Milford chronicle., 1920-12-24
PREDICTS SLUMP
In 1921 REVENUE
counsel FOR INVESTMENT BANKERS
SEES INCOME TAX DEFAULTS AS
F0RETASTE OF FUTURE.

U Robert r. Reed, counsel for the In
NJ vestment Bankers Association of New
# York, in a statement issued last week
S predicts the failure of 1921 revenue
# in so far as it is based on 1920 busi-
Al ness profits. The situation disclosed
VI by the failure to meet the Dec. Is tax
M payments is described as simply q
# foretaste of what is to come. In dis
# cussing the situation he says:
1.-The soap bubble has burst and a
IL revenue based on corporate excess
profits and high business incomes is
q tending substantially to disappear
4 The decline of taxable incomes in ex-
cess of 100000 by approximately
& 5000, 100000 from 1916 to 1918 was not
due chiefly to investments in tax-free
n securities, as the Treasury experts
Il would have Congress believe. It repre-
B sents broadly the sum of the accidents
s. and conditions by which a confiscatory
a tax causes the disappearance of the
object of the tax. The taking of losses
& and the refraining from taking profits
8 represent very large part of this
y change. The figures for 1919, and par
8 ticularly for 1920, will prove the prop
osition and establish the vicious fall
lacy of our present tax laws, that is,
of the confiscatory taxation of profits
+ and incomes.
1--WE are now in the final stage when
= the profits, taxable and non-taxable,
+ tend to disappear, and we face a year
when the revenue provided by existing
law will not be realized and prompt
action is required both to produce rev.
enue and to protect the business sta
bility of the country. The experiment
al and contentious proposals now
made by the Treasury lead nowhere.
4 They include first new profit taxes
which it is hoped will produce in 1922
revenue out of 1921 incomes and un-
distributed profits and second special
: excess on semi-luxuries based on mid
summer conditions of 1920.
"It is clear that the imperative
needs of 1921 will not be met by such
measures. What the 1922 revenue may
: be from such sources, it is idle to
predict. Undistributed profits are in
sense excess profits, excess over
normal distribution. They offer new
soap bubble no more substantial than
those that have burst. The situation
calls for the immediate enactment of
a gross sales tax on goods, wares and
merchandise. A 1921 gross sales tax
will produce an immediate 1921 reve-
nue.. 1t will fill the gap and meet the |
needs of the Government.
What is needed and Immediately |
practicable, both to produce a revenue
and to give business a chance to re-
vive, may be summarized under three
heads: First, the immediate levy of
Straight tax of 1 per cent on the mon
thly sales of manufacturers, produc-
ers and merchants, wholesale and re-
tail, payable either monthly or quar-
terly; second, the immediate repeal of
the excess profits tax, and third, the
elimination of the equiva-
lent businesses by a supplement to the
present law. Businesses subject to
these taxes will be protected against
confscation.
"a general revision both of the tar
iff and of the internal revenue laws ,
should follow, but the revenue and
relief measures suggested are imme- {
liately necessary and can be put in
10 very simple form. With the sales t
AK in operation the amount of addi- /
ional revenue to be derived from tar +
if and. income taxes can be more ac- +
,urately determined"