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Jack Ranger

Tapping the Wall Street Wire

(20 January 1947)

From Labor Action, Vol. 11 No. 3, 20 January 1947, p. 2.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

I’m sorry if you feel this is where you came in, Jack, but I have to take just one more crack at that >Wall Street Journal> series on how the wealthy are finding it hard to make both ends meet these days. We’ve already had a gander at the $10,000-a-year and the $45,000-a-year man. This time we observe Mr. C., “a $200,000-a-year chief executive of one of the country’s top industrial concerns.” A salary like that is the equivalent of $4 million in the bank at five per cent interest. While it is still far from the income of America’s 60 Families, it places Mr. C. as one of the trusted managers for the families who own the bulk of America.

We first glimpse Mr. C. alighting from a taxi in front of one of Wall Street’s skyscrapers. He pays his fare, then pulls a black notebook from his pocket and writes this entry: “Wednesday – taxi, station to office, $1.50, tip, 15 cents.” Mr. C. is noting all his “business” expenses these days, in order to deduct them from his income for tax purposes. Most of us take street cars to work and we don’t deduct the fare from our income. Mr. C. takes taxis and deducts the amount.

Last year, Mr. C. received a salary of $198,675. He deducted 10 per cent for “charitable contributions” – probably donations to his favorite anti-labor outfit – paid his income taxes, and had left a total of $36,611, it says.

But how can a family of five live on a beggarly thirty-six grand? Mr. C. has given up his life insurance, aggregating $250,000, because “I could no longer afford to pay the premiums. It was a tough decision to make,” he says. “It meant kicking over everything I had planned for my family. But under the circumstances it was the only thing to do. My boys won’t get as large an inheritance as they might have, but I guess they’ll be better off with less money.” There was a dubious note in his voice at this last.

The drop in income is bad enough, says C., but when it is accompanied by a rise in living costs, “brother, it really pinches.”

“At home,” he explains, “we’re paying 100 per cent more for our chauffeur, gardener and servants than we did before the war. In addition, we give them all the fresh vegetables they want from the farm (Mr. C. must own a farm), a dozen eggs each week, turkeys at Thanksgiving and Christmas.”

Even the Servants Go on Strike

That is Mr. C.’s story. But the servants obviously have a different story to relate, because Mr. C. confesses to the reporter that “Even with all this, they threatened to strike a few weeks ago unless they were given a $5 a week raise. They got it.”

This is interesting and significant. As a rule, servants in a very wealthy home arc more reactionary than their masters. That is, they take seriously all the expressed reactionary opinions of the rich. The King’s footman is, as a rule, more royalist than His Majesty.

Here we see that this great mass discontent sweeping the United States has struck so deep that it has entered the servants’ quarters of the fabulous mansions of the very wealthy, and has set these persons to thinking, to organizing, to rebelling; Good.

Mr. C., “like most successful business men,” is a sociable fellow. That is, he used to be. Now. he has done a “pruning job” and his total club memberships number less than five. “Where a club membership is deemed necessary for business reasons, his company pays the initiation fee and dues on the grounds they are legitimate business expenses. The company does the same for all its officers and key men.”

Mr. C. has never lived extravagantly or even elegantly, says the account. “He’s never owned a yacht or a string of race horses.” He would like to build a swimming pool behind his house, “but to build it, I’d have to sell a couple of my government bonds. I don’t like to do that, so I’m getting along without the pool. You know, I find I’m developing an inferiority complex on spending money.”

In spite of the absence of luxuries, as noted above, “Mr. C. feels he’s doing pretty well. With the exception of last year, when he drew on his savings to buy two automobiles, he’s managed to live within his income.”

Mr. C. told the reporter of the similar hard times his fellow executives were having, what with high taxes, high prices and all. The reporter asked him a good question: “If taxes take so much of their income, why not pay executives less and help them reduce their tax bills?”

That is just about what the Workers Party proposes. In the program of our party you will see a demand: Limit annual incomes to $25,000. We want to help all the C.’s with their tax problems. We want to take the money away from the rich and use it to raise the inadequate wages of the poor.

An “Energizer” to Prod the Poor

Mr. C. sort of bridled at that one. He sat up straight and pursed his lips. You could see he was thinking of our welfare. “High executive salaries,” he declared in an impressive tone, “are an energizer to inspire those down the line to equip themselves for the higher jobs.”

He felt this needed a little more explaining. “Just as profits are the measuring stick which judge the efficiency of management, the salary received by a member of management is the standard by which he is judged not only by others but in his estimation. It is also the most practical method of rewarding ability.”

You know what I think. I think Mr. C. isn’t paying out all that heavy sugar in taxes that he says he is. I’ve talked to several of the tax specialists employed by the rich to help them keep hold of their dough, and I know a trick or two.

So does the >Wall Street Journal>, for just recently they ran a front-page article, explaining how “Gifts to Charities can result in big tax savings to people in high bracket incomes ... Playing Santa Claus in some cases may mean an actual cash gain for the giver.”

The article goes on to explain that “When a donation is made in securities, the value of the gift for tax purposes is measured by the market value of the securities when the gift is made, not by their original cost. Thus the individual who gives securities on which he has a profit gets a double tax benefit. He saves the income tax on the market value of the gift and the capital gains tax on his profit.”

Just by happenstance, they take a man earning $200,000 a year – like Mr. C. – to explain how it works. Supposing C. gives stock that cost him $2,000 but is presently worth $10,000. The income tax saved on the gift is $8,645. The capital gains tax saved on $8,000 profit is 2,000. The total tax saving is $10,645. The net gain to our Mr. C. is $645.

As Lenin used to say, the million ways that the rich have of robbing society will never be cataloged or known.

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