Economics Professors Predict Tax Cut

Harvard Economics professors surveyed yesterday said that the nation's economy shows few signs of life, although it is not yet dead.

Seven professors contacted agreed that the government will probably institute a tax cut or rebate early in 1977 to stimulate the economy's growth.

Otto Eckstein, Warburg Professor of Economics, said a tax reduction of some sort is the quickest way to get the nation out of its current economic stall.

But Eckstein said, "Even if Carter announces a tax cut in his first speech in January, the soonest it could take effect would be April."

"But at least if people know it is coming, they will stop worrying and the situation will improve somewhat," Eckstein added.

The present unemployment rate, which the Bureau of Labor Statistics reported Saturday as 8.1 per cent, is the most severe weak spot in the economy, the professors said.

But Martin M. Feldstein, professor of Economics, said yesterday, "Overall, unemployment is not as bleak as it seems."

Feldstein said the government adjusts the unemployment figures to account for seasonal lags or spurts in job availability.

"This year they changed to a new type of seasonal adjustment that understated the figures in the spring. So the fall figures are overstated to offset the earlier mistake," Feldstein said.

Hendrik S. Houthakker, Lee Professor of Economics, said President Ford will suggest a tax cut in his budget proposal. But this may interfere with more substantial tax reforms that are needed, he added.

"A tax cut is a simple measure that can be accomplished fairly easily. It will override any chance for more extensive repairs in our tax system," Houthakker said.

He said corporate taxes are one area that specifically needs revamping.