The Caldwell tribune. [volume] (Caldwell, Idaho Territory [Idaho]) 1883-1928, 1922-11-28
ENGINEER SEES
TAXPRObLEM IN
STRANGE LIGHT
Thinks Prohibition of
Sale of Tax Exempt
Securities Would Swell
Tax Burden.

WAST1l W. ON-SalVert lOWnley
broadley known in connection with
his leadership in electrical engineer
ing affairs, takes a position quite diff
ferent from many of our leading bust
ness men, regarding the proposed con-
stitutional amendment to prohibit the
continued issuance of tax-exempt Sc
curities In his statement Mr.. Town
ley says:
we have had tax exempt securities
from the early beginnings of this ma
ton. They include those issued by
municipalities, states, subdivisions OF
states and the United States Nobody
has ever objected to their issue over
all these years until recently. Why
not?
Outside of the ethical reason that
it is not equitable for debtor to
agree to pay a given rate of interest
to his creditor and then take some of
it back in order to help him pay that
interest, which reason may or may
not appeal to the man on the street,
according to his point of view on gov
eminent and business affairs, there is
very obvious economical reason that
money can be obtained at a lower
rate of interest if the lender can keep
all the interest than if he has to give
up some of it. Inasmuch as the where
withal to pay interest on govern
ment obligations comes out of taxes,
the fact should not be lost sight of
that everybody who pays any taxes
at all will have them increased if
this rate of interest is raised and
do not suppose any one will dispute
the obvious truth that if the income
from government securities is tax
able, they will lose all their prefer
red position in the money market and
will have to return a higher yield.
This is point which l have never
seen mentioned much less stressed
in any of the outbreaks appearing
in the press against tax exempt Sc
curities.
Soak Big Boys.
I'm framing the present income tax
laws our legislators in their wisdom
O. have soaked the fellow with the
large income. l believe it to be gen.
orally conceded that the heavy super
taxes on large incomes are not only
unjust but economically unsound but
the law makers seem to care very
little for this fact because the peo-
pie who receive these abnormal in
comes are comparatively few in num-
Der and therefore have correspond
ingly small number of votes, and for
the reason that as every one is more
or less jealous of the fellow who is
better off than he is, they are not
as class particularly popular.
"Of course if citizen is called up
on to pay out from rs per cent to so
per cent of his income in taxes he
can we'll afford to buy tax exempt
securities at a considerably lower
rate of interest and still be ahead of
the game and that is of course why
such a ready market for tax exempt
securities at such good prices has
developed. Federal. state and NUM-
cipal authorities knowing this have
penditures on large scale with the
result of the great increase in the
volume of such securities which has
caused the present discussion.
Remedy Is Wrong.
Obviously, money put into public
improvements, once it has been ex-
pended, is dead money, lie. it is not
productive or at least no where near
as productive as if the same amount
were put into commercial enterprises,
and in just so far are the funds
available for the country's develop
ment restricted To my mind, how
ever, the cure for the evil is obvious
and is not to stop the issue of tax
exempt securities. 1t Is to modify
our ridiculous income super tax
schedules as to re-establish the prop
err balance and remove the incen-
tive for our very wealthy people to
invest in tax exempt securities. In
other words, don't cover up the dirt
With paint and perfume-wash.
81 am very confident if the general
public, particularly our office hold
RS are brought to realize that if
hey abolish tax exempt securities
or ever after they will have to pay
igher rates of interest on ali money
borrowed for public improvements
hat tax exempt securities will never