Evening star., 1923-02-10
Babs0n Sees Little Chance
Of Lower Taxes at Present
Euen Fears Rates May Haze
to Be Increased-Reports Results of
Special Inquiry in Washington.

Of the whole country. The re-enact-
ment of such a tax would be dis
tinct setback to every one. Natural
resources. available labor, nor even
capital. is sufficient to make coun-
nsupa ry Russa Is ssn
in available labor, and in every
country where money Is cheapest
business is at It's worst. Prosperity
is really the result of initiative
tangible, but all-important forces,
are the result Of encouraging busi-
ness. We cannot get prosperity by
putting ball and chain on the en-
terpriser.
Excess Pr0hts Tax Harmful.
Inheritance taxes may be increas-
ed without affecting business. Con-
incomes from stocks and bonds
without hurting the farmer. bu. a
| re enactment of the excess profits
tax. which paralyzes efficiency. en-
terprise and initiative, would be dis
| tinctly harmful to all sections of the
| men and wage workers alike.
"These figures on government re-
| ceipts and expenditures have direct
relation to investors. They mean that
the present demand for non-taxable
| bonds will continue. A good many
| people who have their money in taxa
| BILE securities have continued to hold
these securities and pay a tax on
| them with a subconscious hope that
| some time. some day. somehow. some
A statistical study Of the situation
| leads one to believe that higher taxes
are here to stay. and that 1t Will De
real feat to keep them down to
present figure.
IAN interest in tax-exempt securi-
ties may also be increased by a con-
stitutional amendment preventing the
sale of any more tax-exempts
resolution to this effect is before Con
gress at the present time. IL II Is
passed, it will 60 before the states for
ratification. 1t will be a long time,
before such a bill will get the neces-
sary two thirds of the states to sign
| ii, that Il may become constitution
course. could not be retroactive and
cannot affect the tax-exempt securi-
ties already issued. The very agita-
! tion may tend to bring out rusf
| of new issues which will have de-
pressing effect on the municipal bond
market in spite of the Strengthening
! tendency which many people expect
Would Count on High Taxes.
| "All this means concluded Mr.
! Babson. that the very large investors
! will continue to hold tax-eXempt Sc
curities. but there is no reason why
! the average investor should stampede
| to secure such issues. The bond croT
! is one crop that has never yet been
/ known to fail. Many people believe
that owing to the improved condi-
F.. tions money will be much higher and
! that all bonds will decline In price
during the next few months. Thls
! may be true but I seriously doubt IL
/ Although the Babson chart stands TO
! day at 8 per cent above normal. which
would ordinarily signify that we are
entering another period of imitation
! a statistical study strongly suggests
that this present optimistic figure II
only temporary. The great readJust
iment which started over two year:
ago is only about 60 per cent com
plete. My prediction Is that bont
!, prices in 1928 will average about th'
| same as the bond prices in 1922, ant
| the tax-exempts' will follow the gen
eral market. =,
ut VIII be safest for investors te
count on present high taxes contin
uing. even if Congress has sense
! enougn not to rc-enact an excess
profits tax"
| Every Saturday Mr.. Babson. the well kneWi
| student Of business and finance, Is writing 70
| readers Of The Star an article Interpreting IN
| dustrial and investment problems.