Great Falls tribune., 1922-04-26
The Haskit1 Letter = ,sssss.a. asssz
THE GOVERNMENTS BAD GUESS.
Bv FREDERICK
J. HASkM

bAN - ok2D w 1C0s
| found themselves among the army o.
the unemployed. When men hav,
diminished incpn,es, their purdhaaes
fall off. This means that busines.
houses all down the scale suffer dimin
ution Of business and 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
of probable revenues and of expenses.
If these estimates prove wrong, the
| treasury is embarrassed. The esti-
mates for the fiscal year ended June
30, 1922, called for an installment Of
income and profits taxes on March Is
amounting to $3.50, 100000. For the
calendar year 1922 the estimates were
made on the expectation of taxes from
these sources amounting to 81 ,7OO, 900,
600. The tabulations Of the taxes pa1d
on March is last are just being COM
pleted and show receipts Of less than
$4OO, 100000. This has necessitated an
entire revision Of the estimates for the
| calendar year. It is felt now that not
more than $1,50O, 100000 will be col
lected. This means deficit of $780,
O0O, 900 in expected tax money.
Appropriations for government ex-
penses are made in advance by con-
gress, based on the amount of money
the bureau of the budget. This means
that congress has made appropriations
on the basis Of an expectation of ST.
100, 100000 in 1922 from these taxes.
In other words, the money already is
spent. It is not now possible for con-
gress to levy more taxes which can be
collected this year to make up for this
hiatus between the estimated revenues
and the money appropriated. 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 appro-
prlations. The treasury will not issue
any long term bonds, such as Liberty
bonds put out during the war, but will
effect it's borrowings to meet this
emergency by selling to the public short
term obligations known as treasury
III AeAA1SdtSo VI 1uuCblCuuSSes
A Simple Parallel
To put this in simple terms within
the experience of the man in the
street, assume q man has started the
year 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 use up the full $4,000 Later
he discovers that his income will be
only $500. He has signed contracts
to pay the full $4,000. He cannot get
out of them. He must borrow. He ex-
poets to do better the next wear and
therefore does not desire to obligate
himself to pay interest on his borrow
ings for long period. Therefore, he
signs promissory note for a year.
In the larger national sense, a treas
ury certificate of indebtedness merely
is the nations promissory note to tide
the government over until it can bal
ance its budget-that is, have expenses
and income equal. These certificates
of Indebtedness will be sold by the
treasury to banks, corporations, indi-
vlduals or anyone who will buy them.
The showing Of the March Is tax in
stallment means that 5000. 100000 in
these certificates must be sold between
now ana next January.
The treasury, in estimating the in
come for this year, took into considera-
ton the business depression, but 1t
seems it did not realize how far short
income had fallen. The previous year
the revenues from these taxes had
amounted to s3.22s, $4,000. This sum
was practically cut in two in making
the estimates for 1922 but it seems the
income Of the country has been cut
even more than that. In 1920 the in
come and profits taxes amounted to
1856, ,936. OOO-nearly four billions.
To visualize how much the national in
come has dropped since 1920, the boom
year. contrast this figure Of 1885,
936,OO0 for 1920 taxes with $500.
100000. the revised estimate for 1922.
Not Due to Lower Rates
Some Of the reduction can be ac-
counted for by relaxations in rates but
not much, as the principal relaxations
do not go into effect until next year.
The March IS, 1922 tax instalIment of
less than S4OO,O0O.OOO compares with
a paymen Of S72S,OOO,OO0 on March
Is. 1921. The March 10 payment in
1920 was over $1,000, ,OOO 900.
Usually the March Is payment, be-
ing the first one Of the four tax in
otoALnCdto' 10 luc ldikcSl. OuueI Jue
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 the re-
naming three-quarters on June Is,
September Is, and December Is, re-
spectively. This year, however, so
many taxpayers upon figuring their
incomes discovered their total amount
of 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. Possibly as much as third
of the years income already has been
paid in and the years revised estimates
will fall substantially below 81 $780, !
OOO, 900.
This showing had had the effect of
dulling the enthusiasm of many men,
bers of congress for the plan to pay
a soldier bonus and has increased the |
opposition of the treasury to the plan
It is declared that with the treasury