Arizona republican., 1922-03-08
Mil Stone on the country's Neck

When the policy OF issuing tax exempt bonds
vas instituted one could foresee the abuses which
Foud grow out Of it. At that time during the
rV war the rate of interest borne by the bonds
'ow compared with returns on money in other in
yestment so that only those who were desirous OF
retiring from business availed themselves Of the tax
exempt privilege. And the volume of the tax free
securities was not so great as to absorb money
needed in industry. Beside that the needs of in
dustry were not urgent they afterward became
Moreover there then no income tax or any
other oppressive tax further, and now the chief
inducement for the purchase tax exempt securities
The flood Of them has increased since in a
rapidly accelerating volume until now they have
absorbed and withdrawn from industry volume of
money, the lifebood in consequence Of which indus
ary is left in sort of anaemic condition
The country feels the effect of this policy more
directly in its need Of the money which has been so
withdrawn but indirectly the great mass Of the peo-
pie feel it more in the unequal share OF the weight
OF taxation which is put upon them so that those
who pay taxes pay much more than they would have
to but for the fact that than IA billions Of
dollars Of the countrys wealth has taken refuge in
tax exempt securities. And those who have chosen
this of escape weathiest citizens those
most able to pay. The man with a moderate in
the merely well do have no incentive to make such
investment in them as they could make So we
find the securities in the hands of the very rich
It is estimated that if the wealth now concealed
in tax exempt securities were made to pay its just
share OF the cost of government half the burden the
farmer bears would be lifted off Of him. If
we had the tax the income of that IA billions OF
dollars, all the smaller taxes might be eliminated
and the large income could greatly reduced
We speaking rather of the federal issues of
tax exempt securities the bonds and farm loan
bonds but they by constitute all OF the IA
billions There is flood constantly rising Of state
county municipal issues which are tax free as to
local taxes
1t is only within the three or four years that
the country went wild in issuing these securities
The federal government began and it in it's urgent
need OF money for purposes neglected to con
slider the policy with relation to the income tax
structure it was preparing.
AS we suggested recently it would have been
better to offer the induccment of higher rate OF
interest on its bonds without exemption a rate
Of interest which would have left little TO choose
tween investment In them and investment in indus
try. And at that time there was money for both
We do not suppose at the time of the various
drives for the sale of the Liberty Victory bonds
a comparatively large volume Of them was taken by
persons seeking immunity from taxation Most Of
them sold in limited amounts The saving Of
taxes to the average purchaser would have been
negligible. The Of the average purchaser,
too on the wealth which he put into the bonds would
have been negligible nothing. 1t later, when
the bonds began to be collected into hands the
very rich, that the country felt only the diinnu
ton OF the badly needed and the absence OF the
money which was needed FOR industry after the furry
OF the
Also during the industry at fever heat.
1t needed other stimulant, the railroads in the
hands OF the government made no draft on money
sources. The draft of both industry and the roads
was made at unfortunate time when so many had
just put themselves into the position Of non-tax-
payers.
There is now belated demand upon congress
for legislation against the further issuance of
free securities That of cannot affect those
already issued The equities of the holders in them
cannot be disturbed but it is good thing 10 stap
any where upon ruinous course.