Evening star., 1922-04-23
lie Evening Star Newspaper Compan,
avoid Additional Taxation.

a.:sAvoid Additional Taxation.
4. SECRETARY Mellon is authority for
ths statement that the Treasury faces
q I923 deficit Of close to half a billion
dollars, not counting any further de-
'ifiands which may be made upon 1t as
the result of soldier bonus legislation.
And the disquieting suggestion Is
made that the only way to meet the
deficit and balance the, budget IS 70
levy additional taxation.
a chief reason for the anticipated
deficit is that, because of business de-
nression, present taxes will not yield
the revenue which had been expected.
A chief reason why business is de-
messed is because it Is so heavily
taxed. So it is proposed to impose an
additional tax burden on. business
which is depressed because Of the bur-
dens it already has to bear. The losi-
cal result would be still less business,
stiff less revenue from the taxes levied
and the necessity Of levying still
heavier taxes, until the time came
when there would be neither business
nor, revenue and all taxation would De
futile. 1t, is another one OF those
Vicious circles We heard so much about
In connection with the cost OF living
except in this case the spiral OF the
ciroae is down instead OF up. ..,.---.
.;oAs long ego as in 1776. Adam Smith
In his wealth Of Nations warned
against the folly of, governments IN
ievying taxes SO high as to dry up tne
sources of revenue, and he laid special
emphasis upon the mischief whlch
must result from taxes which may
obssruct the industry OF the people.
and discourage them from applying 10
certain branches of business which
might give maintenance and employ
,ment to great multitudes."
In some way, Of course, the dencit
must be overcome. for we cannot keep
on preaching to, Europe the necessity
OF balanced budgets if our own is to
remain unbalanced. But the govern
mens ought certainly to examine all
other possibilities before 1t considers
resort to the questionable expedient OF
another increase in taxation. one pos
sibility which should be examined IS
that of making use of the eleven Dill
lion dollars of indebtedness owed TINS
government by the governments OF
europe. tits unlikely that next year
there will be return in interest pay'
mef,ts on this Indebtedness sufficient
to meet the needs of the Treasury,
but a, way might. well be found TO
utilize somes Of the securities repre-
seIting principal sums.
The World War Debt Commission,
authorized by Congress and which has
just, effected organization, is expected
to take up first funding of the British
debt. The credit Of the British govern
1nent is. next to our own, the best IN
the world. and the securities Great
Britain will give in replacement -of the
present demand notes will be readhy
marketable, il placed in marketable
form, And Great Britain ought to be.
and undoubtedly will be. willing to
place them in the form most 9ccepta;
bfesso this government. Beyond any
doubt there is an investment market
tatsis country wide enough to absorb
Bfitfsh bonds in amounts sufficient to
meet next years expected deficit, and
any deficits which are likely to con-
front the Treasury for a number OF
years to come. Any resultant tying
up Of capital would be far less harm
fulato business than to load 1t down
with additional taxation. :''''.
~ But if this should be found to be inn
practical and no other way Of es-
Gaping additional taxation can be dis
covered, then the government should
have the courage to make the new
leyycopenly and frankly a tax on con-
sumption and not on production. To
quote Adam Smith again: Every tax
ought to be so contrived as both to
take out and keep out Of the pockets
OF the people as little as possible, over
and above what 1t brings into the pub
lie treasury Of the state" A tax on
production is not that kind of a tax.
The consumers must pay 1t in the end
lust as surely as they pay a tax direct
ly ON consumption, but 1t takes out OF
their pockets a great deal more than
Is necessary ''over and above what 1t
brings into the public treasury OF the
state ...,.