Evening star., 1920-04-04
RY i. A. FLEMING.

Z
not as he states. with any view o
lessening the obligations of the ricl
nor with adding to the burdens o
the less well-to-do in this world
goods. but rather of bringing hom
the readjustment necessities and 10
more equitable distribution OF th'
. burdens.
One of the things that Mr.. Kahn
deprecates most seriously is the rae
that the rich man. should he desire
to shift the burdens and risks o
business on other shoulders ana SIM
ply enjoy his wealth. may retire anG
by making investments in taX-1ree Sc
curities, avoid entirely contributing
! in any way to the expenses oi th'
| general government.
on this subject he is very emphat1c
| believing that nothing can De uont
| to reduce the volume of tax-free In
| vestments now offered. but taking e
| strong position in favor OF the gov
! ernment finding a way to prevent 1ur
| ther issuing of securities of this char.
| ter-state and municipal bonds ant
, taX-free issues of government DondS
| In this connection he takes piair
issue with J. w. Fordney, chairman
/ of the ways and means comhli.ee ..
! the House of Representatives, VINO ma:
recently recommended the removal OF
! all taxes from the various liberty
! bond issues, as means OF StaDlilZlns
! these securities and assisting in theil
! recovery from the current low selling
I prices.
Not Making Investors.
! MIR. Kahn also takes exception to The
general belief that the marketing o
Sl7 900 100000 liberty loan bonds ha'
created an army of new investors II
bonds and securities. admitting tina
/ the ma jority of the buyers of the gov
ernment issues, in time of need. knew
nothing of bonds. coupons. etc. ant
! that their first investments have no.
encouraged them to delve further into
! the possibilities of bond trading.
| Prior to the war there were 100000
/ individual owners of bonds in the
United States. Mr.. Kahn says:
Il have no reliable figures to show
; to what extent the number of small
bond buyers has increased during the
past years. apart from liberty bono
; buyers.
| 1T doubtless has increased but the
aggregate buying power. or, rather
/ buying inclination. of the small IN
vestor has by no means made up ant
! is not at all likely to make up the
detection of the large investor. The
bought liberty bonds during the wal
; is no criterion. Their motive was no
investment, but patriotism"
Unquestiopably the long continued
downward trend in the value of ever
the highest grades of bonds ha:
caused liquidation of holdings OF
bonds and a determination to abstain
|from further investments therein or
the part of many investors. while the
freedom from norm"l taxes of divi-
dends of corporations other than per-
sonal service concerns. has recently
| turned attention to highgrade pre-
| ferred stocks.
In initiating the discussion Mr.
| Kahn gives recognition to the fac
I that criticism is an ungrateful task
| and adds; Il can only say that l dc
not mean to advocate a plan of taxa
SO would be wrong and fatuous."
, Congress Justified.
| He admits that Congress should
draw 'preponderantly upon the well
| to-do in placing the weight of direct
taxation incident to and resulting
from the war;" adding. 1T is right to
seek TO adjust the burden as near as
| may be according to capacity tc
bear it"
! In the discussion of taxation Mr.
Kahn naturally turns to the surtaz
schedule. citing the fact that any
KICK against surtaxes is the 'squea
OF rich man." Right here he points
out how the rich may lie back a,
ease loaded with tax-free securities
| Excess Profits Tax.
Referring to the excess profit tax
he says: 1T lays heavy and clumsy
hand on successful business activity
, 1t is grossly inequitable in its ef
rects. and. to large extent, the
greater or lesser degree of its bur-
densomeness is determined by purely
| aortultous s circumstances. 1t puts a
nne on enterprise and efficiency. /,
leaves untouched the man of wealth
who neither works nor takes the risk
and responsibilities of business. but
simply collects his coupons
But to remove the excess profit tax
of corporations without at the same
time greatly reducing the surtax OF
/ individuals would be discrimina.
tion against private business in favor
or corporate business inasmuch as
it would greatly impair the capabil.
! ity of private firms to compete with
corporations
Must @o Through Laws.
, MIR. Kahn asserts that the repeal OF
modification of the excess profit tas
4 VIII not and cannot effect the relief
which the situation calls for unless
accompanied by a well judged revi.
! sion of the existing scale of taxation
ual incomes"
' comparison of taxes under in.
, come schedules with England shows
/ that our laws are vastly more liberal
/ the exemption of the married man
, there being but $3.50 versus $4,000 or
. this side of the pond. On incomes ur
/ to $4,000 the English tax is six times
i the American. In the upper scale OF
, taxation the reverse is true-but Mr.
! Kahn admits that "our scale with re.
| Spect to small incomes is juster and
wiser than the English scale and
{ fnr III
! our moderation in respect to taxing
small incomes make more conspicu-
/ Gus the unnecessary and harmful ex.
! IRENE to which we go on the other
end of the scale.
! On the Tax-Free Bonds.
i While We take away three-quarter.
| OF MS income, and even more if We
! include other taxes. from the capi
! talists engaged in business or in.
vestins his money in supplying funds
! TO our industries. access is wide oper
! to other forms of capital in safe ant
/ tempting refuge offered by tax-ex.
J empt securities All municipal bonds
! state bonds. farm loan bonds, and un.
/ less otherwise specified federal bonds
are tax free, except inheritance taxes
There are $4,000. 900. 900 of these bond.
now. exclusive of liberties. and NOR,
are being created all the time"
Mr.. Kahn then goes on to show, a
! length. the value of tax-free bond.
| as an investment.
! taxable security or bushes!
! would have to yield the following per
| Centages in order to bring the sam,
net income as a ~. per cent tax
free bond - without calculating eX
| cess profits. state or local taxes: IL
! the case of income exceeding 10000
1 5aa per cent; in case of incomes eX
! ceeding 100000. $40 per cent: in cas-
of incomes exceeding $4,000, 6.5
per cent: in case of incomes of 800.
900, 1923 per cent; in excess of 5000
900, 1880 per cent: in excess of $500.
900, IA 06 per cent: in excess of S5OO