C Douglas Dillon's Influence In The Formulation Of Government Policies

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The Secretary of the Treasury, C. Douglas Dillon, was immensely influential in the formulation of policies that addressed both domestic growth and the balance of payments deficit. The Republican, who was said to have a close working relationship with many members of Congress, worked very closely with the President on numerous policies and ensured their enactment. One course of action that was taken to address both the domestic growth and balance of payment concerns was the implementation of an investment tax credit for factory plant and equipment that would revitalize domestic industry and reduce the amount of productivity which was lost to obsolescence. When the Kennedy administration was determining possible courses of action to address this concern, the two possible courses of action were a compensatory tax cut and an accelerated…show more content…
As for the administration of the tax credit, the deduction would be applied to the tax bill of a corporation at the end of the year, as to not interfere or complicate their current tax accounting systems. Furthermore, the tax deduction earned from utilizing this credit could only amount to 30% of a corporation’s tax bill for a year. As it stood, the tax credit plan would have been able to create sufficient incentive for businesses to invest in new property, plant, and equipment, and through this, new employment opportunities would arise and the increase in production capacity would increase the ability of American firms to export products, which would impact the balance of payments. The Kennedy administration lobbied immensely in hopes of passing the bill as it stood, but as the proposal progressed through Congress, the House of Representatives Ways and Means committee removed the multi-tiered system and replaced it with a flat, 7% credit for the cost of new machinery or equipment. In its modified form, the tax investment plan accomplishes the same objective, just to a lesser degree than Secretary Dillon and the

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