Perth Amboy evening news., 1923-02-10
BabSOn Sees No Cut I'm
Taxes at Present Time

point of view on the business man
who must pay such a tax, but be-
| cause of i-s effect on the prosperity
of the whole country. The ~re-enact-
ment of such a tax would be a dis
| t.nct setback to every one. Natural
| available labor, nor ven
capital, is sufficient to make a coun-
try prosperous. Russia is rich in
! natural resources. Africa abounds
in available labor, and IL every coun-
try where L-.oney is cheapest BUSH
| ness is at it's worst. Prosperity is
really the result of initiative courare
| and ~hopefulness. These intangible
but all-important forces are the re-
| suit of encouraging business. We
cannot get prosperity by putting .
| ball and chain on the enterpriser.
Inheritance taxes may be in-
| creased without affecting business.
Congress may even increase the tax
on incomes from stocks and bonds
without hurting the farmer, but a
re-enactment of the Excess Profits
Tax, which paralyzes efficiency, en-
terprise and initiative would be dis
tinetly harmful to all sections of the
country and to farmers, businessmen,
and wage workers alike.
LllSS6 LIZ uISS On 0OpSTIIl6ilL 4cs
ceipts and expenditures have a di-
rect relation to investors. They mean
that the present demand for ncn-
taxable bonds will continue. A good
many people who have their money
in taxable securities have continued
to hold these securities and pay a
tax IN them with a sub-conscious
hope that some time, some day, some
how, some where, their taxes would
be reduced. A statistical study of
the situation leads one tC believe
that higher taxes are here to stay.
and that 1t will be a real feat to
keep them down TO present figure.
can interest In ~tax-exempt securi-
ties may also be increased by a on
st%itutional amendment preventing
the sale of any more 'tax-exempts.'
A resolution to this effect is before
Congress at the present time. If it
is passed, 1t will &c before the states
for ratification. 1t will be n .ong
time, however, before such a bill
will get the necessary two-thirds Of
the states to sign it, that 1t may be-
come a constitutional amendment.
Even If enacted it, of course. could
not be retroactive and cannot affect
the tax-exempt securities already
issued, The very agitation may ten.i
to bring out a rush of new issues
which will have a depressing effect
on the municipal bond market in
spite of the strengthening tendency
which many people expect.
"All this MEANS" concluded Mr.,
Babson. that the very large inves-
tors will continue to hold tax-exempt
securities but there is nc reason Thy
the average investor should stam-
pede to secure such issues. The bond
crop is one crop that has yet
been known to fail. Many people
believe that owing to the improved
conditions, money will ie m h
higher and that all bonds will de-
cline in price during the next few
months. This may be true, but l
seriously doubt it. Although the
Bahsonchart stands today at 3 per
cent above normal, which would Or
dinarily signify that we are entering
another period of initiation, a statis-
teal study strongly suggests that
this present optimistic figure is only
temporary. The great Geadjustn1ent
which started owe two years ago is
only about so per cent. complete.
My prediction is that bond prices in
1923 will average about the same as
the bond prices in 1922, and the
'tax-exempts' will follow the general
market.
"It will be safest for investors to
count on present high taxes contlnu-
ing, even if Congress has
enough not to re-enact an Excess
Profits Tax"