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Show "Forget About the Stales" By HARLEY L. LUTZ Professor of Public Finance, Princeton University Front page space was given to the Washington dispatches covering a bill attributed to Senator Bone, at the State of Washington. It was described as a bill to take the profits out of war by establishing es-tablishing rates of income and profits taxation which would include a normal nor-mal tax rate of 6 and surtax rates rising to 93. Of particular partic-ular interest was the report that fifty senators, sena-tors, from both parties, had indicated in-dicated read i- are so nearly gone that their existence exis-tence and their revenue claims can be forgotten in a bill to preserve democracy de-mocracy mnrks a new high in Congressional Con-gressional Irony. Only the most simple-minded could be persuaded that the government could engage in vigorous war operations opera-tions under such a tax law. It is as it a man should enter his horse in a race, and lay his bets on him while announcing an-nouncing his intention to hamstring the animal as the starter gave the signal. sig-nal. Such a law will most certainly not keep us out of war; it will only make the going harder in case we get into war. This conclusion is obvious. It Is completely supported by the war experience ex-perience of Austria, where it had been decreed, before 1914, that property prop-erty should be conscripted in the event of war. Conscription of income as is proposed in the bill under discussion, dis-cussion, is about on a par with conscription con-scription of property. It should be noted that the Austrian scheme did not keep that country out of the last war. The historian of that experience Dr. J. V. Van Sickle, in his Direct Taxation in Austria, says that if the war had lasted less than a year, the plan might have worked. But the actual ac-tual result was to impair productive efficiency so greatly that the army got insufficient supplies, the government govern-ment received insufficient revenue, and hence severe inflation was required, re-quired, even before the end of the war. The proposed bill would produce similar results here. It intends to hamstring initiative in advance by conscripting income. Yet private industry in-dustry is expected to go into production produc-tion as war speed and on a war basis. The plan is offered as a method r,r paying the war cost as we fight the war, but this is only a pipe dream, as the Austrians discovered. Instead of giving us a cash-and-carry war, it will be a war financed in far greater degree by disastrous inflation than any other in the national experience. Instead of referring to this measure as the Bone bill, it would be far more accurate to call it the Bonehead Bill." ness to vote lor the measure if it should come before the Senate. Being a revenue bill, it would of course originate in the House, and a duplicate bill was introduced intro-duced there on the same day. The proposed tax scheme would automatically go into eflect as of the date on which Congress should declare de-clare a state of war to exist. Doubtless Doubt-less some of the sponsors of the plan went along with it in the naive belief that wars are made for and by the federal income taxpayers, and that such a tax would therefore be effective effec-tive in preventing these taxpayers from crowding Die country into the next war. Within 24 hours after the bill had been released, the critics had pointed out that combined federal and state income tax rates would absorb more than the total income of some taxpayers, tax-payers, for the maximum of normal and surtax rates together would be 99 on the largest incomes. It was said that one senator remarked, when attention was directed to this point. 'Well, I guess we forgot about the states." True, they did forget, or ignore, ig-nore, the states, but this has happened hap-pened so often, in Washington, that it no longer matters much there. One objective set out in the preamble pre-amble was "to keep democracy alive." The fact that the states and their significance sig-nificance for American democracy, |