The Delta independent., 1923-10-12
TAXES SEEK A LEVEL

During the first year or two afte1
its enactment and before the people oi
] the country had the opportunity Il
learn its effect and adjust themselves
to its provisions. the higher rates ol
the income tax law collected large
sums from wealthy men of large
annual incomes. But Just as the wat
er seeks level and as the law OF
supply and demand controls invest.
ments and directs the channels OF
trade, so the higher rates of the in.
come tax law have caused business
men to adjust their affSirs in such a
way as to avoid the payment of an
excessive portion of the tax.
There are numerous ways in which
this can be done without any viola
ton of the law. The method best
known to the public is by means of
investment in tax-exempt securities.
large quantities OF which have been is
sued by states. counties. school dis.
tricts. road districts, and other gov
ernmental agencies. But the high
rates had other effects upon invest
ment OF capital by men Of large
WEALTH. WHICH Lie IatCo WSsS oh q
basis which exacted a 70 per cent tax
ON some of the large taxpayers. men
withdrew some Of their capital from
active use in business enterprises for
the reason that they assumed all the
chance Of loss while tine government
took 20 per cent OF their profits II
their ventures proved successful.
Their money went into investments in
which there was no possibility OF loss
and a very small margin Of profit
But even under the present law.
which takes 5s per cent OF the income
OF the larger taxpayers, much capital
is driven out of active employment,
and the people Of the country suffer
in ways that most OF them do not un-
derstand There is for instance. a
great need for the building OF houses
in all the large cities, and in many
Of the smaller communities. Form
erly men OF wealth would invest in
building operations of this kind. But
those who already have large in
comes cannot afford to make such In
vestments as the government will
take IS per cent OF the profits they
receive from rents. Men who already
own rented property under circum,
stances which make certain tax OF
from 25 to 5S per cent figure that
tax as one OF the expenses and add
the tax to the rent they must charge
Rents, therefore, are kept up in two
ways-by the scarcity Of houses be
cause capital is discouraged from
further investing, and by the high
income tax that must be paid by the
owner Of the house who had previous
ly made his investment.
People OF moderate means, who con
titute the class occupying houses as
tenants, are undoubtedly strongly in
favor OF high tax rates on large in
comes on the theory that It Is paid
by the rich. II they will take the
time to analyze the situation and
reason out the effects known causes
readily see that they are the ones
the high surtaxes actually reach for
they are paying high rents because
Of these high taxes.
No one would advocate the repeal
of the income tax nor Of the gradu
| ated surtaxes which impose a higher
rate on persons OF large income
than on those of small income. But
there is always a point at which a
tax becomes 50 high as to become sell
destructive. Whenever tax Is OF
such q nature as to discourage in
vestment in active business It de
stroys its own purpose by curtailing
the amount Of income on which an!
tax can be levied. A moderate tau
which will encourage men to invest
In building enterprises and in indus
tries which call for the employment
OF workmen, will produce a large
number OF incomes and a larger ag
gregate amount of incomes subject tc
tax and produce an equal or larger
amount OF revenue to the government
This was proven In the records o.
tax collections following the reduction
In rates soon after the Republican
party came into power.