The sun., 1919-02-27
Call the New Congress for the Sake
Of the Empty Treasury.

tbN tne NeW tOnkEtrs tVf shO c".O
of the Empty Treasury.
II President WILSON does not call
the new Congress until the Treaty Of
Peace is signed and he is back on his
Job as Chief Magistrate Of the nation,
the United States Government may go
on the financial rocks.
There are billions Of dollars OF war
bills still unpaid. Bureaucratic squan-
der still goes on with reckless disre-
gard of the consequences. The Gov
eminent has borrowed from the banks,
is constantly borrowing from them
stupendous amounts on short time GER
tificates. To meet this prodigal spend
ing and take care of this prodigious
borrowing rivers of revenues must
flow into the Treasury.
The country, to be sure, has at last
the new revenue law. framed to re-
lieve American cash drawers and
American pockets of $4,000, 100000 to
be handed out in taxes. But can the
Treasury get from it the much needed
six billions? Surely not by tens OF
millions; probably not by hundreds
If millions.
In the first place In fixing the new
tax rates. on business profits and in
comes Of 1918 1t was assumed by the
Congress financiers that profits and
incomes of that year would equal
those Of 1917. AS a matter of fact,
however, the annual reports for 1918
of thousands of taxpayers all the way
from gigantic steel corporations and
opulent copper mines to modest fac
tories and struggling businesses have
since shown that Unfortunately higher
wages and general costs have eaten
ZIP in the aggregate vast receipts
which in 1917, with much lower costs,
would have been net Income and
clear profit.
1t is very simple to calculate that II
- given tax on given amount OF
urofits in an industry will yield, say
Fl,p'o',OV VI IcNchuc " lno i leuouiy
II tax half again as high on the same
Profits will yield s1.5o0,Oo0. But 1t Is
very easy to understand that If the
profits shrink from the 100000 to
say. 100000. the half as high again
fax will Yield only about as much rev,
cnuc a. was gathered before; that II
me profits go still lower to, say, $500,
100. the higher tax will produce much
css than before.
Profits OF American industry an6
business for 1918 may show a shrink
nge from 1917 of billions Of dollars
such vanished profits mean vanished
taxes. whatever the tax rate.
In the second place it was intendc.
to have a great mass of new or higher
axes on wines and liquors, sof
drinks, tobacco, railroad tickets, lux
urles and the like go into operation
weeks and even months ago with o.
ut set time after the enactment o.
the law. But the long delay first il
getting the revenue measure through
Congress and then in getting it signe(
by the President held back the begin
ming of all such revenues. Every houl
of delay cost the Treasury big money
Millions md millions which thu,
would have poured into the interna
revenue offices If the measure haC
become law prompt. are now lost 4
ne Treasury. They VIII never be re
gained, That water has gone ovel
the dam forever.
In the third place, thousands o.
American citizens who paid materia
income taxes for 1917 at the lowe
rates will pay none at all for 1913 a
The higher rates, because in the for
mer year they were earning good sal
uries or making good incomes at theii
regular occupations, while in the lat
ter year they were in the service O
their country at non-taxable pay.
Yet another financial disappolnt
ment awaits the Treasury. alread!
in sore need. The Governments ole
llllS, Which lllc Iultuutl SlA DllllOHS O.
taxes were TO help to pay. were sadl,
underestlmated. They will be at leas
- billion dollars more than was cal
culatcd. They may run far wors,
than that. Add to this misfortune tn,
possibility that the forthcoming LOAF
may not be success--and II tn,
bonds or notes are not the right kim
on the right terms and conditions
there is every chance that It Will no
he success-and the Treasury will
he not merely In tight but In desper
a;H straits.
However much President Wuso,
may be absorbed in the League of Ma
lions to the exclusion OF almost ever