Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1920-08-17
OTTO n. KAHN TELLS SENATE
COMMITTEE FEDERAL LAW is
GROSSLY FAULTY.
WOULD LOWER SURTAxES
AS AID TO PRODUCTION
Suggests Methods of Raising Rev
enue With Less Injury to Business
Rich Can Avoid Surtax by Be-
coming Idle and Investing Money
in ax-Exempt Securities.

New York, Aug. IA spirited at
tack on what he consideres the gross
faultiness of the present federal tax
system by Otto II. Kahn and the
bankers suggestions for remedial
legislation formed the feature of the
session of the United States senate
committee on reconstruction and
production.
Mr.. Kahn went so far as to hold
the system of federal taxation now
In force as the basic influence UNI
DERIVING most of the other evils from
which the American body polite
suffers.
Il am convinced" said he. tthat
the effect of the faultiness Of our
system Of taxation is all peryasiye.
that you find it as a basic influence
wherever you look for the true
causes OF our economic troubles. in
GLIDING lack of transportation facili-
ties, insufficient housing accommo-
dalton. retardation or other abnor-
malities OF production and distribu-
ton. high rents. high prices and ex-
trayagance. ] believe it Is as harm
lul-tf not more so--as any other
single factor now at work in affect
ing the prosperity and well being of
the people, especially the people OF
small and moderate means.
To those who take the view that
criticism OF our existing surtax
schedule is necessarily the .squeal'
OF rich man, or one affected by the
bias of greed, it should be understood
that the rich man has little to
'squaei about on the score of taxes,
provided he will join the ranks of
the idle rich" Mr.. Kahn said. "All
he has to do, If his conscience and
disposition permit it. is to turn his
back on work. risk the construction
effort and place as much of hix. cap
itai as is or can be made liquid into
tax exempt securities-and to the
extent that he does also direct taxa
tion ceases to trouble him.
Inactive Money Earns More.
"A man in the higher superta,,
class. beginning with those earning
incomes OF say $4,000, actually
makes an investment yielding him
from 10A ito "a per cent If he puts
that part Of his income. which Is sub
ject to the maximum tax into a SIX
per- cent tax exempt bond, as COM
pared to putting it to work in his
businessor OR investing in ordinary
bonds or mortgages.
rs 1t surprising in these circum-
! stances II the investor has with
drawn from the mortgage market
and money for all kinds of enter
prises Is excessively hard to find? Is
any other result possible when sur
taxes are so high that up to roughly
three quarters of a mans income is
taken in taxation.
I am convinced no remedy for
the very serious situation for which
your committee is seeking a cure can
be effective which does not include a
wise and courageous revision Of our
existing taxation system. Such re-
vision is not really q task Of great
difficulty. For a country as i'm
mensely rich and intrinsically as
little burdened, relatively speaking,
as ours, 1t is not very hard problem
to raise by taxation the sum which
the economical administration of our
government requires without causing
sinister effects that our present taxa
ton has brought about, indeed, with
out causing any serious economic
disturbance whatever.
Would Modify Profits Tax.
"The excess profits tax should be
abolished or essentially modified and
some other method devised to tax
corporate profits. AT the same time,
the extreme scale of surtaxes, which
actually defeats its own purpose,
should be revised downward.
The principle Of a progressive in
divtdual income tax and of a tax on
corporate profits should be retained,
but it should be applied not vim
dictively or recklessly, but according
to the rule of reason and experience.
|lSurtaXes must not be so extreme
that they cripple production, dis
courage or prevent normal enter
prise, and prelude that accumulation
Of business and investment funds,
which is an indispensable prerequisite
for material progress and prosperity"