Perth Amboy evening news., 1922-04-27
GOVERNMENTS
AS TO FINANCES
Daily Letter by Frederic j.. Haskin

WASHINGTON. April PA pc
riod Of business depression does not
confne Its effects to individuals and
private business corporations. Hard
times for the people also mean
hard times for the government.
This has become increasingly evil
dent since the treasury has Come TO
place dependence for 50 large a
proportion of it's revenue upon in
come taxes.
In earlier days, the governments
revenue sprang chiefly frcm excise
taxes and customs duties. While
depression IN the United States af-
tected these revenues, they were not
affected so directly as the income
tax. Even in hard times people
bought tobacco. wines, liquors and
such taxed commodities. Imports
continued and the customs duties
went into the Federal Golfers.
With so large a dependence for
revenue placed on income and pro-
mt taxes, a 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 whiskey has disappeared
as the result of national prohihi-
ton. When peoples incomes sink.
income taxes fall off: when business
enterprises pass through d 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 re-
fleets the condition OF business in
1921. That was a bad yea for BUSH
ness. Farm prices sank to lower
levels than had been reached in
years. Wages and salaries were cut
all owe the country and nany peo-
pie laid off. Thousands CT 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 n 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 operates, careful estimates are
made for the fiscal year. Estimates
are made of probable and
of expenses. If these estimates
prove wrong, the Treasury is en-
barrassed. The estimates for the
fiscal year ended June so. 1922, call
ed for an installment of income and
profits taxes on March IS amount
ing to $3.50. 200, 900. For the calen-
: dar tsaa- 1900 fhn Aoir,atas ,rara
made on tire expectation of taxes
from these sources ams uniting to
s1.70O. 900, 600. The ta~bulations of
the taxes paid of March IL last are
just being completed and show re-
ceipts of less than $500. 600, 900 This
has necessitated an entire revisiC n
of the estimates for the calendar
year. 1t is felt now that not more
than $500, 900 900 will be collect
ed. This neal a deficit of $780,
100000 in expected tar 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
Budget. This means that congress
has made appropriations on the ba-
sis of an expectation of $1.700.000.-
| UOO III 1879 lTOm lltSt LdAcS- III
other words. the money already is
spent, II is not o possible for
congress to levy more taxes which
can be collected this year to make
up for this HIATUS between the es-
t:mated and the money ap-
p~ropriated. 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 treas-
ury will not issue any long term
bonds. such as the Liberty bonds
put out during the war. but will eff
feet its borrowings to meet this
emergency by selling to the public
short term obligations known as
Treasury Certificates Of Indebte-
dness.
"A Simple Parallel
To put this in simple terms with
in the experience of the man in the
street. a man has started
the veal IN the full expectation of
having an income at the rate Of
$4,000 a year through the ensuing
twelve months. He has contracted
expenses on that basis which will
Yse up the full $4,000. Later he