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who’ control the markets pass on costs,
including taxes, through higher prices
to consumers, ag recently seen in the
Case of primary steel and nickel. In-
Creases granted to workers in the
Nickel industry are estimated at $85
Million dollars plus, whereas revenues
fom announced price increases will
amount to over $600 million.

Clearly, what we face is a govern-
Ment-employer collusion in which the
largest corporations and monopolies
Call the tune. As a result of these state
and monopoly policies in the interest
Of super profits, there is a rapid and
&fOwing polarization of wealth and
Poverty in which millions of workers
become impoverished.

' In these circumstances, the new
€chnology, instead of raising living

Standards, actually increases private

Profits while keeping wages depressed.

Orking conditions worsen to the
Point of ruining a worker’s health and
ability to work in a few years.

3 What we are faced with now, is in-
tensified exploitation by international
Monopolies, using physical speed-up as
Well as the new technology to enhance
their profit position at the expense of
labor,

It is rather obvious from this, that
Collective bargaining alone cannot solve
all of labor’s problems. Political as well
aS economic struggle is essential to
advance the interests of workers and
their allies. The character of this poli-

tical battle is more and more a strug-

sation, etc. while making premiums for
such benefits tax-deductible. Benson’s
White Paper applies this principle to
unemployment insurance but is silent
on the other items. Mr. Benson has ob-

viously been listening to the life insur-

ance lobby.
CAPITAL GAINS

The most important provision of the
White Paper is that capital gains will
be taxable. If honestly applied, this
would effectively close the most com-
mon route to tax evasion.

In a period when inflation, in one
degree or another, is a built-in feature
of the system, it is ridiculously easy
for the rich to convert “income” to
“capital gain.” For the really rich, this
has been a matter of accumulating pro-
fits in company treasuries and then re-
alizing those profits by selling shares
at a price including the accumulated
profits. For professional people, it has
been a matter oft buying real estate and
using the high depreciation rates on
such property as a deduction from their
taxable income. For corporation execu-
tives, it has been a case of taking part
of their remuneration in the form of
shares at arbitrarily reduced prices, to
be sold in the market at a non-taxable
profit.

The declared purpose of the govern-
ment is to tax such gains as income.
If so, the major route to tax evasion is
closed, and Benson estimates that the
government will pick up about $400
million a year of additional taxes from
this source.

This intention must be applauded,
but one cannot but wonder at the dis-
tinction Benson makes between “‘close-
ly held” companies (those with only a
few shareholders, mainly small com-
panies) and “widely held” companies.

‘Capital gains on the shares of the for-

mer will be taxed at 100 percent, but
the latter only 50 percent. To this ex-
tent, the really rich will still have their
escape hatch half open.

gle involving masses of people, large
mass actions, such as strikes and de-
monstrations having political as well
as economic objectives.

This makes it imperative for the
Canadian Labor Congress to initiate
discussions within affiliated unions and
throughout the broad labor movement
on a labor political action program,
promoted and campaigned for by or-
ganized labor. If independent labor po-
litical action is to succeed, it cannot be
left to political groups within or with-
out the unions and central labor bodies.
Organized labor, through the trade

unions, must lead mass _ Struggles
around clearly defined objectives.
e

Millions of young workers and wo-
men have entered our labor force. This
fact must find reflection in leadership
of our trade union movement at. all
levels. About one-half of the members
of our unions in mass production in-
dustries are now below the age of 30.
Only their full participation in deter-
mination and execution of policy can
make our trade union movement a force
for radical change in our society.

Providing these changes are made
quickly enough and in conjunction with
elimination of political discrimination
within the unions, the decade ahead will
halt monopoly and drive it back. Tre-
mendous gains will be made by the
working class, perhaps far beyond what
we dare to forecast at this time and in
current circumstances.

r

TTT

There are some provisions to pre-
vent undue hardship in the sale of ‘a
home or family farm ($1,000 of exempt
price increases for each year of occu-
pancy) but this may still involve con-
siderable injustice. Thus in a period
when housing costs are rising as rap-
idly as they have since 1965, for ex-
ample, a family having for one reason
or another to move its residence might
find itself in effect exchanging one
house for an identical house and yet
paying a tax on a hypothetical “capital
gain.”

Real justice would require that the
family home and the family farm be
exempted entirely from the capital
gains tax.

CORPORATION TAX

Corporation taxes are to be amend-
ed to favor large over small compa-
nies. In the past, companies with under
$35,000 profit have paid only 21 per-
cent tax. They will now have to pay
50 percent.

Moreover, an important distinction is
drawn between “closely held” and
“widely held’ companies. The income
of the former will be taxed at the per-
sonal tax rates of .shareholders, as if
they were unincorporated businesses.
Moreover 100 percent of their capital
gains will be added to taxable income.
This is the rule that will apply to most
small business.

Widely held companies—which es-
sentially means companies large
enough to be listed on the stock ex-
changes—will pay a straight 50 percent
tax rate. Shareholders will be taxed on
150 percent of their dividend income
but will get credit for half of the cor-
poration tax. This-means that an in-
vester in such a company would pay a

mining industry which argues that it
is unfavorably affected.

The public should understand that
under Benson’s proposals, a mining
company will not be taxable until it
has recovered its entire investment out
of profits. Moreover, even after it has
written off its entire investment, it will
still be able to deduct up to one-third
of its profits as “depletion.” The rest
of us should be so lucky.

In the war and early post war years,
the term “double depreciation” meant
simply that a company could charge off
its investment twice as fast as usual,
and was thought to be a major conces-
sion to war industries. But the mining
companies under Benson’s rules have
real double. depreciation— they can
actually write the same investment off
twice. And these are the people who
are doing the bellyaching about the
White Paper. :

Kenneth Carter, in his liberal in-
nocence, imagined that banks and in-
surance companies could be made to
pay their share of taxes, and went
through the exercise of devising rules
for taxing their true incomes. ‘With the
liberal’s conception of equal treatment
he also proposed to take away the tax
advantages of cooperatives and credit
unions. Benson, whose “liberalism” is
spelled with a larger L, has adopted
the latter proposal, but manages to
write a comprehensive White Paper on
taxation without even mentioning in-
surance companies or banks.

POLITICAL CONSEQUENCES

This piece of fiscal folly will prove
to be a political boomerang.

Benson has computed, on the basis
of some doubtful assumptions, that his
“reform” will remove 750,000 persons .

Income 1969, say

Tax at present rates
Income 1971

Tax by Benson’s proposal

Single Taxpayer Married Man
$5,000 8,000
$ 817 1,387
$5,800 9,280
$1,070 1,740

maximum of 26 percent tax on divi-
dends received, even if he is in the
highest taxable bracket, and some
shareholders would actually receive re-
funds instead of paying taxes.

Moreover, shareholders in widely-

held companies would be taxed on only

half the capital gain on their shares,
whereas the tax applies to 100 percent
of capital gains of individuals or small
(“closely-held”’) companies.

INTERNATIONAL EFFECTS

Since the tax advantages to share-
holders of large companies apply only
to “Canadian” companies, there should
be an encouragement to Canadian
ownership, i.e. to the purchase of Can-
adian shares by Canadians. However,
the test for tax credits will be Can-
adian incorporation. Most foreign-
owned corporations in Canada are in-
corporated in this country and their div-

idends would qualify for tax credit. In-

short, the new rules will not discourage
U.S. ownership of Canadian resources
but may give positive encouragement
to Canadian ownership.

In general terms, the White Paper
expresses the intention of putting an
end to the possibility of escaping tax
by doing business through “tax haven”
countries. However, this is not suf-
ficiently spelled out to determine whe-
ther the new rules would in fact apply
Canadian tax to the CPR, E. P. Taylor
and similar patriots who have estab-
lished residence in the Bahamas to es-
cape tax.

MINING COMPANIES

A good deal of the propaganda
against the Carter Report and against
the Benson proposals comes from the

from the tax rolls, and reduce taxes
for an additional 3,100,000.

However, even if this should prove
to be true for the 1969 level of in-
comes, as he claims, the further pro-
gress of inflation by 1971 when the
White Paper is intended to become ef-
fective, will have pushed most of the
3,000,000 up into the income. bracket
where his increased tax rate becomes
truly vicious. Consider a worker whose
union agreement provides for increases
of eight percent a year to meet the
ravages of inflation:

With each passing year, as the level
of monetary incomes rises in the un-
equal battle to keep abreast of prices,
more and more /workers will feel the
impact of Benson’s increased rates and
will react accordingly. Their indigna-
tion will be added to that of the pro-
fessional and small business people on
whom the impact is more immediate.

FINAL WORD

The principle of progressive taxation
has been preserved throughout the his-
tory of the income tax. What happens
when the government imposes a ceiling
rate at a level as low at $24,000?

In the past 23 years the annual wage
of a common laborer has risen from
$1,500 to $6,000. If the same trend con-
tinues it could rise in the next 24 years
to $24,000. At that point, under Ben-
son’s preposals, all taxpayers, laborers
and millionaires alike, wil! be paying
tax at the rate of 50 percent. In the in-
tervening years as inflation proceeds,
we will gradually approach that situa-
tion. What Benson is proposing, in fact,
is the gradual abolition of the principle
of taxation according to ability to pay.

PACIFIC TRIBUNE—JANUARY 9, 1970—Page 7