The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1923-12-22
WHY THE HIGH SCRTAXES DO
NOT "SOAk THE KICHS

High income surfaces, w'hich
seize half the very rich mans vast
income, are very impressive on the
surface. They look savage. They
seem to soak the rich" and that
gives very great satisfaction to
those of us who are not rich.
That Is why there are men in
public life who oppose reducing
the higher income surtax rates
They oppose it because they think
that people, believing that they are
standing up for the poor against
the rich. will hasten TO vote for
them. They oppose it because they
believe thGt ordinary people are
too dumb t. see that this claim of
"soaking The rich" is an utter H.
lusion, that really 1t let's the rich
OFF 3nd so k he rest Of us for
what the ouch to Re paying.
Take, for IN example. man
with fifteen million dollars inve5 It.
ed in industrial stocks yielding an
averag" OF six and two-thirds per
cent, b.inglng him an annual in
come of . million dollars.
If h. keeps these investments,
the inrome tax. assuming him to
be married nan without Chi dren,
would take $5106i0 out Ct his IT,
"ome le9ving him Stf936O.
Now that looks like "soaking the
ri h" very satisfactorily. But
when the blow falls, the rich man
! nj there any more. He isn't
there because he can make more
money by moving out of range.
He sells his stocks and invests
his fortune in tax-exempt public
securities yielding five per cent.
That makes his gross income $780,
900 a year
But though this is a quarter of
a million less than his old income.
he gets it all. The government
takes none of it, The government
tax which he should be paying.
the rest of us who can't get away
have to pay somehow, directly or
indirectly.
The rich man who made this
switch would get for his own use
$300.64O more than he would if he
kept his taxable securities.
And only those who are sure that
If they were in his place they
wouldn't DO this thing are free to
reprOch the rich man for doing it,
In point of fact, rich men DO do
it.
That is why it is estimated that
the high surtax rates that drive
large incomes into tax-exempt Sc
curities are costing the country
four hundred million dollars Il
year that 1t ought to get out of the
income tax but doesn't. Or rath-
er, it is costing the rest of us that
much because the government,
failing to get the money from the
rich men. has to get it from us.
This is why taxable incomes OF
more than three hundred thousand
dollars have shrunk from 1926 in
1916 to only 246 in 1921-still less
now That is why the total of
these higher incomes remaining
subject to tax has shrunk from
$992,972,9S6 in 1916 to ony $751;
534 .3O5 in Iceland it is still les,
now
The fact is clear beyond any pos
sible doubt that the high surtaxes
which some statesmen urge to
make a show of Soaking the rich
do not soak the rich at all, but
shift their burden to the rest of us,
rob industry of the capital it
needs to keep men employed and
business busy, and promote ex-
travagance in local taxation by
putting premium ON the free and
easy ssue of local bonds.
And the Statesman" who thinks
that ordinary people are too dumb
to see this hole through a ladder
pays niehty poor compliment to
the Intelligence OF the average citi-
zen Duluth Herald.