The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1920-08-14

&c Co, Investment bankers, OF
New York. II hes since been
widely distributed md has gained
an important following among
students OF taxation and business
men. The article Is here given
as originally published In the
Bache Review.)
The present methods Of taxation
threaten to drain the resources or
which the entire business structure OF
the United States depends, and while
we hear many predictions that tax
alton will decrease, we u face the
fact that for many yearB to come the
requirements OF our debts. including
the amounts loaned to our allies, as
well as the high rates at which gov
eminent expenditures have been fixed
will call for a taxation. Of from four
to five billion dollars per year.
To continue to raise this amount
by excess profits taxes and heavy In
come taxes the complete elm
nation. In .our opinion, of the re-
sources of the investors upon whom
this country and It's enterprises have
been dependent during all these years
to furnish such new capital as COM
merclal and financial developments
required. Before the war there was
any army OF about 400, 600 investors,
small and large, who could be count
ed upon to absorb n varying amount
OF securities, running Into tho hun
dreds OF millions. This army has
now completely disappeared and
many OF these same investors. owing
to the Increased OF living, with tho
heavy income taxes, are practically
consuming a percentage OF their cap
ital to meet living expenses.
The fact that enterprise Ia handi-
capped by n heavy profit a makes
for INSTRUMENTATION oh the part OF
the speculative investor. who must
a out "A large percentage OF his pro-
fits, II n are made, but must stand
100 per cent OF his loss II his judg-
ment is at fault.
The wealth OF this country has
been built up by savings out OF pro-
savings today. One OF the pesslmistic
influences In the present situation is
that, whereas In former periods of
booms in business, the merchant who
made II large profit, while spending
literally. was enabled to put gener-
GUS sums back into his business to
provide for the reaction that was GER
tain to come, we now have a sltua-
tion where. due to the last three years
of business boom. profits have been
large: yet merchants have had TO pay
out OF either income taxes or excess
profits taxes, practically all that they
have earned over their living expens-
es, and when the losses due to the re-
adjustment OF values are registered,
many will have suffered material re-
d%uctions in their resources, which
which would ordinarily be relied up
on to meet these losses.
All this must change. or business
will reach an impnsse.
An Eco.y1snlc Tax Should BE
Substituted.
There is only one way to escape
this. and that Is through n tax on
sales, in which every citizen OF the
United States. as well as any for
elgner who may liva within our shores
will pay equally toward the expenses
OF the government and have his stake
In the country.
a small tax, say n per cent on
sales, while II would produce In the
aggregate an amount large enough to
make II unnecessary to keep the ex-
cess profits tax in force, might be
large enough even TO reduce the sur
tax on income and would c a SO
lightly upon the individual that It's
exl1tence would be scarcely per-
ceptible.
II would be. in effect. a fiat per-
centage OF n per cent against vol
ume OF business. to be paid monthly
l N.s ara.u a.a...aI-. -ntaAaa1aln
W cNeIS Ipvrn,,on pa.tnsIsnIp
hssocin.lon o lnuiviunaI IN business,
IN tne case o. pahhs brokers yoD-
centagn ,hnuid Snniv nn "cros. In
con,es bsSora naymen, ~ onerstinr
~ ncnscs. rather ,han against nroaa
voiume ~ business handied
The turpovor In tho Irn,,ed s,a,es
for the year 1919 is estimated by Il
competent financial authority at be-
tween l.4O0 and 1900 billions of dol
lars. These figures have been arr
rived at By using n method employed
by Professor irving Fisher. Mr..
Fisher estimates the circulation OF
money and of checks, adds the two.
and obtains q figure for the value OF
goods bought. His 1918 figures
showed n total of, 1853 billions OF
dollars. The same method shows an
approximation OF 1,4Si billions for
lsis.
Lrrom ,his aooun, r,,., ha deduct-
Oh ,he turnover m The va,ious az
changesNegrain cot,on stocL' Inc sails
~ aecur,tles municinnI cornoration
ana otheraWhu, wa d. not think Ina,
,hcso amn,n, ai,oyother 40 more than