Every evening, Wilmington daily commercial., 1922-04-26
THE GOVERNMENTS BAD GUESS
BY Trsdsric J. Haskin

washington, April, ia period OF
b,Sipeas depression does not confine
its effects to individuals ard private
business corporations. Hard times for
tho people also mean hard timee for tho
government. This has become increas-
inxly evident since tho Treasury mas
come TO place dependence Tor 90 large
a proportion OF its revenue upon IN
come taxes.
In earlier days. the governments
revenue eprang chiefly from excise
taxes and customs duties. While de-
preston In the United States affected
these revenues. thcy were not Affect
cd 10 directly NJ tho income tax. Even
In hard times people bought tobacco,
wines, liquors and such taxed conn
moditite. Imports continued and the
customs duties went into tho Federal
Golfers.
With 30 large a dependence for rev.
enue placed on income and profit taIee
year OF depression is quickly reflect
ed In returns to tho goyernment. Such
development IS felt with especial
keenness when the lsrge volume OF
taxes from beer, wine. and whisky hse
disappeared as tho result OF national
prohibition. When peoples incomes
sink, income taxes fan of; wher
business enterprises pass through Z
year OF low profits or none at all, prof.
| It's taxes dwindle.
Income taxes are paid in one yea
on the Income and profits OF tn
preceding year. Thus. the March 15tl
installrnent Of taxes In 1922 reflect
the condition Of business in 1921. Tha
was a bad year for business. Farm
prices sank TO lower levels than ha.
been reached in years. Wages and sal
aries were cut all over tho countr
and many people laid OF. Thousands 0
people who the previous year dreV
salaries high enough TO make ther
subject TO the income tax. in 1872
found themselves among the army {
the unemployed. When men hav
diminished incomes. their purchase
fall of. This means that bushes
houses ell down the scale suffer din
, mutton OF business and therefor
profits are non-eristent. For that ret
son, business profits taxes sink
, small figures.
. Treasury is Embarrassed.
t Under tho budget system on whic
y tho United States government no
/. operates, careful estimates are ma
A for the fiscal year. Estimates are ma
o OF probable revenues and OF expens,
h II these estimates prove wrong, q
n ! In 1u,r
d mates for the fiscal year ended Ju
30. 1922, called for an instalirnent
q income and profits taxes on March
y amounting TO $3.50, 900 900. For {
I calendar year 1922 the estimates we
q, made on the expectation OF taxes fro
a these sources amounting TO $1.70o. 90
900. Tho tabulationS Of the taxes ps
, OF March 10 last ara just being col
o pleted and show receipts of less tn
s40O 100000. This has necessitated
entire revision f the estimates I
the calendar year. II N felt now III
not moro than $500 900, 900 viii
- collected This means deficit Of $40
I. 100000 IN expected tax money.
Appropriations for government 6
penses ara made in advance by Co
y gress. based on the amount of mon
" which Will be available, AZ osttrna,
by tho Bureau OF tho Budget II
l means that Congress has made q
- preparations on the haGs OF An exp,
N tauon OF S1,700, 100000 IN 1922 ~
l. these taxes. In other words, the NOR
&c already Is spent It - not now posi-
a. Tor Congress to levy morn taxes VIII
can be- collected thiA year to ras
ST up for this hiatus between the e,
IN mated revenues and the money
V. proprtated- There is a definite gar
go The only recourse OF the COVE,
10, ment therefore, Is to borrow nor
D. from the public with which to ca
on government business and meet
of bills contracted by Congress throu
o. appropriations. The Treasury will J
he issue any long term bonds, such
n. Liberty bonds put out during the y
but will effect its borrowings to m
this emergency by selling TO the D,
-, lie short term obligations known
treasury certificates Of indebtedness,
A Simple Parallel
To put this in simple terms wit
- the experience OF the man In
street. assume a man has started
year in the full expectation OF hav
W an income at the rate OF $4,000 a y
'ei through the ensuing 12 months.
has contracted expenses on that b,
which will use up the full $4,000. Ii
he discovers that hds income will
s. only $500. He has signed contra
s, to pay the full $4,000. He cannot
"a: out OF them. He must borrow He
poets to do better the next year
therefore does not desire TO obi,
himself to pay interest on his I
rowings for long period. Theref
do ne signs promissory note for a y
In the larger national sense.
-ay treasury certificate of indebtedr
merely IS the nations promissory !
to tide the government over unit
can balance its budget--that is, h
ad expenses and income equal. TT
certificates OF indebtedness Will be
by the treasury to banks. corporatI