The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-09-07
WAR TAX INEQUITIES.
Fallacies Relating to Capital and the
Dollars Low Value.

To THE EDITOR or THE suN--sir: War
tax iniauities! That Is not what the
President called them, but that Is the
way tho printers devils Of the headlines
made It. The President spoke of 'in-
equities" Strange what one wrong let
ter can do. / submit the following:
INEauIrr NO. /.
Under the existing law a friend Of
mine who made a net profit OF 3 per
cent. on the sum total of his annual
business was taxed 80 per cent. on ex-
cess profits because the capital he en-
ployed was small, while q man profiteer-
ing 800 per cent. on the volume Of his
business paid a relatively small tax be-
cause his capital was large.
INEauIrY NO. 2.
All concerns now making unusual
profits face almost with certainty un-
usual losses within the next few years
when the reaction comes. Merchants
carrying stocks Of merchandise and
making contracts. as they are forced TO
do, with the present inflated prices stand
to lose enormously from a possible col
lapse of values and also from failures
among their clients due to the same
cause. A merchant who may have
doubled his capital from earnings since
the pre-war period. with the price Of his
merchandise doubled. through no fault
of his becomes financially weakened
commercially unsound IL a large part of
that so-called increased capital Is con-
fiscated, with the possible wipng out
not only OF his excess profits but OF
his entire capital.
ISEoUITT NO. 3.
The purchasing power of the dollar,
which means its value, has shrunk al
most SO per cent. since the pre-war
period. To hold a merchant down TO
the pre-war capital through coniiscatory
taxation Of excess profits is forcing
him virtually TO do business on half OF
his former working capital, constituting
unsafe credit expansion.
INEoUIrY NO. 4.
That industries that are Fronting d.
rectly and disproportionately from the
war should be taxed no more than those
Industries whose excess profits are only
apparent, being only greater when meas
| urcd by the standard of the deprecated
purchasing medium.
lNEoUITY NO. 5.
That the tax on profits on a large in.
vested capital should be smaller thar
the tax on the profits from brains backed
by small capital
INEaUITY NO. 6.
That copartnerships should be de.
| barred from charging to running ex.
~. a-la 80 arN~
| mensurate with services rendered, as 4
is the case with corporations. There are
corporations paying salaries Of 500, 00(
and over which are charged agains
| gross profits. No such amounts are al
lowed in the case of copartnerships. Tht
| adjustment of $4,000 in the present law
| is inadequate.
Let us hope that the law about to bt
| enacted may eliminate these inequities
| / do not wish to defend any one tax
| ing advantage of the excess of demand
over supply for the purpose OF profiteer
| ing, but I wish to protest against tn
unjust and misleading statements Civ
ing astonishing percentages of prof
emanating from Washington. We Sc,
such misleading headlines as this Max
imum Increased Profit Was Made b!
Food Dealer, 2lS3 Per Cent. on a Capt.
tai of $1,000" 1t is not the PROFIT mad
on capital but on the transaction which
concerns the consumer. II this deale
| with a capital of $1,000 borrowed none!
| from friends and banks, made his pur
chases on credit, sold for cash. n. pothe
Gated stocks of merchandise he carried
perhaps mortgaging his house to pay hi
bills, and by quick turn did bushes
of a half million dollars at profit o
10 per cent. he would have made $50
600, a moderate and perfectly legitimat
4 thing to do.
That the foregoing represents thi
| particular case / have no means @
knowing. but / know that similar un
Just statements have been made. The
are as pernicious as they are fallaciou
and misleading, for they promote discon
tent. help the cause of socialism an
will complicate postwar readjustment
OF economic conditions.
4 newsboy starting with dollar an
making the pittance OF 80 cents pc
day makes an annual profit of 1000
per cent, on his capital True. he pay
no taxes. but n syndicate of one thou
sand such newsboys would come unde
the highest profit tax rate.
CHARLES VEIN.
New York, September 6.
| patadam mr. EJarEsou3