The Ward County independent. [volume] (Minot, Ward County, N.D.) 1902-1965, 1918-08-22

| ute books that no one in all the years
to come can make such charge.
In this Connection there is q change
which should be made in our Federal
| Farm Loan Law, so that it may not
| be refuge for rich income tax slack
ers. When this law was passed, two
years ago, the bonds of the Federal
Farm Loan Bank were exempted from
all taxation. This was done on the
theory that it would save the farm
ers, who borrowed money at the bank,
about half Of one per cent in in
tercst. At that time we were not in
war, and the income tax rate on large
incomes was only 6 per cent, so that
the government was not losing great
deal in revenue, while, theoretically,
at least, farmer borrowers We're being
saved half OF one per cent interest.
AS the income from 5 per cent ST.
900 land bank bond is $50, the holder,
through its exemption from taxation,
escaped the E per cent income tax or
only $500, while the farmer borrower
of $1,000 was supposed, as a result,
to save one half of one per cent in
terest on his loan, or $500 annually.
Thus the law appeared to work in
favor of the borrower, more than of
the bond holder.
Today all this is changed, as a re-
suit of war taxation. Our present
revenue law provides that all incomes,
in excess Of $1,500,000 (and it is sur
prising how many there are of this
| magnitude, as result of war pro-
| fits) must pay lax of go per cent,
instead of only 6 per cent. In other
words, instead OF escaping only 6 per
! cent or $500 tax on the income of $50
from a $1,000 band, the owner, with
over S1,500,000 income, now is escap-
ing 81 per cent, or $31 LOO, while the
| farmer continues to save but $500
| in interest annually on his ST, 900 loan.
This means that for every dollar saw
| ed the poor borrower, the rich bond
holder is benefited to the extent of
$500.
Perhaps I can make this clearer by
taking a concrete example. Let US
suppose that Mr.. Honeybags, as a
result Of government contracts, or
price regulation, OF downright "prof-
teering" has an income of $2,00O,000.
OF this sum, all that over $1,500,O00
(or 100000 in this case) would be
subject to tax Of 81 per cent unless
for some reason it were exempt. Six
ty-two per cent of 100000 is $4,000
which is the amount Of taxes he would
escape if this extra 100000 were in
come from federal loan bonds.
On the $1O0,O0O,0O0 of federal farm
loan bonds now outstanding, this
would mean an annual loss to the
government Of $3,100,000, if all these
bonds were held by men with such
incomes. That these bonds are rap
idly drifting into such hands is indi-
Gated by the daily stock market re-
ports. In the latest quotations of
stock transactions on Wall Stree, New
York, I notice that 5000 of these
bonds changed hands at price of 1903,
which is $500 above par. This means
that some man with an immense in
come, subject to heavy taxation VERY
possibly one with an income Of over
$1,5O0,OOO, which would subject the
excess to tax Of 62 per cent? was
willing to pay a premium of $50 on
every $1,000 bond, for the privilege
of investing his war profits in federal
farm loan bonds, in order that he
might escape the tax, because of the
law making income from such a
source untaxable.
Now every dollar Of income in the
hands Of the extremely wealthy,
which escapes taxation for war pur-
poses in this way, must be made up
by increased taxation on the great
mass of the people Of moderate means.
In other words, while saving $500 in
terest on a $1,000 loan, the farmer
borrowers of this country are helping
make up by their taxes $31 on each
! $1,000 bond. AS the total loans to
farmers on the federal land banking
law are about 100000, the amount
saved them in interest would be only
100000, as compared with 3d. 900
lost to the government in taxation on
the bonds, which must be made up
from other sources.
| Now, no one in particular, is to
blame for these conditions. They
could not be foreseen, but now that
, they are realized, no time should be
lost by congress in correcting them.
With the prospect of an even larger
tax than 81 per cent on such large
excess profits and with these federal
farm loan bonds drifting rapidly into
the hands of the extremely wealthy
tax-slackers, the need for prompt ac
ttion becomes even more imperative
I believe that all the beneficial feat
ures of Che federal farm loan system
can be retained without this draw
back and that the tax exemption feat
ure should be Immediately repealed,
J .&1 f,,11 chn ~