The New York herald., 1921-02-24
A Start on the New Taxes.

| representative L0NGWORTH'S tax re-
vision begins at the right place and In
the right way, with the repeal of the
vicious, costly and demoralizing ex-
cess profits tax. Aside and apart
from the terrific load this discredited
system piled upon the public with
higher and higher living costs as long
as prices could be skyrocketed into the
realms of the clouds, It becomes q
barren revenue field when no man and
no law can prevent prices from div
ing down to earth again. So Con-
gress must discard 1t not merely be-
cause when 1t operates at full power
it Is ruinous to legitimate bust
ness practices, but because when all
the penalties of such economic evils
fall due 1t Is no better as a revenue
producer than well run dry.
But for the very reason that new
revenues must be substituted for the
failing receipts from the excess prof
its tax schedules, Mr.. LoNGwoRrH's
provision for fiat tax Of IS per cent.
on the net income Of corporations may
be sadly and disastrously disappoint-
Ing to the Treasury faced with the
need Of paying out about four billions
of appropriations and Of caring for
about two billions of floating debt.
From the point Of view Of the tax
payer net income tax that Is just
and reasonable is the ideal tax, be-
cause he does not have to pay it un-
less he makes 1t. But the Govern
ment has to have revenues with which
TO pay its bills, whether corporations
and other taxpayers are making
money or losing money. The most
nerfect tax man can devise so far as
principle and theory are concerned
is a delusion and snare for the
Government if 1t does not work out
in practice to pour the necessary rev.
enues into the Treasury.
AS a matter Of fact and Of record,
the reports of corporation earnings
for the last quarter of 1920 showed
that billions of dollars OF corporation
capital in this country did not make
p profit for that period. No inconsid-
cradle part of that corporation capt.
tai suffered heavy losses. There Is
no doubt that the showing for the
first quarter of the new year of 1927
will be worse than the showing was
for the previous quarter. Even If the
tide should turn before the close of
the year, as we all hope, the losses
piled up meanwhile will give q very
bad result for the whole annual
period.
With American corporations taken
as whole bound to make poor earn
ings as far as any eye can see
clearly ahead, therefore. II Is not
sound for the United States Congress
and It IS not safe for the United
States Treasury to count on big rev.
enues to he derived from normal cor
poration earnings which do not now
and probably will not later exist.
In the condition which confronts
the country there Is only one sure
source of revenue in the volume that
will be required by the stupendous
financial needs Of the Government.
It Is the so-called sales tax. The world
over this tax has met every test
as q revenue producer. AS industries.
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their supplies and spend money on
their needs whether they are max
ing profits or not, whether they are
growing richer or poorer, there is al
ways in the sales tax the sure source
of revenue upon which the Govern
ment must be able to count abso-
lutely.
Furthermore, the sales tax has the
incompatible merit Of collecting
from the average individual Of the
great mass Of the public quite neg
ligible amount, although the aggre-
gate from all Is colossal. The man
who spends 100000 year on his
ordinary living will contribute to the
Treasury even at so low a sales tax
rate as / per cent. the comfortable
sum of $1,000. And Of course the
man able to spend as much as that
also will be paying a very heavy In
come tax. But the man spending
81 900 a year on his ordinary living
will contribute at that rate only $40
to the Treasury, whereas now per-
hans his theatre ticket taxes alone