, 1924-07-16
IMMENSE COE FORTUNE LEAVES
STATE ON ACCOUNT INCREASE TAX
CONTINUED from Page II

essential to all of its people.
l know of one instance about
eighteen months g in which many
millions of dollars were so with
drawn and ~reinvested in the manner
indicated. If the surtaxes at the
time had e rs per cent the
As a matter of fact, the true rate of
surtaxes to obviate the large trans
fers to taXfree securities and to
keep money in commercial activities
is somewhere about Is per cent.
A first class conservative invest
ment carries interest of say 5 to
5.25, per cent. You can buy first
class taxfree securities now in the
neighborhood of $50 per cent. You
will readily see that a surtax of z5
per eel charged against a first
class non-taxfree bond paying say
$40 e cent leaves $50 per cent as
against a surtax rate of at least
4.50 per cent, and this does not take
into consideration the normal tax
and in some instances state income
taxes.
The ease with which, thanks to
the present tax laws, municipalities,
etc, can now dispose of their secur-
tiles. has led to much extravaganza
in public expenditure and has in
cidentally increased the local taxes
which all pay.
The politicians fail too point out
that in the last analysis a large
part of the heavy taxes is finally
passed on to the in the
price of the article. President Coo
lidge, in a speech in New York 10
winter, clearly demonstrated thi-
He made two illustrations that are
well worth keeping in mind. In one
case he questioned whether a work
ing man obliged to pay 5 per cent
on his first days work, 10 per cent
on his second days work. 25 per
cent on his third days work. 40 per
cent on his fourth days, SO per cent
on the fifth and so per cent on the
sixth days work, would work on the
last two or three days, and ne stat
that capital is in the same posi-
ton. 1t quits when the tax gets
high. He cited in the other instance
the farmer who sold a hide and
when he bought a pair of shoes paid
five Or six taxes that had accumu-
between his selling the hide
and buying the shoes.
When congress takes away so per
cent of a persons income and taxes
estate upwards of so per cent,
it seems to me it violates the prop
erty rights guaranteed by the Con-
stitution.
Chief Justice Marshall stated
THE power to tax is the power
to destroy and in view of the pub
licity feature in the recent act
passed by congress which is bound
to have a serious effect on the cred
it of the small merchant, etc, one
could well add "and annoy"
These heavy taxes in peace times
are i~ndefensible and their advo-
apparently do not stop to con-
the possible effect on the
national defense in the case of an
other a 1t is just as important
to conserve the financial resources
as it is to maintain an effective
military establishment. Have you
pondered what the effect would
have been in floating the liberty
and victory loans if we had start
ed from the present basis of income
estate taxes instead of the low
basis that was in existence prior to
war? In the opinion of many
able authorities it would have been
IN extremely difficult task to fl
nance the war.
There is no doubt that these sur
taxes are drying up the returns
from the large fortunes. Statistics
show that when the surtaX was Is
per cent prior to the war the col
lections from incomes of $500 600
Or over were about $4,000, 900 less
they were under the SO per
surtax of 1922.
Just think of it! If I want to buy
either of my sons an interest in a
business or build them a house, un-