Evening star. [volume] (Washington, D.C.) 1854-1972, 1924-02-13

all else, should minister to the
general welfare. Immediately
upon my taking office 1t was de-
terminated, after conference with
Secretary Mellon. that the Treas
ury Department should study the
possibility of tax reduction for the
purpose of securing relief to all
taxpayers of the country and
emancipating business from I'M
reasonable and hampering exac-
lions. The result was the pro-
posed bill. which Is now pending
before the Congress. 1t is doubt
full II any measure ever received
proval. Opposition has appeared
to some OF Its details. but to the
policy OF immediate and drastic
reduction Of taxes. SO arranged as
to benefit all classes and all kinds
OF business. there has been the
most general appreciation. These
recommendations have been made
by the Treasury as the expert adj
wiser Of the government. They
follow. In their main principle of
a decrease in high surtaxes. which
is, only another name for war
taxes. the views Of the two
preceding Secretaries Of the
of pronounced ability. They are
nonpartisan. we'll thought out. and
sound. They carry out the policy
Of reducing the taxes of every
body. especially people of moder-
ate income. They give to the
country almost q million dollars
every working day.
Fixed Policy of Rates.
The proposed bill maintains the
fixed policy Of rate graduated in
proportion to the ability. to pay.
That policy has received almost
universal sanction. 1t is sustained
by sound arguments based on eco
nOmic. social and moral grounds.
But in taxation, like everything
else. 1t Is necessary to test theory
by practical results. The first OBJ
1ect OF taxation is to secure reve-
nue.. When the taxation of large
incomes Is approached with this in
view, the problem Is to find rate
which will produce the laragest
returns. Experience does not show
that the higher rate produces the
larger revenue. Experience is all
rate on incomes of 100000 and
over was but 10 pen cent, the reve-
nue. was about the same as 1t was
at Ga per. cent. There is no escap-
Ing the fact that when the taxa
ton OF large incomes in excessive
there were 206 incomes of $1,000
600 or more. Then the high tax
rate went into effect. The next
year there Were only 141, and in
1918 but 81. In 1919 the number
declined to 65. In 1920 1t fell to SO.
and in 1921 it was further reduced
to u. I am not making any argu-
ment with the man who believes
that So per cent ought to be taken
away from the $1.000,000 income.
or 81 per cent from a 100000
income: but when it is considered
that in the effort to get these
amounts we are rapidly approach
ing the point of getting nothing
at all. 1t Is necessary to look for
a more practical method. That can
be done only by "A reduction of the
high, surtaxes when viewed solely
as revenue proposition, to about
90 per cent.
agree perfectly with those who
wish to relieve the small taxpayer
by getting the largest possible con-
trihution from the people with
large incomes. But il the rates
they disappear. the small taxpayer
will be left to bear the entire bur-
den. If, on the other hand, the
rates are placed where they VIII
produce the most revenue from
large incomes, then the small tax
perience Of the Treasury Depart
ment and the opinion of the best
experts place the rate which Will
collect most from the people of
great wealth, thus giving the larg-
est relief to people of moderate
wealth, at not over 20 per cent.
A very important social and eco
nomic question is also involved in
high rates. That is the result tax
alton has upon national develop
ment Our progress in that direc-
ton depends upon two factors
come An expanding prosperity
requires that the: largest possible
amount Of surplus income should
be invested in productive enter
e prise under the direction of the
best personal ability. This will
not be done if the rewards of such
action are very largely taken away
by taxation. If we had n tax
whereby on the first working day
the government took per cent of
your wages, on the second day 10
per cent, on the third day 70 per
on the fifth day so per cent. and on
the sixth day 60 per cent, how
many Of you would continue to
work on the last two days of the
week? 1t Is the same with capital.
Surplus income will go into tax
to take the risk incidental to en-
barking in business. This will
raise tho rate which established
business will have to pay for new
capital, and result In a marked
increase in the cost Of living. If
peting enterprise the present con-
Germs tend toward monopoly. in
crea sing again the prices which
the people must pay.
The high prices paid and low
prices received on the farm are
directly due to our unsound meth
cd Of taxation. I shall illustrate
nv a simple example: A farmer
ships a steer to Chicago. His tax,
the tax on the railroad transport
ing. the animal, and of the yards
where, the animal is sold go into
the price of the animal to the
packer. The packers tax goes into
the price of the hide to the New
England shoe manufacture: INC
manufacturers tax goes into the
price to the wholesaler, and the
wholesalers tax goes, into the
price to the retailer, who In turn
adds, his tax. in his price to mis-
purchaser. So 1t may be sald enaS
il the farmer ultimately wears
es from the farm to his feet. ~
is for this reason that high taxes
mean q high price, level. and a
high price level In its turn means
dificulty in meeting. world compe-
tition. Most of all. the harmeI
suffers from the effect OF this niSn
price level. In what he Buys ne
meets domestic costs or hlgn .ah he1
and the, high price level. In what
he sells he meets world compe-.
tition with q. low price level
Il is essential. therefore, for the
good Of the people as q whole thaI
we pay not SO much attention 20
the tax paid directly by a cer'a,n
number Of the taxpayers, put we
must devote our efforts to reltev-
ing the tax paid indirectly by the
whole people.
Method Of Taxation.
S,ots>- ol$noathop I think It IS