Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1919-09-09
WAR TAX SYSTEM WRONG
Financial Expert Points Out Serious
Detects.
THE BURDEN ON The POOR Man
Plea for the Small investo'1Hioh
;Pricss Caused by unseient'fic
Methods--Taxsd Capital Collects
Toll from the Public.

prices Caused by Unseientifie
Methods-Taxsd Capital Collects
Toll from tho Public.
New York Times.
In a memorandum to "a public nan
in washington" given out by its
author, Otto H. Kahn of the firm
of Kahn, Loeb & Co., suggests the ap-
pointment by the government of non
political body of experts to study the
effects Of the various kinds of taxation
which have been in force during and
since the termination of the war. and
TO make recommendations to congress
based upon such study. Mr.. Kahn
who submitted the memorandum in re-
sponse to q request from tho unnamed
official for his views on the high cost
of living, makes plain that he believes
1t to be demonstrable that the un-
scientific system of taxation adopled
In this country since 1917" has played
a considerable part in boosting prices.
Denying that it is his wish to object
to the obvious purpose underlying our
war taxation, to impose the greatest
burden upon those best able to bear 1t,
and agreeing that taxation must bo
laid in accordance with the dictates Of
social justice, the, banker conclude:
that the very extreme Of the burden
laid upon business and income has par
TALLY defeated the purpose which the
farmers of our taxation legislation ap
parently had in view. and at the same
time. has given rise to certain unfore.
seen and troublous Developments
invariably happens in the case of ex'
treme measures, especially where econ
omics are involved. Now that the
emergency of the war is over, believe
that the entire matter, should be sub
jected to unprejudiced and competent
critical review
Tax on Industrial Investors.
After conceding that the farmer. the
wage worker and the salaried man ant
woman are entitled because of tho
diminished purchasing power OF tht
dollar to propoftionate increase ir.
income, the memorandum insists thai
the owner of industrially invested cap
ital has suffered similarly. while in ad.
djtlon thereto he is subject to heav,
excess profits tax and. if his income +
large, to AN income tax of unparalleled
ssxerity. Leaving out of. account, ho,.
ever. the relatively snisii number 81
those IN possession of large income
and defining owners of industrially in
vested capital as, primarily, the store.
keeper, the average merchant, and tht
millions who derive their incomes, al
or in part from investments in cor
poration securities, Mr.. Kahn urge
that SUCH "by the same token as tho
farmer, the wage worker, and the sal.
aried man. feel the need of a larger re.
turn than formerly"
To emphasize his argument tha'
spectacular earnings of certain indi
viduals and corporations afford M
just criterion as to the earnings o
business as whole and to show tina:
there are numerous cases where earn.
ings have shrunk since the war, tho
writer quotes from a recent investiga.
tion In England. where, he says, con.
ditions appear to be similar. This in.
vestigator concluded that the increase
in cost of certain articles during th'
past two years as compared with the
two years before the war had been di
vided 80 that 81 per cent. went tt
labor, 10 per cent. to the state
through taxation, and S per cent. tC
capital.
Thus It Is set forth that the return
on industrially invested capital nC
doubt has been diminished on the
whole, Mr.. Kahn arguing that if it bt
taken into consideration that the pur.
chasing power of the dollar has shruul
nearly onehalf, it will be seen that the
actual yield Is much less than it was
prior to the war and that there ha:
taken place in fact n drastic read.
justment in the distribution of the ma.
tional income. Noting thai the excess
profits tax for this year while reduced
"is still very severe" Mr.. Kahn as.
sumes the case of q corporation who's,
excess profits tax amounted under tho
rates prevailing until this year to 4(
per cent. on profits over and above "ar
arbitrarily fixed and, everything con.
sidered, low return on money actually
invested in business" 1t was imDos-
sible, he points out, for such q business
to make one dollar profit over ant
above such arbitrary return without
charging to the purchaser something
over two dollars, it being pointed out
that earnings were subjected in addi-
tion to an income tax of 12 per cent.
The government, the memorandum re-
marks. takes the difference.
Effect of Excess Profits Tax.
Most articles before reaching the
ultimate consumer, the banker con-
tinues, pass through several inter.
mediaries, each of whom is subject tc
much these same conditions. He con-
cludes his discussion of this particular
tax with these observations:
THE excess profits tax has tended
furthermore to- increase actual cost OF
production, inasmuch as costs natural
Il