion in the pending tax bill of a provision calling for creation of a joint congressional committee to report by December 1 on new tax proposals, with special attention to compulsory savings. Adoption of a far-reaching plan of compulsory savings, calculated to reduce consumer spending and provide the government with badly needed additional revenue, is advocated as a fair and effective means of combating inflationary pressures.
Tax increases imposed by the new revenue bill, in the form in which it is expected to be reported to the Senate, will not, without an unexpectedly large increase in voluntary purchases of war bonds, close the widening inflationary gap between the volume of buying power in the hands of the public and the supply of civilian goods available for purchase. Nor will the government receive sufficient revenue from these sources to finance the war program without continued resort to the heavy borrowing from commercial banks that is building up a base for inflationary credit expansion.
Secretary of the Treasury Morgenthau declared, September 17, that “there has just got to be more revenue, and we feel emphatically that there will have to be enacted into law some kind of legislation as a deterrent on spending by the public and as an incentive to save.” Chairman George (D., Ga.) of the Senate Finance Committee voiced the belief, two days later, that a compulsory savings program would have to produce between $12 billion and $15 billion annually. Those totals are more than twice the estimated yield of a tax on consumer spending, partially refundable after the war, which the Treasury proposed and the Finance Committee rejected early this month, but which will no doubt come up for renewed consideration.