THE PRESIDENCY: Attack at Arthurdale

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Mrs. Franklin D. Roosevelt had a date to address a high-school graduating class in northern West Virginia—at Arthurdale, the subsistence homestead community closest to her heart. But in her husband's chest welled up something which he wanted to get off to all the People. He announced that he would fill Mrs. Roosevelt's engagement, using a national radio hookup. Before he left Washington last week, newshawks knew what was on his chest: the 1938 Tax Bill, still lying unsigned, un-vetoed at the White House.

Instead of speaking, Mrs. Roosevelt attended the commencement hop. In a gay print dress and highest spirits, she square-danced, Virginia-reeled and trucked with partners young & old (see cut). The President roamed in his car through the Arthurdale project, stroked the muzzle of the community's prize cow, said: "That's a West Virginia moose."

At the commencement exercises, the graduating class—13 hill children in grey caps & gowns—were waiting for him on the Community Building stage decked with mountain laurel. Their parents and friends clustered around as Franklin Roosevelt greeted them and, over their heads, addressed all school graduating classes, all the People.

He told them that the cost of social pioneer ventures like Arthurdale "we justifiably charge off as the inevitable cost of all progress."* A better investment for taxpayers he could not conceive than "able, alert, competent and up-to-date people." And now, "How should taxes be paid?"

In its new tax bill, he regretted to say, Congress had flouted two "very fundamental principles" of Government: 1) In alleviating for small businesses the tax on undistributed profits, it had reopened the loophole for Big Business to avoid taxes. "The penalty for withholding dividends from stockholders is so small—only 2½ % at the most—that it is doubtful whether it will wholly eliminate the old tax avoidance practices of the past." 2) "This new bill wholly eliminates the progressive tax principle with respect to ... capital profits ; it taxes small capital profits and large capital profits at exactly the same rate."

The President pictured to the subsistence homesteaders a stock profit of $5,000 which he or they had made over more than two years. Ranging it alongside a $500,000 stock profit made by some other man, he told them that the new tax law would require the $500,000 man "to pay a tax of only 15%. just as you and I would. . . . Nobody, by any stretch of the imagination, can say that this new provision maintains the principle of payment in proportion to ability to pay."

For these reasons, he said, he gravely disapproved the new Tax Bill. But it did have some good features. "Therefore, for the first time since I have been President ... I am going to let the act go into effect at midnight tonight without my approval.

"By so doing I call the definite attention of the American people to those unwise parts of the bill . . . one of which may restore in the future certain forms of tax avoidance, and of concentrated investment power, which we had begun to end, and the other a definite abandonment of a principle of tax policy long ago accepted as part of our American system."