The Washington herald., 1921-09-14
Propaganda Boomerang.

TT IS NOT infrequent that propagandsts hnd
II their propaganda returns to lvex them. 1t the
repeal of excess profits taxes and surtaxes on
incomes IS not made retroactive as of January
sIaSt, it will be because of the arguments used
against it We believe these arguments to be
of themselves in the main, sound, and that these
forms 'of taxation should be repealed. Neither
would we oppose making repeal retroactive. But
it is easy to appreciate why Others and especially
those holding elective offices, approve it
Almost the only argument broadly made against
thc excess profits tax that it is passed along
Not only this, but that it is passed along in ex-
cess of the tax. In other words this tax, est-
mated to cover years business is added to over
head or to costs. AS it passes from raw ma
teria to finished product, this process Of increased
cost is repeated. 1t is made a consumption tax,
a hidden, self-estmated sales tax That the con-
sumner pays it all, and then some, has rarely been
questioned. This plea has been made as to
the surtax on incomes we'll as the other plea
that il turns capital from investment in industry to
investment in tax-free securities.
If this passing-along argument has merit, thsn
so much of the tax as was estimated for this year
has been or is being paid by consumers. If it is
remtted as of January I, last, those who have
already collected it, would keep it. II paid the
government, it would in this 60 back to
those who have already paid it in the cost of
things consumed or bought No one need
imagine that the PLAIN folkS nave not sunclently
absorbed this argument to appreciate the conclu-
: sion.
p, 1t has seemed to The Herald that altogether
too much emphasis has been placed by the oppo-
nents Of this tax on this plea that the consumer
paid it ALL and overpaid it. II this wholly
true and the effect was to increase profits, then
those who pay it in bulk to the government would
not be so deadly anxious to be RID OF it. That it
is passed along, so far as is humanity possible, We
do not doubt. 1t has to be. But the chief obec-
ton to it is that it shackles business expansion,
burdens accurate cost records, hampers credits,
= prevents safe margin of reserves, causes needless
anxietes cuts down the normal flow OF business,
= and, so far it adds to consumers prices re-
duces the volume of business, closes industries
and adds to unemployment.
1t is an economically nnwise form OF taxation.
1t was a failure in its main purpose of reducing
war profits and mulcting the prohteers. War
riches might have been reached in other ways.
They were not scratched by this tax. What is true
Of it is equally true of income surtaxes. Exempt
10 securities, 100, have but added to municipal and
State extravaganza under the cloak OF constitu-
tional prohibition which does not exist.
1t is hard job to get the better of tax avoid
ance and the simpler any tax system is the fewer
things it covers and the more definite the subject
Of the tax, the better. 1t should not be possible
10 collect than in larger amount
: from someone else, a tax paid to be paid.
Also, whoever ultimately pays the tax should know
it and how much it is. This rule points to stamp
taxes, to moderate income taxes, to death taxes,
to license taxes, to a single sales tax evil
denced in definite way, and the like.