Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-08-22
URGE REPEAL OF SURTAXES
AND IMPOST OF SALES LEVY
Funding of Public Debt Needed Measure.
Armour q Go. Not Optimistic on Bust
ness ituation-Deposits Lighter.
BY I. A. FLEMING.

| BY i. A. FLEMING.
| Sentiment. as interpreted by fnan-
| cial interests. is so uniformly against
the excess-profits feature of the in
| come tax laws that there is small
chance of another session of Con-
gress ceasing its labors without hav-
ing found a substitute for raising the
needed revenue of the government
and wiped the offending statue from
the records.
| No one has been more persistent
In pressing for the repeal of this Sec
ton of the law than Otto H. Kahn,
prominent international banker.
Mr.. Kahn has spoken so often and
written so much on the subject that
he not infrequently prefaces his ad-
| dress with the hope that his au-
dltors will not consider that he is
possessed of single-track mind"
He says that "the faultiness OF
our system of taxation is the basic
influence. wherever you look for the
true cause of our economic troubles,
| including lack of transportation IA
c1lities. insufficient housing accom-
mediation. retardation Of other abb
normalities of production and distri-
button, high rents. high prices and
extravaganza. 1 believe it is as harm
| full, if not more SO, as any other sim
| gle factor now at work in affecting
the prosperity and wellbeing Of the
people and especially the people OF
small and moderate means"
| Mr.. Kahn deprecates any attempt
| at speedy def1ation, such as would
bring on strained conditions and Grip
pie industry, but he adds, The cure
1 for the evils of taxation can be ap-
piled at once-as soon as it pleases
Congress and the administration to
take appropriate action.
| Injured General Investments.
| Mr.. Kahn deprecates the view
taken by many that the objections
to the surtax schedule is necessarily
the squeal Of the rich man, and points
| out that the rich man has little to
squeal about if he will consent only
to remain idle and not produce"
Tax-exempt securities have re-
ceived much criticism from Mr.. Kahn,
as being especial inducement to the
possessors of considerable fortunes
to withdraw their funds from taxable
| investments and place them more and
| more in the tax-free securities. to
the injury Of the investment market
generally.
Statistics show that the average
subscription to new issues Of taxable
| securities is one-fourth of what it
| was few years ago. The advan-
tage of non-taxable investments in
creaseS as the excess taxes increase.
If the money is taken away by the
government for taxes, there is less
and less for investment, for making
betterments and. improvements. and
as Mr.. Kahn says: 'It is necessary
for him to add to his profits. because
the cash resources essential to every
business would be infringed upon to
a perilous degree. AS a result costs
are greatly increased
Cost Of Money Higher.
'The cost Of money since these
taxes were imposed has risen so pei
cent and the cost of money necessar-
lily enters into the calculation Of
every manufacturer and merchant
great causes of the increased cost Of
living"
Not having the usual profits fol
their own expansion and business
needs, the excess taxes force the bust
ness man to go to the banks more
and more for money. and they mt
themselves competing with the SINAI
merchant and manufacturer, thus
tanning credit conditions.
Now the Remedy.
'"The alternative" in the opinion o.
Mr. Kahn, sis not to burden undulJ
either business or the people"
He believes that the principle of :
progressive individual income tax ant
a tax on corporate profits should oe
retained, but not applied vlclousiy OF
recklessly. Surfaces must not De 81
heavy that they prevent normal en-
terprise or cripple production.
He is strongly in favor OF a small
tax on sales, one dollar on the hun
dred dollars.
To those who shudder at a com.
modify tax" Mr.. Kahn recalls that
rose nv any other name would smell
as sweet" and declares that such
fax would be productive OF large rev
| enues and would diminish the exist
ing burden on the people. and, tnere-
fore, be a good tax by whatever name
| it may be called.
ua also argues for the passing OF
the federal inheritance tax and tnat
| this source of revenue be LETT 1or the
states, now hard pressed Tor reVenue
land that 1t be imposed on the estd.e
and not the Individual, as an estate
henueathed to one descendant IS taxed
| a. same "a an estate divided among
siT heirs-manifest1y unfair.
| Should Go Slowly.
whne every indication points to the
end of the long. long period OF dull
ness and wtping out OF security
valnes: while the bottom has. in all
probability, been reached. 1t VIII
probably be weeks yet oefore tne
money market reaches semi-norma a.
lconditions and longer BEFORE the
Iciamned-down lid is loosened-
Poland VS.. Russia is still threat
| Local bankers admit slow i'm
nrovement in conditions; they admit
! that their corresponding are g1vins
more encouraging reports ana tnat
commercial paper is meeting with
tsome little demand, where it was
tSarge,v neglected ten days ago. They
also believe the reports from Chicago
Of the preparations for crop move.
iment well under way and in parts OF
THE country to a certain extent cared
Ifor and out of the way.
But the urge of carelessness IS SIN III
working and it will be necessary for
many credits to be fquidated before
the hanks will be in possession Of
funds for the full needs of their Gus
itomers-
| The Controllers Call.
The next call of the controller
lof the currency should be made
laround the first Of September. The
last previous call showed loss OF
sis 900 900 in deposits and the next
Ithe fact that the public is placing it's
snare cash, not in local securities to
LAW great extent. but in high-grade
Investments where the returns are
nearer on a basis with the high rates
}of interest corporations are compelled
| For years, practically since 1914.
1.-THE general movement in local Sc
lcurities has been on small scale
Every three months interest and divl-
jdend payments would amount to con-
tsiderable money and the monthly dis
ltribution was fair, but there was
small local reinvestment.
/ 1aro ond fheHA a stock might al