Evening star., 1936-05-26

Cax-exempt. Likewise, the countleS
and municipalities. The Federal Gov
ernment. under our Constitution, has
no power to tax these securities or the
salaries Of employees of any State or
its political subdivisions. It does have
the power to, and 1t does tax, its own
employees, with certain exceptions
where the Constitution provides
against it, such as in the cases Of the
judiciary.
There is q question that naturally
arises which I am not able to answer
because Of lack Of statistical informa-
ton as to what savings the States and
their political subdivisions make as
a result of their ability to secure
money at lower rates than what they
might have to pay If the tax-exempt
provision was eliminated.
Now, the Federal Government, Of
course, hss to compete in the money
markets for the same money as the
States and their political subdivisions,
but the Federal Government, In spite
Of this, has made practically all Of
its bonds subject to surtaxes as well
as subject to gift and estate taxes.
Let me give you roughly an example
Of an individual who falls, say, for
example, in q bracket which requires
him to pay 43 per cent. He would
only receive q net return In buying
Government bonds of 11a per cent.
This Is not true, however, Of State
and municipal bonds because they
are not subject to income taxes, al
though they are subject to estate and
gift taxes.
Power to Tax, Power to Save.
While every one admits that the
power to tax constitutes the power to
destroy, it Is also q self-evident fact
that the power to tax constitutes the
power to save. The purpose Of gov
ernment is to save, and therefore q
fair and Just tax is the most essential
force Of government. Had Congress
the foresight to have seen the COM
ing depression, 1t would not have been
justified in making the enormous re-
ductions In taxation during the previ-
GUS decade. However, this Is a case
of your hindsight being better than
your foresight.
In a large measure we have become
q Nation of phrase-makers, and when
repeated often enough they become
a doctrine of infallibility. We fire.
quently hear the phrase or doctrine
expressed to the effect that we must
not use our tax program for social
purposes and yet every tax proposal
has its social consequences; it can
not be avoided. You have heard
much Of another phrase. soak the
rich" The country. I believe. has
almost universally approved the policy
of the graduated income tax based
on the ability to pay, so we might
examine that to see what happens
to an individual with a million dollar
taxable income. The taxpayer would
be in the highest surtax bracket and
on his whole income would pay an
average Of $3.50 per cent. or, in other
words, $679,000. Let us see what he
has left after paying his tax-it is
1921 900 net income. Many men have
contributed just as much to society
as most Of these million dollar in
come taxpayers and are pleased with
much less income.
Let me say in this connection I know
Of no member of Congress who gets
pleasure out Of placing taxes. Some
old trained politicians say that it is
a sound policy for a member of Con-
gress to vote for all appropriations and
against all taxes, and by so doing, of
course. he does not offend any Of his
constituents.
The late lamented Lincoln once said:
Honest craftsmanship Is the wise EN-.
ployment of individual means for the
public good" Burke said: THE great
difference between the real statesman
and the pretender is that the one sees
into the future. while the other sees
only the present; one lives by the day
and acts on expediency, the other acts
on enduring principles and for immor-
tality." May I state in this connection
that We insist on thinking Of statesmen
as men in public life but the man in
business or the man who has any power
to direct or control any number of his
fellow men may well be more i'm
portant statesman than are many of
the men in public life. He may have
far more opportunity to exercise poll
cies of craftsmanship than have any
officials in the highest branches Of our
Government.
When great industrialists or private
men Of power use 1t In statesmanlike
manner they accomplish a greater
purpose and a greater good than public
officials and should be commended.
However, when they do not do this or
when they devise ways and means to
avoid taxation, or, in other words, avoid
paying their share Of the cost Of Gov
ernment, they are really in the same
class as politicians who adopt ex-
pedients to be reelected.