The Washington herald., 1917-05-22

they exceed the profits of normal years.
In principle. direct taxation of bust
ness activities should be avoided as
much as possible. Apart from a war
profit excess tax, business profits should
be taxed in the main not through an
impost on business itself but through the
income tax on the Individual benehci-
aries. Care should be taken lest the
wealthy man least entitled to prefer
entail consideration, !. E.. he who neither
works nor takes business risks or busi-
ness responsibilities be favored as against
the man who puts his brains, his ca
paCities and his money to constructive
use in active business.
(5) II seems to me SO manifest as 70
hardly require argument that retro
active income tax, such as has been suS-
gested is wrong both in morals and in
economics.
II the foregoing reasoning is correct
these conclusions would seem to tolloW; ;
l. There ought to be a substantial ana
progressive increase in the rate OF IN
come taxation during the war, together
with a lowering OF the existing limit or
income tax exemption. 1 believe that IN
practice the best result would be oo-
tained II the maximum rate OF taNatloh
were not to exceed say 80 l-3 per cent
certainly for the first year OF the war
A higher rate would not, in my opinion,
yield a higher aggregate OF revenue 10
the Government while at the same time
II only for sentimental reasons, ana even
though only aPPLied 10 " UeTy csuse ,s imam
cisI disIocation and retard business ac-
tivity and enterprise.
1t would seem advisable that such POI
ton Of a persons income as Is oeEotea
TO charitable purposes should be, at leasC !
subject to a reduced tax only, so as 70
countelact the tendency which eXperl]1
ence has shown to follow IN the WSEe tsS,SS Ot Z
heavy taxation, or greatly olInlhlsAlAe
charitable contributions.
2 There ought to be an excess pront
tax which might well be at a higher
rate than the present per cent or
even the proposed 16 per cent but II
should only be applicable TO the e1tent
that business profits exceed the pronIos
Of. say. a fve-year average perloSG poSi. Te, So
held to be attributable TO war condltlohs.
An onset which might be fixed at say
10 per cent per annum ought 10 be al
lowed on all new capital invested IN
business since the beginning OF the war
g. There are very numerous forms OF
taxes, stamp taxes. &c. (such as for m
stance, a 2-cent tax on checks)'- WmSh'
while they would mainly fau on the
well-to-do. would be in no way burden
some, and would produce very large
aggregate Of revenue. what seems 10
been suggested. namely. a tax on sales
e. e.. each single sale) Of all kinds OF
merchandise excepting foodstuns. ana
probably raw materian of one cent for
each dollar or greater part thereof, eX-
empting sales Of less than. say, s.. This
tax. which should he paid by the pur-
chaser would produce a very large rev.
enue II would be more widely distrib-
uted than almost any other form OF
taxation and would be felt but very
little. 1t would be easily and cheaply
collected and would begin to accure
much sooner than most other taxes.
l. I am not convinced that the total
amount which needs to be spent or
which as a matter of fact can be spent
in the course OF the year requires so
huge a sum to be raised by taxation as
our legislators appear to contemplate.
The policy of raising a large portion of
war expenditures by taxation is wise
and sound. But to be iconoclastiC in
applying that policy, TO make that por-
lame the enterprise of the country, is
neither good politics nor good eco
nomics The present has its rights as
well as the future. Sacrifices should be
reasonably averaged.
s. In determining upon the scheme and
detail of taxation. il should be borne in
mind that the intent Of taxation is not
punitive, neither Is IT to apply practical
socialism under the guise of war
the advice recently cabled here by one
of the leading financial writers in Eng
land: You should go slow in your tax
plans Too violent a financial disloca-
tion would be caused unless taxation is
most judioiously and scientifically ap-
portioned." The desire to place the
financial burden incident to war pre-
ponderantly upon the wealthy is lust
and right. but even in doing things from
to remember the old French saying that
virtue is apt to be more dangerous than
vice, because ii is not subject to the
restraint of conscience.