The sun., 1918-09-12
Killing the Liberty Bond Market
with UnsOund and I'm.
lust Taxation.

Just AaAotiVus
For the cOuntry's war chest, for the
country's very foundations, it is for
tunate that Secretary McADoo's in
tellect is as lucid as Chairman
kIrcHIN's is nurky.
In urging the Congress leaders to
grant further tax exemptions to hold
ers Of Liberty bonds, Mr.. MCADOO
looks sQuarely in the face truths
which this paper, for one, has ex-
pressed repeatedly. These are that
the Kitchin tax programme spells the
failure of future Liberty loans. 1t
will throttle the productive capacity
OF the nation. When 1t has done that
suicidal thing it will make 1t impOs-
sible for the Government even to
raise taxes in the volume in which 1t
now can raise them.
Chairman KiTcHIN is Incapable Of
comprehending the homely adage that
you cannot eat your cake and have
1t too. But at this moment there are
tens Of thousands Of taxpayers who
are appalled, by their realization that
when Mr.. KIrcHIN's tax gatherers
have cleaned out their pockets they
will be unable to take any more Lib
erty bonds. Large numbers Of men
working for their living, not rich men,
but earning good incomes-executives,
managers, superintendent, agents,
statesmen. lawyers, physicians, engi-
neers, professional men generally
have been taking very considerable
part of their incomes and putting It
into bonds. The sum total has been
huge. They have been the chief alb
sorbers OF Liberty bonds. All the
while their rents have gone up. The
prices Of everything they and their
families eat, drink, wear and use have
gone up. Now the Kitchin surtax pro-
poses to exact SO much Of their income
beyond what Is needed for their in
creased and increasing cost Of living
that they see nothing left to put into
bonds. Employers and banks, who
have had to lend them money to pay
their income taxes due last June,
while they were meeting their install
ments on bond subscriptions, know
this. Secretary McADoo knows it.
Probably everybody but Mr.. KITcHrN
knows it.
There are thousands more of an
other classification appalled, by the
realization that when they are 50
drastically taxed as to be left finan-
cially exhausted they will not be able
to keep their business going as 1t has
been going: therefore earnings which
they have to-day, earnings which can
be taxed now because they, do have
them, cannot be taxed in the future
because they will not exist for taxa
ton or any other purpose. These con-
stitute the next most important alb
sorbers of bonds--the industrial and
commercial concerns making profits
and saving surplus. But now the
Kitchin tax on profits proposes to
SCOOP those earnings into The Treas
ury as taxes. Furthermore, the very
rich man cannot take his taxable
bonds at low interest without having
Mr.. KITCHENS lofty surfaces recover
into the Treasury the greater part OF
that low interest.
This Is exactly what Mr.. McADoC
means when he says that Mr.. HITCH
ms revenue bill. with It's system OF
surtaxes, "limits the market for Lib
erty bonds to those who have little oil
no surfaces 10 pay Mr.. kIrcHIN, ir
fact, kills the Liberty bond market
for everybody except the man whose
Income is below the tax range. VIVA
must then be the consequences? Il
there are forty million men below the
surtax range, probably ten million OF
them will be in the army. That will
leave possible thirty million men il
the bond market. If those thirty mill
ion could average 800 year. tn,
amount Of their subscriptions would
be So, OOO, 100000 a year. II their nv
erage could be $500 a year. the tota
would be $4,000, 100000 n year. Blu
the Treasury, within the next thre'
weeks, wants to ask for $4,000, 600, OO
at one clip.
II it is sound theory that this wa
should be paid for largely by dire
taxation, 1t cannot ut the same tim
ne a sound theory that it should b.
paid for momentarily by taxation
which Kills the thing that Is taxed
The tax that slows down a bushes
cuts down the taxes that can be pal,
by that business. The tax that slow
down that business also automatic !,
slows down other businesses that ar
economically linked up with that. busl