The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1938-06-09
What ItMeans:
BY MORGAN M. BEATTY
Alp Feature Service Writer

QGdE0 III hlIluGISdTIGI
The new fable is just as simple
as the old, with a few scientific
| twists, and a mystery finish.
In the first place, modern gov
ernment has known for long,
long time that more than one kind
| of goose can lay a golden egg, and
| that geese come fat and lean, just
like other fowls. Likewise, it has
long since discovered a most i'm
| portant scientific truth about
geese-namely, that killing them
won't increase the egg production.
So, instead of killing the geese
that lay golden eggs-and also
vote = modern government has
busted itself selling them bill of
goods. There are two items in the
bill:
1. More golden tax dollars pro-
duce greater comfort and safety
for everybody when government
spends them for the general well
fare; and,
2. The fatter geese are more
able, and therefore ought to pro-
duce the biggest and best eggs.
(This is the theory accepted by all
political parties-that the tax
system should be based on the
ability of the citizens to pay.)
Services For Sale
The Am eri C n government
started out early to sell the first
item in the bill. The federal sys-
tenn began by levying taxes
(stamps) to carry the mails. More
services came as time went on.
There were educational grants for
citizens at large, new departments
of government, federal highways,
and so on. Take the departments
of Commerce and Labor. One pro-
notes the interests of business
men and corporations, the other
the welfare of the laboring popu-
lation.
AS the nation grew, the need
for services apparently increased.
The services cost money. Natur-
ally, Congress, j. e., government,
set out to get more tax eggs from
the geese. So it was that govern
ment began to sell item No. 2 in
that bill of goods - namely, the
latest geese ought to pay the
most. The idea was sound enough,
so under the income tax law pass
ed in 1913 citizens who made
more money than their neighbors
had to pay more to keep the fed
eral government going.
Came the World war and its
burdens. More and more taxes
were added, with emphasis on big
incomes of citizens and corpora
tons. BY 1920, over two-thirds of
federal tax money came from in
come taxes and excess profits
taxes. sAs
| Just about that time the latest
/, ! geese began to get wiser. They cut
down on their egg production and
offered perfectly legal excuses to
the government for doing so. But
they remained pretty fat.
| Tit For Tat
In the late twenties, the gov
eminent also got pretty sly. 1t in
vented new theories, such as the
income surtax system-a tax on
top of a tax-to get at the fat
fowls, such as wealthy citizens
and still weather. corporations.
Personal incomes over $4,000,
for instance, paid surtax rate,
higher than the normal rate.
Corporation income taxes were
made progressively higher as
profits increased.
Corporations and weather. in
dividualS, in turn, retaliated with
sly-yet perfectly legal-tricks of
their own. People invented "per-
sonal holding companies" and
took credit for their 'losses" on
yachts, racing stables, and the
like. Corporations held up their
dividends and laid them by in the
form of surpluses, which were
not taxable.
Meanwhile the demand for gov
eminent services increased. In
1888, a big new item appeared in
the federal budget called "recov-
cry and relief 1t was a service to
the unemployed, and for business
recovery. 1t cost billions. Govern
ment went deeply into debt to pay
for these new services to its citi-
zens.
| In 1886, came the "undistribut-
ed profits tax" and an upward
revision of the capital gains tax
new devices to get more golden
eggs from the corporations and
individuals that had found ways
to avoid some of the previous
taxes.
Scared Or Holding Out?
That brings us up to the new
!. ..debfession in 1897 and the new
tan Bal of 1888.
+" All along, since 1920, the fatte1
geese had been asserting they
were laying more than their share
of the golden eggs.
Immediately, the argument was
on. Were the fat geese merely
holding out, or were they really
unable to produce more tax dol
lars?
Roosevelt administration lead
ers said the fat ones We're on q
strike and had quit laying to
make the government look bad
Others took the stand that the
wealthy citizens and corporations
were really scared - so scared
they could neither get business
going nor produce more tax dol
lars.
Congress accepted the theory
that the government had been toe
hard on the fat geese. 1t reduced
the undistributed profits tax to {
mere shadow of its 1886 self ano
modified the capital gains tax.
President Roosevelt, on the 9TH
err hand, argues that Congress is