The Bismarck tribune., 1925-06-13

the Congress THE fact that the sur
taxes had long since passed the stage
of maximum productivity on account
of the very high rate of the levy and
were becoming serious menace to
the Nations business. In 1928
Secretary Mellon called to the atten-
tion of the lawmaking body of the
Nation the fact that the high rates
of the income tax were becoming
every year less productive of rev.
enue, that they were depriving the
Treasury Of revenue that it might
obtain under more reasonable rates,
and at the same time they were des-
troying business incentive and slow
ing down productive development in
the country.
Let me illuminate what this
means: Under the law Of 1916 the
maximum surtaX on incomes in eX-
cess of 100000 was 13 per cent and
produced practically speaking the
same revenue as came from similar
income in 1921 when the maximum
surtax was 65 per cent. In five
years vast sums of money formerly
engaged in productive enterprise had
been driven out of active business
and had become entered in tax free
securities. 1t must be manifest to
even the casual observer that if the
rates of 1916 had remained the
Treasury would have received more
revenue and. business would have
been far less embarrassed.
"The wealth of country must
be created by the labor of that
country, it cannot be manufactured
out of nothing. 1t is limited in
quantity and can be invested in non
taxable, low interest rate securities,
that do not represent productive
enterprise, or it may be used in the
active development of our fields, our
mines and our factories when new
enterprise is making our natural
resources the hand maiden of men
and giving employment to labor.
Abandon Production
"Let me tell you something to re-
member. Under the law of 1916
nearly 80 per cent of the revenue
was derived from incomes of over
100000 and in 1921 only four and
a half per cent came from that
source. Your laws had made it more
profitable for the citizen of large
means to abandon productive enter
prise and invest his money where he
need not fear confiscation The bond
bgoker will tell you that it is more
profitable to the man of large in
come to invest his money in 1-2
per cent tax free bond than in an
enterprise that will pay him 8 per
cent on his money, where his in
come is subject to federal taxation.
The loss is really greater to the
country than it is to the individual.
He contents himself with safe in
vestment and limited income, but
the community that is seeking capi-
tai for new enterprises or money for
new development of any kind must
pay extraordinary rates of interest
to get it, which in the end usually
falls on the public to pay.
"There is another viewpoint to
the situation, and that is here no
capital can be had at all for indus
trial development and industry must
remain idle because great Govern
ment lacks wisdom in the writing of
it's revenue legislation. There is a
field of taxation on which / have
barely touched SO far, but it's cx-
ploitation is even more dangerous
to business development than the tax
on incomes, and that is death taxes
The absorption of the principal of
the dead mans estate for the bene-
fit of the government, known as
State Taxes and Inheritance taxes
Before the Great War the maximum
tax on estates was 10 per cent, now
it is 40 per cent by the Federal gov
ernment alone, and when some of the
state governments get through col
lecting their share of the spoils
there is not much left for the wife
and children of the dead man.
"What are we to do about it?
What are you going to do about it
for, in the last analysis. it is up to
you to decide whether you want high
taxes to continue? | know what
would do about it if had the power
to write my views into law. | would
go back to the tax law of 1916, or
something very like it, where the
normal tax was per cent, and the
highest bracket of the surtax was
13 per cent, and the highest tax on
estates was 10 per cent. think we
could get the revenue we need, but
if we could not l would give the
President blanket authority to abol-
ish Government bureaus, and there
are many of them that are mere
conveniences and not governmental
necessities, until our expenditures
did not exceed our revenue. In
other words, l would slow down the
government before it slows down
the business of the nation"