Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-08-24
DON'T BREAK THE
BACK OF CAPITAL
Otto H. Kahn Protests Against
an Income Tax That Would
Defeat Its Own Ends

|
OF which he warned Congress OF tho peril
In an unintelligent distribution OF the bur
dens and called attention to some OF tn
probable economic consequences or unwis
legislation. His views were severely csiti
cized by some of his correspondents. IL
has written TO one of them correcting tn
mans Interpretations and setting forti
his views with renewed vlgor Following
are some extracts from the letter.
"I fully agree with you In the principle
OF your conceptions of the duties OF moneyet
men toward the country They must b
| willing not only to surrender such par'
of their income, indeed of their fortune, a'
| the necessities of the country require, they
| must be ready not only to rellnquIsh their
affairs and to put their time. their ener-
ges, capacities and experience at the dis
posal OF the Government In time OF war
but they must be prepared TO orer their
lives If the country calls for them.
MY article on war taxation was NOT
written with any idea of questioning these
manifest and incontrovertible truths.
The question to which my article
addressed itself was not what sacrifices cap
ital should and would be willing to bear
reasonable and above all, to the pubic
advantage, to impose on capital, seeing that
there is a point at which the countiy'a
economic equilibrium would be thrown out
of gear.
"rhe fact that capital IL not subjeo,
TO income tax in Canada was, OF course,
we'll known to men OF wealth, I thought
1t point and n fact of sufficient Importance
as bearing upon our own taxation program
to deserve TO be made generally known,
That this might be considered as either
suggestion or threat of what capital
might do during the war never, ] confess,
tered my mind for it would, Of course,
be little short of treason for capital and
capitalists to take advantage Of Canadas
propinquity while the war is oil.
what | meant to intimate in saying that
capital and men Of enterprise would seek
Canada if there was no income tax, or only
n moderate one, in that country. while
America at this time imposed excessive and
practically punitive income taxation, was
this:
Capital Doesn't Forget
Capital has long memory, Capital is
proverbialy timid. / am not referring
only to large aggregations of capital. but
to all capital. | am not referring only TO
the capital and capitalists of today, but
to those who accumulate capital by prac-
ticing thrift and to those who by invention,
ny CONSPICUOUS bfSdHlHlIB bl OllltI dpIlltN'
by originality of method, etc, are instru-
ments in the creation of capital and will
he, presumably, among the future owners
of capital.
THE possessors Of capital. present and
future, would not easily forget If, in the
very first year of the war. capital in this
country were TO be taxed at far higher
rates than prevail in any European country
after three years Of war. Even If such
extraordinary taxation was removed at
once after the termination of the war, capi-
tai would remain disquieted by the fear
that the machinery Of excessively high In
come taxation, once used and found easy
of motion, might be used again for pur-
poses of a less serious emergency than now
exists Those seeking capital for other
there is bound to be very
keen contest for capital after the war
would not fail to make use of these argu-
ments.
Therefore, in the case to which my argu-
ment was addressed /. e.. unduly high in
come taxation in this country and no, or
only very moderate. income taxation in
Canada, there can be little doubt that after
the war there would be an overflow OF capr-
tai TO Canada, and that-which Is still
more important-men Of enterprise espe-
cially young men. will be apt to seek in
that and other countries fields for their
activities If the reward of enterprise is too
greatly diminished in America as compared
to what 1t is elsewhere.
Not a single one of the leading Euro
pean nations, after three years of the mos,
eXhausting war, has an income taxation
schedule as high as that adopted by the
House Of Representatives: neither republi-
can France nor democratic England nor
autoCratic Germany. or these three coun-
tries, England has imposed the highest in
come taxation yet the maximum rate
in England is almost so per cent less than
the maximum rate in the House bill The
cabinets in these countries have undergone
many changes in the course of the war.
They include Socialists and representatives
Of labor In the determination Of their
taxation program they have had the as
of the best economic brains in
Europe. Those nations have had far longer
experience than we in the science of
financing.