The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-04-25

not confine its effects to indiyidu-
ais and private business corpora
tions. Hard times for the people
also mean hard times for the gov
eminent. This has become increas-
ingly evident since the treasury
has come to place dependence for
so large a portion of its revenue
upon income taxes.
In earlier days, the governments
revenue sprang chiefly from excise
taxes and customs duties. While
depression in the United States af-
fected these revenues, they were
not affected SO directly as the in
come tax. Even in hard times peo-
pie bought tobacco. wines, liquors
and such taxed commodities. I'm
ports continued and the customs
duties went into the federal cof-
fers.
With so large a dependence for
revenue placed on income and prof
it taxes, year of depression is
quickly reflected in returns to the
government. Such a development
is felt with especial keenness when
the large volume of taxes from
beer, wine, and whisky has disap-
peared as the result of national
prohibition. When peoples in
comes sink, income taxes fall off;
when business enterprises pass
through a year of low profits or
none at all, profits taxes dWindle.
Income taxes are paid in one
year on the income and profits of
the preceding year. Thus, the
March 18th installment OF taxes in
1922 reflects the condition of bust
ness in 1921 That was bad year
for business. Farm prices sank to
lower levels than had been reached
in years. Wages and salaries we're
cut all over the country and many
people laid Off Thousands of
people who the previous year drew
salaries high enough to make them
subject to the income tax, In 1921,
found themselves among the army
of the unemployed. When men have
diminished incomes, their purchas-
es fall off. This means that bust
ness houses all down the scale suf-
fer diminution of business and
therefore profits are non-existent.
For that reason, business profits
taxes sink to small figures.
Treasury Is Embarrassed.
Under the budget system on
which the United States govern
ment now operates, careful esti-
mates are made for the fiscal year
Estimates are made of probable
revenues and of expenses. If
these estimates prove wroag, the
treasury is embarrassed. The es-
Inmates for the fiscal year ended
June 80, 1922, called for an install
ment of incomes and profits taxes
on March Is amounting to $780,
100000 For the calendar year
1922 the estimates were made on
the expectation of taxes from these
sources amounting to S1,700, 900.
The tabulatiens of the taxes paid
of March Is last just being com
pleted and show receipts of less
than S400, 900 900. This has neces-
STATED an entire revision of the
estimates for the calendar year. 1t
is felt now that not more than ST.
500, 100000 will be collected. This
means a deficit of 5000, 900 900 in
expected tax money.
Appropriations for government
expenses are made in advance by
congress, based on the amount of
money which will be available, as
estimated by the bureau of the bud
get This means that congress has
made appropriations on the basis
of an expectation of S1,700, 900, 900
in 1922 from these taxes. In 9TH
er words, the money already is
spent. 1t is not now possible for
congress to levy more taxes which
can be collected this year to make
up for this hiatus between the es-
timated revenues and the money
appropriated. There is a definite
gap.
The only recourse of the govern
ment, therefore, is to borrow
money from the public with which
to carry on government business
and meet the bills contracted by.
congress through appropriations.
The treasury will not issue any
long term bonds, such as the Lib
erty bonds put out during the war,
but will effect its borrowings to
meet this emergency by selling to
the public short term obligations
known as treasury certificates of
Indebtedness.
A Simple Parallel.
, To put this in simple terms with