The Washington herald., 1920-10-19
Government and Business.
Put to Enormous Expense
By Present System.
LEVIES DANGER TOLD
American People Not Pre-
pared to Adopt Methods
Of Socialism.
BY OTTO III. KAHN.

articles on Faulty Taxation" pre-
pared by Otto H. Kahn for the Bust
ness Section of The Washington
Herald.
Article ".
An evil-more serious than is gen.
orally appreciated and again an eIe-
ment making for high prices-is the
huge and cumbersome machinery
incident to the determination and
collection Of certain of our taxes,
notably the excess profit and income
taxes.
Stamp taxes virtually collect
themselves. The collection of the
income and excess profit taxes, on
the other hand, is an enormously
costly thing.
To begin with, there are the num-
Der and expense Of additional en-
ployes OF the Treasury, and this
number and expense, according to
what information I have been able
to obtain. are so amazingly large
that, in the absence of official con-
frmation, l hesitate to mention the
figure.
Then there is the time and cost
Of the reports which have to be filed
by the individuals. firms and cor
pOratiOns, reports so detailed, intri-
cate and manifold that they cali
throughout, the nation for the serv-
ices of many thousands of clerks,
accountants and lawyers, and for
many hours of the time and thought
Of business men.
Reports Eighty-SiI.
A gentleman at the head of a fair
L.
that in connection with our State
and Federal tax measures, and at
the call of the bewildering variety
Of commissions created in recent
years. he is required to furnish in
the course of one year.. apart from
incidental reports due TO the work
mems compensation and similar
acts, not less than eighty-six diff
ferent reports (abOut to be increased
by twenty-three in consequence OF
recent legislatiOn). He calculates
the actual cost to which he is being
put in connection with the prepara-
tion Of these exports and the re-
quirements incident thereto at the
sum of $4,000 per annum. aside
from the value Of his own time.
Point to Increased Prices.
NO" all lQeSe Things spell IN
creased prices to the community in
two ways. First, the actual cost OF
clerk hire, accountants and law
yers' fees, etc. is added to the cost
Of the product. Secondly, national
productivity is diminished:
la) By the time and effort devoted
to cumbrOus and complex formali-
ties;
Cb) BY the withdrawal from Gre
ative activities, mental or physical.
of the army of men who are en-
plOyed by the government and by
individuals. firms and corporations
in connection with the determination
and collection of taxes and kindred
functions, and who. however indus
trious they may be. add nothing to
the total of the nations assets, but
on the contrary. are maintained at
the expense of the nation.
Confirm Old Truths.
If to the actual cost, direct and
indirect, incurred by the government
in the collection of the income and
excess profit taxes, there were added
the incidental expense to individ-
uals, firms and corporations, the ag-
gregate would be nothing less than
staggering in its magnitude.
The baneful effects upon the cOun-
try directly traCea BILE to the faults
of our fiscal system and methods
since 1917 merely go to confirm old
and tested truths well known to ev-
cry student Of taxation. Thus, for
instance:
An excessive tax destroys ulti-
mately its own productivity. Gov
ernmentaI greed, just like private
greed, is apt to OverreaCh itself A
tax which is regarded and accepted
as reasonable is likely to bring at
least as high a yield as a tax which
those upon W Aom it falls feel justi- |
fed in regarding as grossly and
needlessly excessive.
Reach People.
Extreme rates of taxation do not, J
and cannot, fully reach those whom
they are intended to reach. but they
do inevitably reach, in one way or
another, in their ultimate Conse-
quences. the masses of the people.
The formula of a very small nor
NAL tax and enormous surtaxes acts
as a strong stimulant to wasteful-
hess on the part of the executive, |
heads of government departments
and Legislators, in that it tends to
lessen their salutary qualms on the
score of being held to account by
the people for the resulting tax
burdens.
. II Is all too inyitingly easy to meet /
rising expenditures by giving the |
surtax screw another twist Of a few |
per cent, or to maintain an exorbi- |
tant level of expenditures in normal !
times by leaving the surtaxes at |
rates which were meant to cover the |
needs OF an extraordinary emer- |
gency. BY the opiate OF such taxa J
tion which apparently touches them !
but very little or not at all, the I
masses Of the people are apt to be |
lulled into a sense Of relative indif- !
ference to governmental wasteful- |
ness. But the facts remain awake |
and inexorably at work, and their \
working means and has always !
meant that governmental extrava-
gance is visited not upon one class,
but upon all the people.
People Not Prepared.
am aware that the contention |
has been put forward as an argu-
ment for the existing scale of taxa
ton Of incomes and profits that IT is
a desirable thing in itself to place
limitations upon a persons income.
But If that principle were once to
be admitted. where would its appli-
cation stop2 Where would the per-
rnissible limit of earnings be fixed |
CONTINUED ON PAGE TWO. !