The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-12-04
OUR LAUNDERING TAX SYSTEM

/ that for the year ended with last June
the receipts decreased s1.ss7,so5.97S.
The falling Off was mostly in. income
and excess profits taxes This is diff
ferent from the decreases which have
been remarked hitherto, and which
mainly sigffified shifts into tax exempt
securities in the flight from taxation
so severe that it defeated its own
ends. The present decline apparently
reflects the small profits due to the
reaction in trade That is the explana-
/ ton given by the bureau to account
for the increase in the cost of collec-
ton from 81 cents to $3.50 per 500.
Taxpayers bear the cost of $4,000
conferences with officials for settle
ment of tax ACCOMPLISHING nothing
of the fees paid for professional ad-
vice. Estimates have-been made that
such expenses add $3.50. 10000 900 to the
| taxes. The amounts nominally col
lected are subject to further reduction
by. the refunds to individual taxpayers.
There is a similar leak in the customs
taxes. s1s.5ss,s11 being appropriated
for customs refunds this year. State
and city taxes must be added. max
ing a total which the national indus
trial conference puts at one-sixth of
the entire national income.
The trouble with our system of
taxation. state and national, Is that we
attempt to make the savers and those
! in debt bear the burden. when It
should be placed on the spenders. This
shift could be accomplished by levy
ing n sales tax.
As long as taxes are regarded as a
burden to be shifted about from one
group to anothef. in accordance with
the latest fortune at the polls. they
will continue to be levied in the man.
ner and form in which they are likely
to be the most destructive. Under ex-
listing conditions, the question of who
shall pay the taxes is a live political
issue upon which dema gogues win Of
flee by arousing the prejudices of
large groups who feel that somehow,
in some way, they are being made to
shoulder more than their share of the
burden.
At bottom. our difficulties with. and
misunderstanding of, the tax question
are due TO our failure to appreciate
the fact that. Notwithstanding the nor
NAL claims of the actual possessors, all
surplus wealth is in reality community
wealth. and that, therefore, when we
undertake TO escape the burdens of
taxation by levying on these savings in
the hands of the so-called wealthy
groups we are in fact merely deludirE
| ourselves by taking the money out of
one pocket instead of another. More
over. when we force the savers to pay
all of the taxes or when we attempt
to increase the share to be paid by
them. we simply fall into the error of
paying part of our costs of doing
business out of savings. insteadDof pay
ing all costs out of gross income.
No individual who pays taxes direct
would think of leaving the charge TO
be deducted from funds set aside as
savings. Any corporation or business
which undertook to treat taxes as a
charge against surplus would be forced
out of business the first time it failed
to earn a surplus. Taxes are as much
"a charge on the cost of doing business
as rent insurance. depreciation or any
other expenditure or charge connected
with carrying ION business enterprise
In the old days before scientific &C
counting opened the eyes of business
men and pointed the way to solvency
and continued business health, ignor-
ance OF this principle accounted for
most OF the failures and wrecks which
lay along the path of progress.
Suppose an investor were asked to
put money into a concern which re-
ported surplus before making deduc-
lions for taxes, is it possible to be-i
lieve that a sane man would put mon
ey into a concern of that kind? Yet
exactly the Same situation exists when
advocates of taxation on the basis of
ability to pay" apply>their reasoning
to the tax problem as a whole.
There might be some difference of
opinion as to the community character
of SURPRISES in the hands of indi-
viduals, but there can be no differ
ences on this point with respect 70 |
SURPRISES in the hands of corporations
certainly there can be no differencei
among those who agree that the
wealth Of the nation is largely repre-
scented by the equipment available for
more production. As equipment of
this kind expands and grows. 1t serves !
an Increasing number of persons, and
since its expansion and growth Is, to |
a large extent, dependent upon the re-
investment of surplus earnings derived |
from the operation OF the initial plants, |
it is also obvious that this increase in |
equipment may be the sole cause of an
apparent increase in surplus shown In |
the financial stateA lent of the corr
poration which operates It.
If We are determined 10 pay taxes /
out of surplus of savings, instead of /
paying them out Of gross income. we
shpuld at least be sure that the levy 4
is made before the surplus is con-
Verted into new equipment, otherwise /
the new equipment will have been con-