The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1920-01-21
Faulty
By OTTO Il. KAHN


do not mean to advocate n plan OF
TAXATION which shall spare wealth.
What A am advocating h. n policy and
methods which Ahnil not bear rcscm q
hlonct 90 tho fpirit nHu temper OF the
ulfNsinle 4aIuip spcNkcr, but shall be
pnNpd ppon the recofniiion OF The
tcacAInea OF history aud economics
and pmeucni cxperlcaco. and shnil
bear The imprint % rcasQnabieness
and fairness and dinnaaionnie think
Ing free from either iayoritism or
AnImoalty.
purpose OF ConEreaa 70 draw pre-
pondcrantiS upon the wealthy Ia piac-
ing The weight OF direct taxation I'M
cidcnt to the Wnf. But even In doing
things frvm entirely praisworthy mos
tNca. Il - Wen 10 remember the old
French saying. that virtue has been
known NJ Times. to be more dangerous
than vicr, because h u not subject TO
h undertaking restraint OF con
science.
The other three factors. which more
than uny othen. have brought about
IN this cpuntry the present era OF &C.
onenilc disturbance are;
lstwThc urgency OF the worlds
demand for oW raw materials
ana manufactured articles. dur
Ing, and. though to u lesser de-
gree, since the war.
2d-lnnution. and.
Sd-fnulty taxation.
Tho worlds demand Tor our mater
lals and services will rlncken surely
hut gradually. The cure for initiation
IN a SLOW process. But the remedy
for faulty taxation. and the resulting
relief 10 the people can be secured At
once whenever u pieases Congress and
inc ADMINISTRATION 10 seek hat rem
cdy and to apply IL.
Az accordance with the text which
Nou have assigned me. l shall con-
fine my observations to the income
tax;
4. Comparing our income tax
alton with that OF England, we
nnd that ~ that country taxation
Starts with Incomes (for married
mem OF t1-b, here With incomes
81 $4,000. The English tax on
the smaller Incomes, say up 10
$1,000. II on Tho average. about
SIX times as heavy as ours.
On the other hand. our tax In
he upper scale = far heavier than
that 0t England. mo English
maximum taxation Is 81 40,
ours h faE, and that without IN
Guiding thu State Income tax.
That Is hy far the highest tnAn-
ton cNi4timc anywhere IN Ia.
world. Even the newly introduc-
ed income tax OF Germany pro-
pressed by a Socialist Democratic
G%oyernment does not RISE beyond
500.
Our scale OF Income graduation
IN respect OF small incomes H.
juuier and WISER than the f.nglisn
seaie INIT Nreutly preferable 10 II.
But ouTs Jnat moderation Ia re-
spect Of taxing small Incomes
makes all h more conspicuous
the unnecessary and harmful ex-
IRENE 20 which we 20 at the other
a OF the scale.
= while We thus take away up To
three-quafters OF his income dtnd
even more u We include the opera
the capitalist engaged in business or
investing in supplying funds TO our in
1ustries. we At the same TINE open
wide the door Which leads into "a room
hlicd with taN-eN,mpt securities.
As you know all Municipal Bonds.
State bonaS Enrn Loan Bonds and
Unless specifically otherwise pruvid-
ed-Federrl Bonds, are free from all
ltNatoni except Inheritance taxation.
There are about fourteen billion doll
lars OF such taN-free bonds outstand-
ing tupart o partially exempt Lib
ertf bonds), and more are being ere
ated all the time.
] am advised that Il is not feasible.
constiiutionnlly, nor would il be fair.
70 remove b Tx exemption from
such bonds as are now OUTSTANDING
Nor as 1 am Informed. would ia b.
possible, according to the predomin-
ant opinion Of legal authorizes, Tor
congress 60 subject even future issues
OF state. Municipal and County Bonds
10 taNutiOn, unless "a constitutional
amendment be adopted 10 that effect.
y doubt whether q Is fully re-
aliNed by many people how immorse
~ the advantage which Is enjoyed by
capital invested In t~aN-eNeFapt securi-
ties ~ compared o. capital Invested
H. business or In corporate securities
or earned In salaries.
The following table may. therefore.
be OF SOME Interest. II shows what
percentage or returns WOULD nave TO
be obt1tned from such sources lu Or
der % equal the return from a fsH
tsA.eNempt bond purchased az par
II shows, To take an extreme Instance
mat In the case OF "a person In the
highest taxable class. he would have
TO make nearly i7ft with "a corporate
sec 'rity or la his business IN order 10
get the same return which he re-
ceives by Investing In "A ttx-free bond.
And u should be remembered that
In mixing up these figures no nc
count b. taken Of tho excess profit
tax. which still further increases tho
yield from uaN-free securities as COM
lHAfN " ANf tA'lN liuW tAuftHl III
vested In business. Nor o. nccouut
taken Of state income taxes or local
taxation. Here Is the table.
A taxable security or a business
would have to Yield the following per-
cottages az return In order TO bring
the mime net income as u 49, tax
free bond without calculating oNcess
profits. state aud local taXesl.
IN the case Of income exceeding
SEQ, 00o-blakef.
In the case of Income exceeding
$50. OOe-b.TON.
In the case Of income exceeding
$40, 0O0-G.0Rff.
In the case OF Income exceeding
$50. 00O-G.52cf.
ln the case Of income exceeding
$50, OO0-7O8G.
In the case OF income ONccedln.
S7O.000-7G2H.
In the case uf income exceeding
$50, un0-s. aaG.
In the case Of income exceeding
500. 600 -g.Iaff.
In the cusc Of Income exceeding
500. 00O-lu28Nt.
IN the t7tsc of income exceeding
$500. 0OO-12.b0a.
iu the case of Income exceeding
S300 0O0-ff O6ef.
Ia the case OF income exceeding
1900, OO0-ib,blfa