Evening star., 1924-03-16
CAN YOUR TAXES BE CUT?
Series of Articles the Cost of Government;
Where the Money Goes, and Why.
BY JOHN r. SINCLAIR,
Author of Can Europe Hold Together

ton. The last election In Great Britain
Was largely fought out on this issue
Ihe present government OF Great
Sfitaln Is committed to the program
of the capital levy To pay Approximate
ly half of its huge internal debt,
European Debt Problem.
The second plan so far suggested to
meet this government expense is to
insist that the seventeen European
countries who now owe US approxi-
mately twelve and a half billions OF
diately. This sounds plausible at first
glance, but is it SO easy to accom-
plish? Let US sec. This stupendous
debt was created in the first place by
America selling to Europe an excess
Of goods over what Europe sold to
America in the same period. The
amount of the excess is the amount
OF the debt 1t can be paid back only
debtor countries to sell to us an ex-
: cess of their goods over what we sell
to them. How much more? Just as
much as Is necessary to pay the debt.
That is to say, IL we want those debts
paid by these European nations. it
will be necessary for the United
States to allow these seventeen ma
tions to send US each year for tho
next forty years approximately $50
sell e so aS. eSsm. VIII Wiz We se'do DO W ias We
haven't started to do it yet.
The record for 1928 shows that
these seventeen nations who owe us
sent to the United States about SEQ
them 100 millions of goods. no doubt
paid for largely by borrowings. The
! record further shows that of this
amount which we sent to them. two
thirds was farm products. II we In
sist on Europe paying its exportabie
surplus for reparations and interest
on war debts, either to us or to oth-
ers, Europe cannot az the same tn,,s time
US. We cannot eat our cake and have
| it, too. II we decide on such policy
where will the American farmer sell
his surplus? Is further comment
such policy would only end in Eu-
preme disaster for the people or the
! United States.
The third plan suggested for re-
| 6ucing this expenditure is that whiie
agreeing to pay the debt in full. the
American people insist THAI the in
terest rate be reduced very materially
from the present high level
Oae-Half Per Cent Means size, ,0oe, 900.
1t is the contention of the sdvo-
Gates for this plan that "a high rate
of interest paid en- government Sc
curities sets the pace in maintaining
a high interest rate on borrowings OF
all kinds in view of the fact that it
is estimated that about 50 per cent
of all commercial transactions are
based on credit"
see, 100000. A half Of / per cent
reduction in interest means q saving
to the taxpayer of f1l0,o00.0o0 q
year. This is no small item. During
hn
ment carried on the greatest amount
of peace financing ever attempted.
1t was handled as banking PROPOSE.
tion, mostly with bankers. The point
of view of the banker prevailed. l
do not need to say that interest is to
the banker what water is to the nsh.
Tho more the better. Interest rates
on all government obligations which
were offered during the past year
must have been eminentiy saust &C
tory to the bankers, for every issue
was greatly versubscrfbed.
Here's the record: From December
Is. 1929, to September is, 1923, the
Treasury offered approximately 81
$50, ,o80, 600 of government obligations
at rates varying from to 4A per
cent So attractive were THESE Of
ferings that the volume OF subscrip-
tions total approximately $a.loo'-
During the aext five years the gov
ernment has to, take care of approx
mately four billions OF Treasury
notes. and three billion four hundred
million in Liberty bonds. or a total
of Approximately $7.i0o. 100000. The
sinking fund will provide for about
ene billion six hundred twenty mil
lions. leaving a balance Of $s.7se,-
o00,0a0 which has to be raised by
issuing new securities or by adding
new taxes. If one-haif Of ! per cent
even can be saved of this amount, It
Viii mean can ssi,oeG.Oeo a year, At That hats IS
: cost us for 1923. This is no small
item to neglect.
The obligations of the United States
are at this time the finest and safest
security, relatively. in the world. No
state within the country has such
power and such credit
Government Is Largest Debtor.
The Treasury Department declares
that interest rates are determined by
the conditions of the market For
the ordinary debtor this is probably
true, but in the case of the United
States such a statement needs a real
qualification. United States is too
big to be discounted or ignored. It is
the largest debtor within the country,
it sets the pace and to a very large
extent can set the interest rate
charged
Congress has seen fit to give to
the Secretary of the Treasury the
power TO fix the interest rates on all
refunding obligations OF the govern
ment- 1t is q terrific power. It means
over course of years hundreds OF
millions Of dollars one way or the
other. II the people of America are
going to buckle down and pay the
debt without qualifications of any
kind, they should insist that interest
charges on all renewals must be made
low, and the long suffering people or
the United States so far have not
insisted.
(CopyrtEht, 1924. in United States and Great
Britain by North American Newspaper
Alliance. All rights reserved.)
ToMorrows Some Independent Spend
ing Bureaus.