The Washington herald., 1920-02-29

and inflated principles of our pres
ent system. Mr.. Kahn says
Taxation. while necessarily in
volving political and social consid-
erations. is essentially a problem in
national economics. 1t is primarily
a question Sof public advantage
wisely. truly and broadly conceived.
Its effects are subtle, profound and
manifold and, unless carefully
studied and measures in advance,
apt to crop up in unexpected ways
and places. The very extreme of
the burden laid upon business and
incomes by the method Of taxation
adopted by Congress in 1917 and
since continued. has partially de-
feated the purposes which the
trainers OF that legislation had in
view. and at the same time has
given rise to certain unforeseen and
troublous developments-as inya-
riably happens in the case of eX-
treme measures, especially where
economics are involved.
FACTORS hesponsible.
Several factors are responsible
for the economic dislocation and re-
sulting ills Gncluding, high prices)
which confront us. Among these
factors, none has been more potent
for harm than our Federal taxation.
The results which did arise from it
were bound to arise. 1t did not
need a prophet to foretelI, for in
stance, that the existence of many
billions of Federal. State and Farm
Loan Bonds, entirely free from all
taxes (and more of such. bonds COM
ing out almost daily. on the one
hand, and income taxation on a
scale unparalleled in any other
country in respect of a persons in
come from business and corporate
securities. on the other hand, would
drive a very great portion of the
country's liquid capital into tax free
securities and thus largely prevent
the access of private and corporate
trade and industry to the great res
ervoir of individual investment cap
itaI.
Tax Burden to Investors.
The free flow of capital, the nor
NAL working of the investment
market are absolutely basic ,ele-
ments for every kind of trade and
industry. The effects of their dis
turbance to any serious degree for
any length Of time are all-pervad-
ing.
we cannot have a return to a
state approaching normal condi-
tions of trade. prices, etc, until our
investment market will have come
VI in n L.
of normal conditions.
And that is impossible as long
as our present income tax remains
in force, even if the other elements
which have operated to bring about
the present abnormal situation were
removed.
1T is an old axiom of taxation
that an excessive tax destroys it's
own productivity.
"A small committee of well-in-
formed men of different callings, ap-
preaching their task free from po-
litical, social and sectional bias,
would not find it formidable un-
dertakfng to evolve measure
which. while fully responsive to the
dictates of equity and social justice,
would produce no less revenue than
the taxation now in force. and yet
would be far less burdensome upon
the country. less hampering to en-
terprise, and less productive of eco
nomic disturbance and location.
Revision OF Income TAX.
1T might recommend a radical
revision of income taxation on the
theory that the emphasis of taxa
tion be laid rather on expenditures
than on incomes and that a sharply
marked distinction be made between
such portion of a persons income as
is used constructively in savings.
investments. or enterprise and such
portion as is spent on his scale OF
living. A tax based on that theory
would no doubt exempt expenditures
of certain minimum sum per an
mum. say, $4,000 for single and
$4,000 for married persons. would be
applied moderately to moderate ex-
penditures. and would be severely
progressive on large expenditures.
Much can be said for such a tax
hn