The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-01-31
WHO PAYS THE TAXES?

WHO PAYS THE TAXES?
The man says Secretary the Treasury Mellon
engaged effort to cut down the rich mans should
read article in The Saturday Evening Post by Roger
Rabson, noted st-lent of business who heads it, Taxes
Paid by the Unaxed.'
Mr. Babson points out that % years railroad street
railroad ana waterpower securities the big issues of the
time sold to net the investor rate of interest of about 45
per cent The Federal income enacted 1t jumped
Purchase of the bonds at apparent net rate of ATS
cent ceased because the income lowered the net
rate to the investor to such extent that he got but
3.5 cent. Bond buyers quit buying This forced the
interest rates up in turn this ncreasd the expenses of rail-
roads street railways all industrial life The interest rate
being part of the expenses of such business the extra
cost passed on to the ultimate consumer.
Buyers turned to taxexempt securities, for at
lower rate of interest they could get higher net return
few weeks ago great issue farm loan bonds exempt
from taxes issued The net rate Ats per cent
about the obtained in industrial issues before the
extra taxes were added Many municipal issues in the east
sell 45O per rate interest before
the income tax went into effect they sold per cent
basis The extra interest in this instance directly met by
the taxpayer.
a few weeks ago, Mr. Babson said, manufacturer
an automobile accessory found way to cheapen production
costs materially Naturally Babson suggested the price
the same, the sraxes would swallow the whole saving
In this the auto owner paid the increased tax.
Babson was examining the books of large hotel
that rented for 81 before sraxes went into effect
rented for $3.50. The hotel owner replied so cents
added for increased wages and dollar for income tax and
surtaxes.
An example of the cumulative effect of taxation is given
to the price of wheat; the income tax that the mil
Ter pays is added to the price of flour; the income
tax that the baker pays is added to the price OF
bread and the income that the storekeeper pays
IS added to the price of the individual loaf which
you buy Hence, when you buy loaf of bread the
tax of four groups of people is added and profit on
al! these groups iseadded four times in addition.
Get me? We not only pay the four taxes for these
four groups but pay profit of, say, 20 per cent
each of the four sets of taxes"
Money spent taxes is largely nonproducve he points
out The government does not use large part of its taxes
to cutters of stone and hewers of wood who produce
a They are Useful but thew are not Creating
and spreading wealth as producers.
f. f Mr. b a a on to is
fact that interest rates prices and wages ultimately adjust
themselves that all taxes with the possible exception Of
inheritance paid by the final purchaser of goods
Most men, he concludes, willing to pay fair share
of tax But when becomes burden on industry !% it is
ought to bring about reduction in prices in the
nation. He summarizes this conclusion as follows:
"The final retail sales each year for the United
States are estimated at s30ooo,ooo,ooo. 1t is now
proposed to reduce the drect-tax bill by more than
s3Oo,ooo,ooo. This reduction is per cent of the
final sales. There are four turnovers before the
final sale is contaminated If these turnovers were
all at the valuation it would at become
evident that this proposal would enable per cent
reduction in general prices. Of course in practice
Or to put it in another way Are excessively less as
approach the source Therefore would not be
at the total figure On the other hand certain other
factors come in which more than compensate for
sete Of per cent not When
| this S per cent in the price level is added to the
direct saving in tax and the saving in the tax which
the other fellow passes along we have final sum
mary indicating somewhat follows
"That the tax-revision plan recommended by Sec
rotary Mellon should men getting incomes Of
from $500 to $4,000 per year total Of from 5000
to $500 per year"
complete reading of Mr. Babsons article is
mended He is logical and has habit of presenting with
blunt emphasis real facts Hescks to the main argument
much as does Secretary Mellon. The who is voting
bonds for things which his community can get along with
ont who is voting for elaboration Of governmental Services
which are unnecessary he is going to be taxed Tor 1t
whether he believes he is or not. h
ABOUT WEATHER
RHpinnnp about the time of the birth of Christ the
world had very wet Weather for several centuries Then