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I j l~l~iv'S REVIEWW wea; YORK, N. Y. t;D'Ji HLY 135,000 AUG i96$ Members of the Presidents' Panel speak out on a controversial issue. r Now that it has finally mustered the votes to pass the long-debated income tax surcharge, Congress will soon be aske& to turn its attention to another highly controversial proposal that points in exactly the opposite direction: the negative income tax. This novel ap- proach to solving one of the nation's most basic and perplexing problems- that of poverty in the midst of affluence -is being increasingly urged these days by eco:iomist's, politicians, labor leaders and social'workers. That sort of backing is not exactly unusuali for such a daring proposal. What' is surprising is that,, little known to the country as a. whole, another group is now rallying to the support of NIT: Though many in their ranks still' vehemently oppose. it, U.S. business leaders have abruptly switched their thinking on the subject~ lately. Indeed, a plurality of the 300 men who sit on Durr's REViEw's Presidents' Panel, when asked what they consider the most~ hopeful way out of the nation's current poverty dilemma, forcefully- and rather surprisingly propose just such a tax. Take, for example, President William F. May of American Can Co. NIT is, in his view, "simple, equitable and would' not tend' to accentuate our population explosion problems." Nor is he alone. Other executives are impressed by the potential benefits to 38 be derived' by replacing the present $8- billion hodgepodge of welfare programs with a negative income tax, which would pay an impoverished family enough to bring its income up to a specified level. Among the other panel- ists who give NIT their unqualified sup- port are President George Weissman of Philip Morris, President Thomas L. Phillips of Raytheon„ President Ben Willingham of Genesco and Chairman B. E. Bensinger of Brunswick Corp: Why do these men, for the most part of a conservative cast of mind, show such a: strong preference for something so new and untried-and which others, including even a few panelists, de- nounce as soeialistic?' There are many answers. They like NIT, first~ of all, be- cause of its sponsorship. The proposal for a negative income tax, as it now stands, follows the basic principles laid down by Milton Fried- man, the leader of the conservative Chicago schooli of economics and close adviser to Barry Goldwater in the 1964 Presidential campaign. Anything pro- pounded by such a man, the reasoning goes, can hardly be too radical'. NIT has an added attraction for the modern executive in that it has some of the easily measurable qualities of a profit-and-loss statement. Its mathemat- ical logic appeals to any man who must deal habitually with balance sheets. Says President Robert Semple of the Wyan- dotte ~ dotte Chemicals Corp.: "I rather like Friedtnan's approach, though I feel it would take study to find an equitable formula. For example, costs of living vary decidedly in different parts of the country, so theoretically there should be a sliding scale." Friedman's basic premise is that families that earn too little to file a tax return are thereby deprived of the automatic exemptions ($600 for each family member) and'the deductions (for medical bills, interest payments and the like) to which every taxpayer is en- titly d! For the typical family of four, those exemptions and deductions run to about $3,000. Thus the Friedman proposal to give every impoverished family a government check for $1,500 (half the $3,000 that is considered the poverty line for a family of four) would' merely compensate them for ths lost deductions and exemptions. Fur- thermore, as a positive incentive to work, NIT expressly provides that the stipen& would be reduced by only 50 cents for each dollar that the family earns. That incentive wins the approval of a majority of the panelists. In their view, the negative income tax has at least two other virtues: First, in the long run it seems likely to cut today's staggering outlays for fighting poverty. The blunt truth is that busi- nessmen have lost whatever faith they once had' in~ the nation's cumbersome welfare system. Not only have the bil- lions expended to date become a heavyy and continuing burden on every tax- payer, they argue, they have almost wholly failed to solve the ever-growing problem of the poor. And as riots in the streets have all too often demon- strated, poverty is something the nation vi no longer can afford. The enlightened businessman, then, is attracted to NIT particularly because it would' give minimum incomes to the poor without threatening to balloon fur- ther an already huge welfare bureau- cracy. According to Professor Fried- man, in fact, such a system would elim- inate tens of thousands of caseworkers. It' would be administered' not by any welfare agency-federal, state or local -but by the relatively impersonal In- ternal Revenue Service. Second, as a variation on a familiar theme, it might be argued that what is good for poverty is also good for busi- 100240245'7 ' DUN'S REVIEW (4)

~ nes~s.That is to say, any system de- signed to lift the income level of the im- poverished will necessarily create new buying power, as a number of panel- ists observe. Wyandotte's Semple puts it most simply: "U should stimulate business." Some of the top executives are even hopeful that NIT might help to reduce unrest in the cities. Says Chairman M. L. Haider of Standard Oil of New Jersey: "If itwere properly carried' out, it should tend to decrease tension among inner-city residents." Or as Morris' Weissman puts it, adop- tion of NIT would "reduce violence and improve our national conscience." President William S. Lowe of A. P. Green Refractories has still another reason for casting his vote for NIT. Unike some of the rival anti-poverty panaceas, he notes, it deserves business support because of its "lack of induce- ment to have more children." His oblique reference is to one of the most widely discussed alternatives to NIT-a system of family allowances that would pay parents a specified amount each month for each child. A minority of panelists opt f'or the latter system, which differs from NIT' in that it would make payments to all parents, regardless of need. Those above an agreed-on poverty line would simply re- port the allowance as income on their tax returns. "We are the world's only industrial democracy that does not' have such a program," argues Daniel P. Moynihan, a leading advocate. Adds Moynihan, director of the Harvard- MIT Joint Center on Urban~ Studies: "It is easy to administer, it carries no stigma since every family would get it and it would help keep poor families from breaking up." In general, however, the panelists are far from enthusiastic about family al- lowances. While President Augustine R. Marusi of Borden prefers them to NIT' and Chairman Robert Stevenson of Allis-Chalmers would go along "with reservations,"' the majority simply do not consider outlays based on family size the answer. A few of the executives choose a third alternative: government-guaran- teed jobs. They argue that since it is impossible in today's highly technical economy for business, however goo& its intentions, to make use of people with AUGUST 1968 American Can's May and Jersey Standard's Haider are two of the top executives who take a stand on some of the current proposals for a guaranteed annual income. little or no skill, the federal government should~ find work for all those unable to get jobs elsewhere. Among those who rally behind this proposal are American Can's William May and President Al- fred' J. Stokely of Stokely-Van Camp. President Elwood F. Curtis of Deere and Co. takes a slightly different tack. Curtis feels that while the federal gov- ernment would be technically the em- ployer of last resort, the hard-core job- less thus put to work should be listed on the payrolls of "private companies who would in turn be paid by the gov- ernment." Amid the debate over what to do now, it is pertinent to ask how the U.S., in the most prosperous era: in its his- tory, managed to get its welfare pro- grams into such a mess. President Ed- win L. Parker of A. G. Spalding and Bros. and President George A. Wilson of Lone Star Steel Co. both point a finger at politics. Why has the poverty problem mushroomed? Declares Parker: "Because the Kennedys, the Johnsons, the Humphreys, the Rockefellers and the courts have done so very much to convince these people that they must be supported in their insolence, their arrogance . and often in their immor- ality, in grand style, by the decent, hard-working, moral people of the United States." Warns Wilson: "Fur- nishing economic assistance to the able- bodied inevitably destroys incentive and creates bums." But the feeling that politics is mainly to blame is distinctly a minority view. Other panelists attribute the growing burden of welfare mainly to social and' economic factors-and especially to the onward march of technology. Asserts Jersey Standard's Haider: "The increase has been caused principally, by migra- tion of unskill'e& rural residents from areas of little employment opportunity and little, if' any, welfare programs to the large cities where the most attrac- tive welfare programs exist's but where employment opportunities for unskilled labor are also minimal." A different cause of the rise in the welfare rolls is cited by Allis-Chalmers' Stevenson. Says Stevenson: It has come about simply "because we are taking care of problems we avoided before." Be that as it may, whoever is elected President this fall will face two unblink- able facts in the troubled area of wel- fare: continuing automation throughout the economy that will leave even fewer jobs for the unskilled, and rising expec- tations of a better life among the very people whose menial jobs have been wiped out. If the U.S, is to: know any- thing like domestic tranquility' agains it must find some solution to this wel- fare conundrum. And' although Ameri- can Sugar's' William F. Oliver, for one, cautions that "I do not believe the best possible system has been uncovered yet," most panelists clearly feel that the neg- ative income tax has more to recom- mend it than any other plan yet pro- posed. -CERALD R. ROSEN 1002402458 39