Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-01-17
One viii Be Paid, However,
Through Direct Taxation.
6, O, P, Plans to Railroad
Measure
BY DAVID LAWRENCE
Ueased Wire Service to The Journal.)
.s.' iConyrinhf 1900

WASHINGTON, Jan. 14.-All
idea that the American soldiers
will be paid bonus out of the
proceeds of the allied war debt may
be abandoned. ~
There will be bonus paid, how
ever. 1t will be raised by direct
taxation. President Harding an
nounces that he favors the enact
ment of bonus law and that he
will not oppose sales tax as the
method of raising the money.
Whether public5 sentiment will ap-
prove another tax imposition is
quite another matter, but Republi-
can leaders believe it is essential to
success in the fall elections that
they put the measure through and
they plan to do so within the next
few weeks.
Practical obstacles have arisen to
prevent the linking UP of the bonus
with the proceeds of the allied war
debt. One is the. fact that the
original liberty loan acts provided
that any payments made on the
principal of the money lent to for
eign governments shall be 1mme-
diately applied to the payment of
Liberty Loan bonds and interest
thereon.
If the plans which have been dis
cussed for the last week to collect
interest on the foreign debt and
pay it to the soldiers were. to go
through, it would mean the repeal
of that provision Of the liberty loan
acts of September, 1917, and would
compel the federal government to
keep on taxing the American peo-
pie not merely to collect the inter
est on the Liberty bonds but the
principal as well.
Would Prolong Tax Burden
AS matters stand now, the gov
eminent here must annually pro-
vide about $975,000,0 900 to pay LIB
erty bond holders the interest thaI
is due them. Where is that money
secured? BY the income tax, cor
noration tax and all the other
leyies of the new revenue act. Re-
lief from this. immense burden
one-fourth of the annual budget
has been expected to come eventu-
;ally from the payments by foreign
governments of the interest ana
principal of their war debt.
If, instead, the soldiers get it, this
means the government would have
to keep on borrowing from the Amer
lean people by regular bond issues
and would not be able to reduce the
tax burden for generation at least.
Liberty bonds and Victory bonds
nowadays are around par and the
government is gratified that they
have returned to normal value but
fears are entertained that if the pro-
ceeds of the allied war debt are
somehow made payable to the sol
diers as a bonus, the Liberty bonds
held by so many millions of small in
vestors will be adve1 ely affected and
the resultant impression on the cleo
torate so far as the fall elections are
concerned is to be taken into consid-
Grafton by the administration as a
possible boomerang. There was
something like 100000 bond-hold-
ers. There are approximately 4,S00,-
600 soldiers, and many of them hold
bonds, too.
Sales Tax Favored
The tendency therefore will be to
steer clear of the allied war debt and
find some other means of raising the
bonus. The sales tax has executive
sympathy, though not full approval
as yet, because it means the inau-
guration of a new system of taxation
which its advocates Insist will even
tually make it possible to do away
with the present levies of the reve-
nue. act, especially on corporations
and give the government practically
all the revenue desired for the an
nual budget.
Some of the champions of the saels
tax are so ardently In favor of it that
they actually welcome the soldier
bonus as a way to demonstrate the
practicability of this new method of
taxation. Z
Some officials, however, who have
nothing to do with the reelection
troubles Of members of congress
point out that whatever name it may
be called-sales tax or anything else
1T means an added tax burden to
American business and that the real
danger in the soldier bonus is that
what appears to 5be a single expen-
dltufe of one billion dollars now may
easily become a triennial or quad