The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-04-26
TOPEKA STATE JOURNAL
Information Bureau
FREDERIC }. HAsKIN. Director.
Washington. ID. o.
THE GOVERNMENTs BAD GUS.

period of business depression does not
confine its effects to individuals and
private business corporations Hard
times for the people also mean hard
times for the government This has
become increasingly evident since the
treasury has come to place dependence
for so large a proportion of its rev.
enue upon income taxes
In earlier days, the government
revenue sprang chiefly from excise
taxes and customs duties. While de-
preston in the United States affected
these revenues, they were not affected
so directly as the income tax Even IN
/ hard times people bought tobacco,
wines, liquors and such taxed com
modities. Imports continued and the
customs duties went into the federal
Golfers.
with so large a dependence for rev.
enue placed on income and profit
| taxes, a year of depression is quickly
reflected in returns to the government
| Such a development is felt with espe-
i cial keeness when the large volume
| of taxes from beer, wine, and whisky
has disappeared as the result of ma
| tional prohibition. When peoples
incomes sink. income taxes fall off;
when business, enterprises pass thru
a year of low profits or none at all,
profits taxes dwindle-
In come taxes are paid in one year
on the income and profits OF the pre-
| ceding year. Thus. the March 5
/ installment of taxes in 1929 reflects
| the condition of business in 1921. That
was a bad year for business. Farm
prices sank to lower levels than had
been reached years. Wages and sal
aries were 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 di-
minished incomes, their purchases
fall off. This means that business
houses all down the scale suffer di
minution 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 government now OPP |
crates. careful estimates are made for
the fiscal year. Estimates are made |
of probable revenue and of expenses.
If these estimates prove wrong, the !
treasury is embarrassed. The eSu- |
mates for the fiscal year ended June |
so. 1922. called for an installmeutA of i,
income and profits taxes on March LIS |
amounting to $3.50, 100000 For the |
calendar year 1922 the estimates were |
these sources amounting to S1,70O,- |
100000. The fluctuations of the taxes
paid of March Is last are just being /
completed and show receipts of less /
tated an entire revision of the esti-
mates for the calendar year 1t is felt /
now that not more than $500. 600, 900 |
will be collected. This means def
icit of $2OO,00O,0 900 in expected tax
money.
Appropriations for government ex-
penses are made in advance by con-
gress. based on the amount of money
which will be available. as estimated
by the bureau of the budget. This
means that congress has made appro- I
priations on the basis of an expecta-
ton of $1,700.Oo0,oOO in 1922 from
these taxes In other 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
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
bill contracted by congress thru ap-
The treasury will not
issue any long term bonds. such as
the Liberty bonds put out during the
war, but will effect its borrowings to
meet this emergency by selling to the
as Treasury Certificates of indebted
ness,
A Simple Parallel. e.
To put this in simple terms within
the experience of the man in the
street assume a man has started the ,
year in the full expectation Of having
an income at the rate of $4,000 a year :
thru the ensuing twelve months. He {
has contracted expenses on that basis
which will use up the full $4,000. Ii
Later he discovers that his income |
will be only $500. He has signed {
contracts to pay the full $4,000. He /
cannot get out of them. He must '
borrow. He expects TO do better the s
aNvN a l. e. L i -
sire to obligate himself to pay inter '
EST on his borrowings for long '
period. Therefore, he signs a promis- $
sorry note for a year.
In the larger national sense. a
treasury certificate of indebtedness
merely is the nations promissory note
% tide the government over until it
an balance its budget-that is, have
expenses and income equal These ,
certificates of indebtedness will be sold
~ the treasury to banks, corporations
or anyone who will buy
hem The showing of the March Is
AK installment means that 100000
700 in these certificates must be sold
,etween now and next January.
The treasury, in estimating the in
'ome for this year. took into consider
Ltion the business depression. but 1t | Il
Ieems il did not realize how far short +,
income had fallen. The previous year 5
he revenues from these taxes had 1 n
amounted to S3,22S. 137, 900. This =
um was practically cut in two in \ 81
making the estimates for 1922 but .
{ seems the income of the country Il
las been cut even more than that. =
n 1920, the income and profits taxes
mounted to 1885, 1886, OOO-nearIy / :,
our billions To visualize how much
he national income has dropped since /,
$40. the boom year. contrast this
igure of 1886. 936, 600 for 1920 taxes :,
With $500, 100000. the revised esti- h
nate for 1922.
Not Due 10 Lower Rates. e
Some Of the reduction can be ac- 81
ounted for by relaxations in rates Il
'ut not much. as principal relaxations
10 into aEfa..t until 81