Evening star., 1919-12-20
BELIEVES EXCESS PROFITS
TAX CAUSES HIGHER PRICES

lutely indefensible. affecting both the
producer and the consumer. The pro-
Queer is hurt just as much as the
consumer is: for he himself is the con-
sumer of every other thing except
the one little thing he may produce
Nobody. in other words, is playing
even on the game.
Since, as a matter Of fact, the ex-
cess profits tax was created as an
equalizer. in cases of price fixation.
and for no other reason. and since
prices are no longer being fixed. even
that reason for it's continuance is
gone; and I am waiting for some one
to give me a reason for continuing it
Nobody can say that it continues be-
cause we need the money; for certain
ly we can find ways to provide the
money without losing 80 per cent Of
the money that is collected from the
public as a tax.
Shouldd Not BE Tolerated.
Leaky as tax methods may be, I do
not go along with this 80 per cent loss
in getting 20 per cent into the Treas
ury, thus skinning the public-you
and I and all of us-out of so per
cent in the process. That is all wrongi
A price structure built upon such a
theory as the cannot and should
not be tolerated by the people of the
country.
Aside from the impossibility of such
a principle. viewed from the public
standpoint, 1t has a vicious effect upon
business itself. The reflect shows it,
self in tax evasions, and, worst of all.
in inviting and encouraging wasteful
and extravagant business operations.
when a business reaches the point that
its excess profits tax will operate to
take away a considerable part of its
surplus earnings. it inevitably is
tempted-and in many cases the temp
tation has proved irresistible-to
spend extraordinary sums in unnec-
essary expenditures. These take the
form of advertising looking to the
building up of present or future good
will or of repairs and betterments
not presently needed or made with an
eye to the future and in anticipation
of return to peace-time basis.
1 think 1t would be great blessing
and great step toward the reduction
of the high cost Of living IL at this
moment the whole scheme Of excess
profits tax could be abolished. There
never was SO bad a device in business
as the device called cost plus" and
the excess profits tax is in it's essence
"cost-plus" scheme.
Can Increase Profits.
Under a cost-plus arrangement, say,
of 10 per cent on cost, one can in
crease his profit by one dollar only by
wasting nine other dollars, and we
have that curious and impossible
situation Of attempting to create
wealth by wasting it. In the excess
profits tax. when a concern has
| reached beyond what is considered to
be it's normal in profitableness, the
surplus is partially taken away from
1t by increasing percentages. What
follows? Waste and extravagance. or
% 1r ,oI, a~nf =,
the excess profits tax in operation as
though it were not in operation. and
that is done by charging excess profits
tax to cost. 1t means the collection
from all the people. when the so per
cent excess profits tax rate has been
reached, of dollar, unnecessarily, in
order that 40 per cent may be added to
divisible profit.
And the excess profits tax or any
other tax is not paid by the taxpayer
i'm the price Of the product to the
purchaser of the product, and as il
passes on and on it grows, like a
snow ball rolling downhill, until il
reaches the public. And the pubic
whether represented by railroad pres
ident, a skilled mechanic. a farmer. a
merchant, common laborer. or a
6nancier, having had the composite tax
bill of all his predecessors passed to
him. haises the price of his own labor,
whether that labor be stored up Iaoor
in the form of capital, labor of the
hands, or of the mind, to meet the new
cost of living So the distressing proc
ess, having made a complete circle
starts again the endless spiral up
ward.
The excess profits tax boosts costs,
raises prices. halts production. breeds
! waste, extravaganza, and inefficient bus
! mess methods, and raises the cost of liv-
| ing Such vicious law should be
! wiped off the statute books before an
other day passes.