Evening star., 1920-02-29
ST1ORTCOMING IN TAX LAWS
CHARGED BY OTTO H. KAHN
Pamphlet Just Out Deals With Demands
on Incomes, Excess Profits and Other
LEGISLATION of Recent Years.

agricultural and other organizations
no great difficulty should be found TO
devise the best. most productive ana
least troublesoms way and method by
which tax of that general nature
should be made operative
Passed on to Consumer.
II NAV be objected that such tax
is finally passed on to the consumer.
No doubt it is. So is the bulk of the
cxcSss profit tax. So. in the end. is
practically every business tax and. to
a great extent. even individual taxes
And the burden on the consumer is
always cumulative. inasmuch as al
most every article bsfore it comes to
him passes through several different
landings in the process of being con-
verted from the raw material to the
finished article on sale. and each one
of those concerned in that process
seeks to add to the price proper
tionate percentage to cover his taxes,
AT least in part.
The sales tax would aggregate a far
smaller burden by the time it reaches
the consumer than our prevailing ar
ray of taxes. 1t would weigh far more
lightly on the rank and file than do the
results of our existing taxation.
AT present. apart from various minor
taxes. corporate business pays 10 per
cent income tax and. in addition. ex-
cess profit taxes up to 40 per cent In
dividuals pay up to 73 per cent in fed
eral income taxes alone.
"A trif1ing sales tax on the huge
volume of commodities changing hands
annually would yield SO vast a revenue
that it would enable the excess profit tax
and practically all other abnormal busi-
ness taxes Except perhaps the corporate
income taxi to be eliminated, surtaxes
on individual incomes to be greatly re-
duced and federal taxation of incomes
up to, say $4,000, to be abolished alto
gether.
1.-THE result would be a great reduction
in the cumulative percentages with
which prices are now loaded to meet
taxation. that is to say. there would be
bound to ensue lowering of prices all
round. Competition would see to that
If. contrary to all expectation and pre-
cedent, it should not do so, other agen-
cies will.
Simplicity. Advantage.
Another advantage of the sales tax
is the great simplicity of its working
and the definiteness of it's application,
especially as compared to the vexatious.
uneven and unfair working of the excess
piUu, TAX.
Furthermore. to collect such a tax
requires little expense. no complicated
bookkeeping. no intricate schedules.
no lawyers and accountants services
and no army of government employees.
1t can be increased or decreased in
short order and without any resulting
economic disturbance according to
the financial needs of the government.
If 1 per cent tax produces too
much it is very simple process to
decrease 1t by an appropriate percent
age. II 1t produces too little a small
additional percentage will yield the
sum needed.
I'VE have had a two-year test now
nj q Sph f4v ;c;v
is unscientific. inconsistent and i'll
designed and has it's principal char
acteristic the taxation of business and
constructively employed capital. on a
scale without parallel anywhere.
The result is writ large in the high
cost of living, industrial and economic
d1slocation ahd social discontent-for
all of which our taxation. policy is
strongly contributory, though, of
course. not the sole, cause.
Would Help the Poor.
In common with all right thinking
men. I desire very earnestly and sin
cerely to see the burdens of the poor
and those of moderate means light
ened to the utmost extent possible
realize but too well that the load
weighing upon those whose income
has not kept pace with the increased
cost of things has become almost in
tolerable. 1 welcome every means
with sober reason and the
test of experience and with national
welfare. to remedy that situation. or
at least to mitigate it to the limit.
of our ability.
But I am entirely convinced that
crushing and bungling taxation of
capital and industry is not the way to
accomplish that result. / am con-
WINGED. on the contrary, that such tax
alton is bound to rebound to the detri-
ment of all the people.
If our extreme surtaxes on in
comes. and our excess profit tax had
the effect of breaking the vicious cir
Gle of price boosting and wage boost
ing. if these taxes had power to elm
mate or curb ''profiteering." much
might be forgiven them.
But experience has proved that
not only have they no such effect and
no such power. but indeed they have
tended to greatly intensity those
evils. To deal with these noxious
things, measures of quite a different
nature are required