New-York tribune., 1920-02-26
Excess Profits
TaxOppressive,
Asserts Butler.
Should Be Abandoned i'm
Order to Unshackle In-
dustry, Release Initiative
and Stimulate Production
Income Rates Too High
Believes Principal Task of
Next Administration Will
Be to Finance Country

Nicholas Murray Butler, president OF
CoIumbis University and candidate
for the Republican Presidential nomi-
nation. addressing the Republican
Club Of New Britain, Conn. last night.
said that the excess profits tax is un-
sound in theory and oppressive and
represslvc in operation. To unshackle
industry, he said, it should be gotten
rid of at the earliest possible moment.
Dr. Butler declared the Immediate
business problem that will confront
the Administration and the Congress
TO be elected next November will be
how, justly and wisely, to raise by
taxation $4,000 .ooo, 900 a year and how
to supervise and direct the govern.
ment penditures in order to make
sure that the peoples money is not
wasted and none improperly spent.
Revenue From Tariff insignificant
"Granted that the budget system is
in effect" asked DR.. Butler. chow is
the government to raise $4,000, 100000
8 year? During the present fiscal
nearly $6.5oo0 100000, of which about
$4,000, 100000 comes from internal
revenue, and three -fifths of that huge
sum from the income and excess
profits taxes alone. Tariff duties now
sink to less than $500 O00,0 900. Even
under a wiser tariff than the present
one, therefore, we cannot expect to
derive from this source any consider
able proportion of the vast revenue
that the government needs. The ar
noyances and the lnfairnesses of many
OF the lesser internal revenue taxes are
such as TO Justify their early discon-
truance. We must, therefore, depend
for the major portion of our national
income in the wears lmme ediately 70
follow upon taxes levied on individual
and corporate incomes.
The excess profits tax is a lnisnomer.
It is unsound in theory and most OPP
pressive and represslve in operation.
It should be got rid of at the
earliest possible moment in order to
unshackle industry. 10 set free initia-
tive and IS stimulate production. The
income tax rates are also far too high
TO be reasonable in time of peace. The
abolition of the excess profits tax and
the revision of the income taxes would
leave probably 1.50O 600 900 to be pro-
vided in other ways. One suggestion
that has been made and largely sup
ported is that there should be imposed
a general tax on sales Of. say.
per ce.t. Economists generally do not
arrrove this sugges ion and ront to
unfortunate results in countries like
Sps--., wnege it WAS once IN op ration.
Nevertheless. this gap in the revenue
must be made up somehow. and if we
are not to have a general tax on con-
sumption we must find 8 substitute
sor it.
New Sources Are Sought
"One plan is to get rid of the present
YER wide spread exemptions from taX-
alton, including, OF course, the obiiga-
tons OF states counties and munici-
pal.t.es. This, however, raises polit-
lea and constitutional que tion, as
well as an economic one. The sum
and substance of the matter is, there
fore, that even supposing the existence
OF scientific budget system, even
supposing new spirit of economy to
displace the spirit of extravaganza at
Washington, there will be need Of ST.
600 900 900 or 81 500 900 900 of revenue
from sources yet to be agreed upon. This
!revenue must be raised in u spirit OF
fairness and not in a spirit of con-
fscation, and it must be raised in q
manner that will leave us free to
develop the industries and the business
Of the country in order that we may
have the widely distributed incomes
with which to bear the burden of tax
alton and TO produce the revenue that
the government requires. Whether
We can begin to provide for the amorti-
cation of the huge debt that the war
mas saddled- upon us by the establish
ment of sinking fund depends upon
what sort of system of taxation we
develop. Prudence would suggest that
We do make provision for sink
ing fund that would discharge the war
debt in fifty or sixty years.
Huge Task Imposed by War
The country has not yet fully taken
IN the magnitude of the cost of the war
or the debt which it has left behind.
l. is probable that our total net ma
.ional debt will be not less than $685.
0oO,000,000 at the close of the present
:iscal year.
The huge burden of debt and the
greatly expanded cost of government
tirectly affect the cost of living The
? pansion of credit necessary to float
b-Fernment loans and to carry on the
r, with its resulting imitation of cur
oacy, deprecated the purchasing
rower of the dollar and has at least
Z ubled the cost of living. The short
Aning of the hours Of labor decreases
production and Increases the cost OF