The county record. [volume] (Kingstree, S.C.) 1885-1975, 1922-11-16
A PROPOSAL FOR
TAX REVISION
SPEECH DELIVERED BEFORE
NEW YORK CITY CLUB OF THE
HARVARD BUSINESS SCHOOL.
By Otto H. Kahn.

New 10rk, NOV. Oil dH duuiesS
delivered before the New York City
Club of the Harvard Business School
Alumni Association, at the Harvard
Club on November 9Th, Mr.. Otto ii.
Kahn spoke. in part as follows:
> The underlying trouble with our
whole system of taxation is that 1t
is based upon, and actuated by, not
plain business-like consideration OF
reSenue-raising, but social, experiment
tation plus class and sectional ami
mostly. The aim, when that scheme
originally was enacted into legisla-
ton, was to ''take it out of" the
few and "out Of the mainly indus
trial states, primarily the East. The
crudity of that theory was covered
by the formula taxation according
to ability to pay" This is formula
to. which fair-minded and right-think-
ing men will give adherence in prin-
ciple, but it must be applied within
the limitations of the rule of reason
and with that discrimination which
takes account of practical considera-
tions and consequences; else, 1t Is
bound to become mischievous and a
breeder of great harm, as indeed it
has become.
1t is an old and sad truth that the
effect of economic laundering by
governments is always felt myst by
those least able to protect them
selves. You cannot "take it out, of
the few and "out of the East with
out also taking it out of" the poor
and "out Of the West and South.
The principles of the revenue meas
ufe of 1917, re-enacted essentially
unchanged for 1918 and 1919, and
not modified to any adequate degree
in the measure of 1921, stand dis
closed as breeders of harm to all the
people, by. the inexorable test of
actual experience.
It is bound to interfere, has inter-
fered, and does interfere gravely and
in many ways, direct and indirect,
with the needs and the attainments
and the prosperity and progress of
the country.
A Democratic president and Re-
publican president, three Democratic
and one Republican secretary of the
treasury have advocated an adequate
reduction of our extreme surtaxes.
Yet this evil and the countrywide
damage flowing from it remain uncor-
rected, for the slight modification
effected last year is no correction.
By reason of their very extremes,
the high surtax rates have defeated
their own purpose, or, rather, that
of their advocates. The country is
afflicted with all the hampering and
troublous consequences flowing from
the operations of a draconic statue,
without even gaining the advantage
of the revenue which was supposed
to result from it. The higher brack-
cts of the surtax schedule have ceas-
ed more and more to be productive.
To a considerable degree they have
abolished themselves, but in the
wrong way. To the extent that they
are collected they penalize the work
ing capitalist, the men engaged in
active business and in productive en-
terprise, as against the idle capitalist
who simply puts his funds into tax
exempt securities. According to the
latest published official figures, the
aggregate income subjuct to the high
er surtaxes has been reduced to less
than one-hslf of what it was in the
first year of their existence. That
does not mean that large individual
incomes have diminished. 1t merely
means that the governmental reve-
nue. derived from the extreme surtax
rates on large incomes has diminish
ed. Quite apart from the plain way
of avoidance, through investment in
tax-exempt securities, these rates
} challenge the ingenuity of those sub
jected to them, as every extreme
statue does, to find permissible means
of escape from their rigor.
Governmental greed, Just like pri-
vate greed, is apt to over-reach itself.
Many transactions on which those
concerned would willingly pay a
moderate tax are now simply being
laid aside and not effected at a..
because of the intolerable taxation to
which they would be subjected,
Others are being concluded in an
artificial, roundabout unsatisfactory
wav so as to avoid the full burden
nyI1 >.ar,,1% sy asfba, coco