The Washington times., 1918-10-14
BANKER WRITES
ON WAR TAXATION
BY JEAN MOTT

Business men who read The Wash.
| ington Times and who are interested
in the important problems of taxa
ton will be interested in this letter
which the weII-known financier. Otto
H. Kahn, sends to the New York
World:
In order to make my position clear.
may 1 say that am wholly in favor
OF the highest practicable rate of
taxation on war profits and OF the
highest rate OF personal income taxa
tion which wisdom and experience
justify? Indeed, ! advocated the i'm
position OF income taxes long before
the passage OF the constitutional
amendment which enabled such taxes
to be laid.
Il am in favor OF taxation which,
first. lays the heaviest burden on
those best able to bear it, and, sec
ondly, raises the largest obtainable
amount OF revenue with the least eco
nomic disturbance, and, as far as
possible, with the effect Of promoting
thrift.
THE criticism which I felt free to
make OF the income and inheritance
taxation schedule adopted by the
House, its rates rising. as they do. far
beyond those existing in any other
oelligerent country, is twOfold:
Sentimental Eject.
Il. The sentimental and thereby the
actual effect OF extreme income taxa
tion is not confined to the relatively
small number OF people in possession
Of lHSBe incomes directly affected by il.
The apprehension caused by the
contemplation Of an excessively high
ratio OF taxation is contagious and
apt to react unfavorably on construct
i've activity.
ut is highly important that taxa
tiOn should not reach a point at which
business would be crippled. cash re-
sources unduly curtailcd. and the in
centive to maximum effort and enter
prise destroyed. And it must not be
forgotten that both theoretically and
actually the spending of money by the
Government cannot and does not have
the same effect as productive use OF
his funds by the individual
80. It is an old maxim Of taxation
that an excessive imDost destroys its
own productivity. 1t attains that in
nvitable result in variety Of ways,
both actual and psychological
FdNOrA stamp IaNeS.
My advocacy OF consumption and |
similar taxes, such as stamp taxes OF |
many kinds. is not actuated by any |
iesire to relieve those with large in !
,omes from the maximum Of contri-
'ution which may wisely be imposed
IN them. ! advocate consumption and
tamp taxes such ds every other bel
igerent country without exception
las found it well TO impose. because
y the wellattestcd fact that while
productive of very large revenues in
he aggregate, they are easily borne,
productive Of no strain or disIocatiOn
nd automatically collected, and be-
ause OF the further fact that they
end to induce economy. than which
othing is more Important at this
ime, and which. as far as J can OBJ
erve. is not being practiced by the
ank and Tile Of our people to a de-
rec comparable to what 1t is in Eng
and and France.
And II must be emphasized that
he vast possibilities or saving do not
est with the relatively small num-
er OF wealthy people. especially now
'hen their spending power has been
cry largely decreased through taxa
ION, price-fNinE, contributions to
'ar charities. etc, hut with those eIe-
rents among the masses Of the peo-
!e whose spending power has been
cry largely increased that is, main
? the workinsmen and the farmers.
Heavy TaNatICn. II
THE tendency of the House bill Is | |
} rely mostly on heavy taxation in |
ome respects unpreCedenicGIy heavy | |
of relatively limited selection OF |
ems. | am, aS 7 have already said,
favor OF the highest possible war
rofits tax. and OF 1t least as high
lte OF income and Inheritance taxa
on as exists in any other country.
ut apart from these and a few other
ems which can naturally support
ary heavy taxation. such. for in /
ance, as cigars and tobacco. I be- i
eve that the maximum OF revenue
I'd the minimum Of S"onomir disad !