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Jack Ranger

Tapping the Wall Street Wire

(2 June 1947)

From Labor Action, Vol. 11 No. 22, 2 June 1947, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The College Tax Racket

Big Business, which controls the schools and colleges of. this nation, uses that control in many ways, to defend its own interests. In recent years it has perfected a new gimmick – the use of its educational institutions in order to avoid payment of taxes.

Non-profit colleges pay no federal income taxes, file no returns. Many of them have substantial funds to invest. Big Business is always looking for ways to evade taxation. Here is how it is using the colleges for that purpose:

Spiegel, Inc., a Chicago mail order house, recently sold an eight-story brick building and warehouse in Kansas City to Yale Uniyersity for $1 million. The mail order firm immediately leased back the properties from Yale for a 100-year period. Thus Spiegel will pay no taxes. Neither will Yale. Clever?

The University of Pennsylvania a year ago bought the block-square store building and land owned by Lit Bros., Philadelphia department store. Lit then leased the property from the University for 23 years.

Ramsey Accessories Corporation, St, Louis manufacturing company, early in 1946 sold all its assets to the Ramsey Corporation of New York for about $3 million. The New York corporation is a tax-exempt organization whose profits go to the medical and law schools affiliated with New York University.

Union College, Schenectady, bought practically all of the real estate and buildings owned by Allied Stores Corporation, department store chain, for about $16 million.

Washington University in St. Louis owns 51 business buildings in St. Louis, others in Kansas City. It even owns a railroad freight station and a switching yard. All its property is leased back to businessmen. St. Louis city officials estimate the city's annual tax loss on university-owned property is about $220,000.

Back in 1944 Gimble Bros., Philadelphia, sold its block-square property to the Fidelity-Philadelphia Trust Co. as trustee for a group of schools and colleges, then leased back the store building. (We are indebted to the Wall Street Journal for these examples.) It’s a nice racket for Big Business. Other ways in which the wealthy use the colleges: To perform research work for private industry; to order the professors to speak out on all political questions, taking the Big Business viewpoint; to control the thinking of the youth.

The $5,000-a-Year Man

How does the family with an income of five grand a year – well above the average – get by in these days of high prices and high taxes. For some weeks I’ve been carrying around a clipping of an article by Bernard Possner which appeared in the New Republic. Possner has a wife and baby and gets $416.67 every month at the pay window – less, of course, $48.67 for withholding taxes. Rent takes $65, food about $95. He says it costs him $25 to operate an old car, and that he pays $22 monthly for laundry, cleaning and diaper service. Clothes call for $20. He spends $25 on recreation and charity; $5 for newspapers and other reading matter; $20 for lunches; $30 for furniture, house-cleaning equipment, bathroom needs. The guy apparently has faith in the government, because he buys a monthly savings bond, which, with his insurance payments and telephone bills, comes to around $40.

Possner says at the end of the month he has nothing left. He can't buy a new car, or a radio-phonograph, or modern kitchen equipment, or fine clothes. What about those with substantially lesser incomes? The good things of life, materially, are still further from reach.

Possner’s income looks adequate to most of us, and it seems he could get by easily, but he says no. Only four out of each 100 war veterans make as much as $80 a week, which is less than Possner makes. The average weekly income of married vets is $48.

The Sale of War Plants

Up to March 31, the War Assets Administration sold, leased or transferred 968 industrial properties. These plants cost the government $3,203,706,000. The government received $988,802,475. Big Business thus picked up these properties for a little under 30 per cent of their cost.

Of the 968 properties, 731 were sold outright, 211 leased, and the balance transferred for so-called “public benefits.” Most of the plants disposed of, 599, were in the less-than-$1,000,000 class. Some 247 plants cost between $1,000,000 and $5,000,000; five plants cost more than $50 millions; 53 cost between $5,000,000 and $10,000,000, etc.

As of March 31, WAA had 363 surplus industrial properties on hand for disposition. Big Business had gabbled up all the rest, those most desirable and most strategically located. Only the cats and dogs and the white elephants are left. Rather than pick these up, even at bargain prices, business has chosen to build its own new plants and to purchase new equipment.

Private business expenditures amounted to $13.5 billion in 1946. In 1947 total business expenditures for plants and equipment are expected to reach $15 billion, an all-time record for a non-war year, according to the N.Y. Journal of Commerce. The Securities & Exchange Commission and the Department of Commerce set the figures slightly lower – $13.9 billion estimated for 1947, $12 billion in 1946. Taking the lower estimate, industry will still spend for new plants and equipment in 1947 70 per cent more than in 1941, and more than 50 per cent higher than in 1929, the two highest pre-war years.

Economic Notes

The merchants in Newburyport, Mass., have wound up their brief experiment for 10 per cent price cuts. After the 10-day period ended, all the stores quietly dropped out one by one. One food store said it lost an even $100 in the experiment, and a clothing store said the same. Retailers said they were unable to obtain a single price reduction from their suppliers ... Non-housing real estate holdings by the big life insurance companies of the U.S. reached $87.millions in April. In January alone, such holdings exceeded $10 millions. Insurance firms have turned to this type of investment just in the past year. Now they are acquiring department stores, chain stores or office or loft space for established firms, leasing the properties on a long-term basis ... The amount of turkeys in cold storage is the highest in history – about 130,000,000 pounds as of January, almost double two years ago ... Department store inventories of major household appliances in the New York area are 416 per cent above a year ago. Men’s clothing stocks are up 168 per cent; carpets, up 194 per cent; dry goods, up 158 per cent ... 36 states and 35 cities now impose taxes on cigarettes ... in 1946 an average of $89 for each person above the age of 18 years went for the purchase of liquor in the U.S., for a record national liquor bill of $8.7 billion. Forty per cent of the 1946 total, or about $3.5 billion, went to federal, state and local government, with the federal government taking the biggest bit – $2.7 billion.

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