Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1920-02-26
INCOME TAX SYSTEM
CRITICISED.

TENS of taxing business income
because the governor has overrid-
2 den the legislature. Since adjourn
ment, when his veto cannot be
overcome, he has reinstated an in
come tax law that in his message
I he declared should be repealed and
which he specifically called Gun
constitutional" though he had APP
proved, if not originated it. This
law was found to lay burden up
on New Mexico business. individ-
uals and local corporations, and
discriminating to the benefit of va
rious foreign corporations.
1t now calls for collection of
burdensome tax for 1919 not plan
ned for in the budget for which
state taxes for the year 1919 wera
computed
Among objections to the Law was
ga graduated tax making various
taxpayers pay more per dollar net
than some other taxpayers.
The subject of income and grad
uated taxes is causing much dis
cussion among financial experts, as
to the federal system and the eff
b. forts Of states to raise the wind in
- the same way. Arguments in ia
vor of federal changes are met with
declarations of the nOnrich that
capital is trying to slack, now that
war necessities are not so com
polling upon all citizens.
Nevertheless II is well for the
people to read the reasons ad
vanced against the government
system, and consider whether taxa
ton of money and capital is not
= driving it into non-creative chan
nels.
If such be the case in federal
taxation, does it not work out in
the same manner, if the graduated
income taxation system is applied
by state governments?
Are not the daily transfers of
millions of Liberty bonds by aver
age people evidence that bankers
and capitalists are planting their
money where it will not be taxed?
The market is gathering up fed
eral securities as never before and
tieing up cash that would be in
vested in industry were it not for
heavy taxation upon profits. Lib
erty bonds are being bought for
capitalistic investors at a discount,
to yield from five to five and one
half per cent, and also make a
tax savings for investors. The re-
turns are much surer, many cap
italists believe, than can be real
lied by use of funds in industry
when income and surtaX shall have
been taken away from investors,
Absorption of the money by federal
and tax exempt municipal securities
tends to decrease general business
and I'm time diminish employment
of labor bringing hard times, some
financiers assert.
But aside from this is the argu-
ment that while the rich pay vast
lump sums, the charges eventually
in divers indirect ways are paid by
ctthe public
Otto H. Kahn, one of the ablest
bankers of the nation. who has
written much in the past few years
upon finances and economics, has
just published statement to show
that the taxation method of the
government, largely born of war
needs, is now causing a condition
that will pinch business and dimin-
ish prosperity. He comes forward
with a pamphlet, 1.-TWO Years of
Faulty Taxation" in which the in
. teresting suggestion is made for
by the business world
and people of all classes that the
taxes collected on incomes of the
!. arich should be based on expendi-
lures rather than on income, and
that taxes on sales of commodities
ascould be made to apply by a small,
say one pier cent collection, on
gross sales, even of real estate, and
ID vast system and number of gov
eminent employees and sleuths be
reduced, to the advantage of the
. public, to which business taxes are
@spassed along anyway. He suggests
p that If the system were to apply
only to retailers:
as 1t might be found well to eS-
empt from the tax single purchases
below 81. Also in that case, /. e..
in dealing with the ultimate pur-
Achaser, it might possibly be deemed
appropriate to make the tax vary
Ing in its scale, say from ! per cent
10 10 per cent, or even 90 per cent.
progressing according to the value
\ OF the article purchased so that,
for instance, a person making a
: s purchase would pay / per cent
{ tax. !. e., five cents. while a person
= making a $1,000 purchase would
pay 10 per centstax, /. e., $500, and
so on.
On the subject of graduated
tax, the financial writer above re-
ferred to says, in the treatise given
TO the press this week:
While the progressive scale above
y suggested would be attractive from
: the point of view of equity, ! real
ize, of course, the practical objec-
lions TO which il is open and the
difficulty of its operation. Indeed,
q II may be found upon due investi-
4. cation that the complications in
4 volyed would be such as to be deei-
s sive against the, adoption of that
I suggestion, o lps ee
We have had two-years' test
now of a scheme for raising reve-
nue. which is unscientific. incon-
eistent and ill-designed, and has