Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-01


N Finance Committee, WA de-
livered In the National Radio
Forum, arranged by The Star and
broadcast over o cuast-to-coast net work
Of the Columbia Broadcasting Eystem,
last night from Station wMAI. here:
Ladies and gentlemen Of the radio
@udience--It Is always pleasant and
gratifying to talk 70 the radio audience
which tunes In on the Columbia Broad
casting System for the washington
Evening Stars Forum program on Sat-
urday evenings. 1t Is pleasant because
one knows that nobody who tunes in ct
this hour viii be disappointed II he does
not hear Jazz music or amusing Jokes.
II Is gratifying 10 address this audi
ence because It is composed OF people
who are really interested In trying to
solve serious national problems.
when the editor Of the Forum asked
me 20 talk 70 you upon the subject OF
taxation felt disposed to decline with
thanks, for this is perhaps the most I'M
pleasant topic In the whole realm OF
governmental activities. never heard
Of any one who enjoyed paying taxes.
The most unpleasant. and, therefore
most generally concealed fact In con-
nection with taxation is that no one
who buys anything from a ride In the
street car to fur coat actually escapes
taxation As President Coolidge once
vividly pointed out, every time you buy
q pair Of shoes you help pay the taxes
OF the retailer who sold them TO you;
OF the wholesaler who sold them TO the
shoe store; of the manufactures who
sold them TO the wholesaler; Of the
leather merchant who sold The material
20 the manufacturer: OF the packer VINO
&bld the hide 10 the tanner: OF the
Gka arA nsi1n he mi
or the railroads that brought II TO the
gtockyards and Of the farmer or ranch
man who raised It. When you bought
that pair OF shoes which you are now
wearing out you helped pay the real
estate tax Of the ranchman or farmer.
the State tax and income tax on the
railroad. the income tax on the stock
yards. the packers taxes, the tanners
taxes, the leather merchants taxes, the
shoe manufacturers taxes. the whole
salers' taxes and the retailers taxes.
There Is no one you can pass 1t on 70
because you are wearing the shoes out
and when they ART worn out you must
throw them away. In the meantime
you must earn more money to buy an
other pair Of shoes and help to nay
some more taxes. It Is the same way
with everything you buy Your hat.
your clothes, your food. your furniture,
everything you buy and use contains
portion OF the tax bin of all the persons
who were engaged in producing it and
selling 1t to you. Therefore. there Is
no one. or at least no wage Garner. no
one with money TO spend, that Is not
personally concerned with the problem
Of taxation.
Doctrine Based on FalIacy.
Some of our more popular political
writer's and orators are saving that tax
revision should be limited to increasing
the taxes on very rich people. They
say let us have heavier taxes in the
upper brackets OF the income tax This
Is the popular doctrine, but 1t Is based
on q faliacy and the people who pro-
pose it ought TO know that it Is a
fallacy. The fallacy has been pointed
out by clear thinkers Of both great
political parties. The late Oscar w.
Underwood, for many years q member
OF Congress and Senator from Alabama
and frequently her favorite candidate
for the presidency, pointed out as q
result Of lifetime Of the study of
public finance that the burdens of
government always rest upon the people
who live under 1t and that in the last
analysis 1t Is the human being who
tolls that pays the bill. He &aid that
those who believe that taxes which are
levied on the wealthy are not burden
on the people who toll are fooling
themselves. There Is no escaping the
TACT, as was pointed out by. President
Calvin Coolidge in speech in New
York In February, 1924, that when the
txation Of large incomes Is excessive
they tend 70 disappear. In other words,
they seek investments in non-taxable
State and municipal bonds. When Mr..
William Rockefeller died, It was pointed
out In the House of Representatives by
az ~ S~.~.~
of the Ways and Means Committee.
that he had $44 ,000, 1000 worth
OF tax exampt bonds. President
Coolidge pointed out that in 1916 be-
fore the high rate Of taxation on large
incomes went into effect, there were
206 persons who had taxable incomes
OF q million dollars or more. Then the
high tax rate went into effect and not
outstanding the enormous business
we were doing In providing ammuni-
tions and supplies for the nations en-
gagged In war. the number Of persons
having taxable incomes Of q million
dollars or more fell from 206 to 81 in 1918
and to 80 in 1920. Does any one believe
that II is wise to drive all that money
into non-taxable securities2 In 1916
persons who had q taxable income of
over 100000 numbered nearly 1900
During the war We enormously in
creased taxes on such persons. What
happenedP BY 1920 there were less
than 200 persons who had a taxable
income of over $500, 900. In other
words, 100 persons of the original
1,SO0 had put their money into non
taxable securities. AS President Coolidge
pointed out: ''When taxation of large
incomes Is approached, the problem is
90 md rate which will produce the
largest return. Experience does not
SHOW that the higher rate produces
the larger revenue. Experience is all
the other way. When the surtax rate
on incomes of $500, 900 and over was only
10 per cent. the revenue was about the
same as when It was at SIS per cent"
Failed by Seven Votes.
In other words, when you start put
ting excessive taxes on persons Of large
income you make it profitable for them
70 put their capital into non-taxable
securities. Now, the day may come
when this country will adopt a consti-
tuuonel amendment TO prevent the
Iurtner issuance of tax-exempt Securi-
ties The last time such a resolution
was presented in the House of Repre-
sentatives 24T votes were recorded in
favor OF II. only votes less than the
required two-thir6S necessary for the
adoption by the House of an amend
nsent 10 the Constitution. Even that
amendment, however. did not apply 10
the $4,000. 900 600 Of tax-exenipt Sc
curitieS which are now outstanding II
may be that we may find method Of
levying q heavy inheritance tax against
estates which have enjoyed q large
measure of tax exemption through
holding State and municipal securities,
II Is worth considering.
The burden OF taxation is one Of the
most serious burdens which today con-
fronts the men and women who own
their own homes and who can only
avoid paying the tax on that real eS-