Milford chronicle., 1923-09-28
PRICE FIXING AND EXCESSIVE
TAXATION

Just as legislation fails in efforts
to fix prices of few commodities out
of harmony with the general level of
prices, so an excessive tax rate on
some incomes defeats it's own pur-
pose and ends in failure" declares
the Republican Publicity Association,
through its President, Hon. Jonathan
Bourne, Jr. when the power of gov
ernment is used to fix prices on speci-
fed commodities, high price results
in over-prOduction and low price in
under-production with the inevitable
result that arbitrary price-fxing yields
to the superior law of supply and de-
mand. This has been the history Of
all price-fiXing experiments from the
days of the Roman Empire.
In the last few years here in the
United States we have observed the
results of the imposition Of excessive
tax rates on the incomes of men Of
wealth. Up to a reasonable limit those
taxes were successful. Beyond that
limit they were self-destructive, for
men who found themselves burdened
with an excessive income tax diverted
their investments in such a way as to
escape the excess. This does not mean
that they escaped the tax by resort to
illegal means. In fact, in all import
ant business, the methods pursued
were expressly recognized by law.
"The United States Government has
always recognized the right of States
and subordinate divisions to issue Sc
curities exempt from all Federal tax
alton. More than that, the Federal
Government itself has expressly di- |
a6 fhO Of
empt from Federal taxation. A notable |
instance of this was the issuance of !
the Farm Loan bonds. These bonds |
were made non-taxable for the pur-
pose Of enabling farmers to secure
loans at lower rate of interest be-
cause of the increased demand there
would be for non-taxable securities.
Directly, this was a benefit to the far
mers. Indirectly, there have been Off
sets to this benefit which probably
wiped it out entirely.
In order to carry on its business,
and to pay the interest on the public
debt, which must be paid, the Govern
ment must raise a certain amount of
revenue annually. If a portion IF that
revenue be not raised from one class
Of income, a greater burden must be
lead upon other classes to make up
the deficiency. Thus, when a hundred
million dollars worth of Farm Loan
bonds were exempted from income
5axes it became necessary to raise a
amount of revenue
from income derived from other
sources. One of these sources, for ex-
ample, was the income Of manufac-
.urers of farm machinery, of boots
and shoes, and of clothing. These
in fixing the prices of
heir commodities, necessarily include
he amount of the tax they will be
to pay to the Federal Gov
That means that although
he farmer saved some interest on the
money he borrowed through the Farm
Ioan system, he made that amount up
~ the increased price he paid for
machinery, boots and shoes and cloth
ng.
"Price-fxing by Government will
work only so long as is necessary for
he law of supply andd emand to get
ntO operation. An excessive income
ak will work temporarily, but it will
york as it was designed to work only
% long as is necessary for men of
BUSINESS affairs to adjust themselves
o its provisions.
"The present regime in Russia had
he power to confiscate the profits of
rivate industry That worked perfect
Y in the first instance, but one of its
esults was that private industry ceas-
d to produce. There has been revival
f private industry in Russia only to
be extent that the government has
elaxed its confiscatory policy. Hun
reds of millions of dollars have been
vithdrawn from active enterprise in
he United States because of tax rates
yhich taxpayers deem confiscatory.
hat money will be put back into ac-
i've industry only to the extent that
xcessive taxes are reduced"
It isn't every man who can diagnose