The Washington herald., 1920-03-01

advanced even more rapidly than
the advance in prices. And those
who are in receipt OF such wages
have had a true increase in the pur-
chasing power Of their wage and
are In a position to increase their
standard OF living. and indeed to i'm
dulge in the extravagant purchase
of luxuries. There is, however, an
other vast class whose income has
not increased, or at least has not
increased as rapidly as prices have
increased and who have a much
smaller amount of things through
their income. AS q matter Of fact
there is little. II any, increase in the
total Of production measured at the
present time and compared with the
total production in 1914. II there has
been no increase in production there
Is only the same total amount of
things to divide. Population has in
creased and the divisor is larger.
II there has been no increase in pro-
duction, and there has been an in
crease in consumption, the average
amount that each can consume is
less and not greater than in 1914.
We can, therefore. draw the conclu-
sion that in spite of many illustra-
tions of increase in the standard Of
living and extravagant expenditure,
the average standard Of living Of
the whole country has not improved.
People with fixed incomes. or people
whose income has not advanced as
rapidly as the average level Of prices
has advanced have reduced their
standard of living.
Even people with very large in
comes have frequently been forced
to reduce their standard OF living
because so much of their income IL
taken away by taxation. Large in
comes in the United States are SUBJ
jcct to the highest rate of taxation
ever known in a civilized commun-
ity. The Federal income tax is now
taking 80 per cent OF large incomes
while the net amount left to the
holder is still further reduced by
State income taxes and the whole
OF the estate Is deeply cut into by
Inheritance taxes.
Tax Burdens.
IF / may get OF the subject q lit
tie to say q word regarding taxation
1 wouid call attention to the fact that
our present rate Of income tax is
making capital go on strike.
Men with large incomes find the in
come tax SO enormously burden
some that they are seeking the cover
OF investment in securities free
from income tax. There is a vast
amount of such securities not only
in the form of United States gov
ernment bonds but in the form OF
State and municipal obligations, and
farm loan bonds, which are free
from income tax. There are $14.-
900 100000 of securities free of in
come tax. A rich man has the
choice Of investing in a tax-free
security and getting a net income
OF " per cent, or investing In a
taxable security and submitting to
the super tax Of the Income Tax Law.
man with an income of say
100000 finds that It 10 as profitable
to invest in a tax-free bond paying
him " per cent as Il Is to invest
In a taxable security paying him II
per cent. Such a system OF taxa
tion drives the income that men of
large means have into the tax-free
bonds. For no one cares to take
the risk of any business where he
must get return of 121s to II per
cent to have as much income left
as he would have by investing his
money at A u per cent In a perfectly
sound security concerning which he
need haye no worry, nor need give
any attention as to management.