The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-04-25
Frederick Haskin's Letter
tsbeca of The
THE GOVERNMENTS BAD GUESS
ESPECIAL Correspondence of The

tHe street, dSSuuie a ulein mas start
ed the year in full expectation of
having an income at the rate OF
s., 900 a year through the ensuing
twelve months. He mas contracted
expenses on that basis which will
use up the full $4,000 Later he
discovers that his income will be
only $500. He has signed con-
tracts to pay the full $4,000. He
cannot get out of them He must
borrow. He expects to do better
the next year and therefore does
not desire to obligate himself to
pay interest on his borrowings for
a long period. Therefore, he signs
a promissory note for a year.
In the larger national sense, a
treasury certificate of Indebtedness
merely is the nations promissory
note to tide the government over
until it can balance its budget
that is, have expenses and income
equal. These certificates of in
debtedness will be sold by the
treasury to banks, corporations,
individuals or anyone who will
buy them. The showing Of the
March Is tax installment means
that $200.000,000 in these certifi-
Gates must be sold between now
and next January.
The treasury, in estimating the
income for this year. took into con
sideration the business depression,
but it seems it did not realize how
far short income had fallen. The
previous year the revenues from
these taxes had amounted to So
228, 137. 900 This sum was practi-
cally cut in two in making the es-
Inmates for 1922 but it seems the
income of the country has been cut
even more than that. In 1920, the
income and profits taxes amounted
to 1886, 1886, 000,-nearly four bill
lions. To visualize how much the
national income has dropped since
1920, the boom year, contrast this
figure of 1886, $4,000 for 1920
taxes with $1,5O0 ,0O0,0 900, the revis-
ed estimate for 1922.
Not Due to Lower Rates.
Some of the reduction can be &C
counted for by relaxations in rates
but not much, as the principal re-
laxations do not go into effect IN
til next year The March Is, 1922
tax instaIIment of less than $780,
900, 900 compares with a payment
of S72S, 200, 900 on March Is, 1921.
The March Is payment, being the
first one of the four tax install
ments, is the largest. Under the
income tax law, a taxpayer may
pay his entire tax for the year on
March Is, or may pay one-quarter
of his annual tax on that date and
y
June Is, September Is, and De
cember Is, respectively. This year,
however, so many taxpayers upon
figuring their incomes discovered
their total tax liability was SO low
that they could afford to discharge
the entire obligation on March Is,
and have the job done with. There
was an unusually large number of
such full payments this year. Pos
sibIy as much as a third of the
years income already has been
paid in and the years revised es-
Inmates will fall substantially be-
low $500, 900 900.
This showing had had the effect
of dulling the enthusiasm of many
members of congress for the plan
to pay a soldier bonus and has in
creased the opposition of the treas
ury to the plan. It is declared
that with the treasury in such poor
condition it is not feasible to add
a burden of two or three additional
billions for the soldiers. There
are, of course, widely differing
opinions on this point, many con
gressmen and others declaring that
no matter how much the nation has
to borrow, the soldier bonus should
be paid in recognition of the con-
spicuous services of the soldiers in
the war.
When the governments income
falls below expectations and the
treasury must resort to borrowing
still more taxes are being piled up
against the people. Interest must
be paid on the loans made to make
up the deficit. Therefore, that in
terest charge must be added to
next years expenditures. Just the
additional short term borrowing Of
$500, 100000 to make up the gap be
tween this years expenses and in
come, will cost interest amounting
to $500, 000-a great fortune in
itself. In other words, because tax
es were 5000, 100000 short this
year, next year they must be Sos
100000 more