Show ASCENDING TAXATION e DESCENDING INCOME r THE T-E VANISHING POINT The second of or three instalments of ot an analysis of the mounting cost of government federal federa state tate and local budgets stud studied ed In Inthe Inthe inthe the light of ot private corporation management By JOHN W. W PRENTISS Senior Partner Weeks New York U. U S. S government 1913 1929 1932 debt State and local debt Total debt National income Total government expenses national state and local Net income available for taxpayers taxpayer Note Note o Above figures obtained from National Industrial Conference through to 1929 It In computing 1932 figures the Guaranty Trust estimates through 1931 weI used as 1 a II basis for current computation Dr Mertz In the New York Times has estimated current governmental go expenses for 1932 at but for br cons conservatism r wo prefer to use me last last years year's total Continued Therefore gentlemen I repeat that blind as lS our government was to the increasing danger of ot this tax burden even In the prosperous years of the late twenties this blindness seems excusable compared with the reckless disregard which our public officials national state and local have paid to the problems arising from our financial financial financial finan finan- cial and industrial collapse Let us consider what this blindness has meant to industrial America in inthe inthe inthe the last three years It is estimated that in 1930 approximately 20 cents in every dollar e earned by the American people went to p pay y our cost pf pC government gov gov- national national state and local local local- and in 1931 this dangerous overhead rose to nearly quarter one-quarter of the na national na- na na-I na income and currently promises i to run at nearly third one of our i present Income Back in 1913 1013 our governmental costs cost happily stood below below below be be- low the Immemorial tithe which history history history his his- tory has proved to be the maximum overhead which the government can impose on Its people with safety With current expenses draining one dollar in every three that will b be earned by the American people there has not been a single public leader who has openly faced this problem and economies heretofore proposed have not been drawn up in hi regard to the overwhelming governmental costs of our people TAXES TAXES LIKE MILLSTONE 1 Gentlemen it Is clear that this overwhelming overwhelming overwhelming over over- whelming taxation is not only the greatest obstacle to any industrial re recovery recovery recovery re- re covery of our people but is actually a millstone around their necks Without Without Without With With- out drastic tax abatement business advances will continue to be impossible impossible impossible sible and if it incomes fall faU at nt the rate at which our income has declined since 1929 through h 1932 it b becomes apparent that by 1935 1035 at the latest the entire earnings of the American people people peo peo- pIe will fail fall to match the to 15 extravagances of our political cal leaders The absurdity of this situation is apparent yet the vanishing point is only three years away awny While it is foolish to hold Congressman Congress Congress- man La Guardia personally responsible ble blo for the entire governmental blindness blindness blindness blind blind- ness to our critical situation nevertheless nevertheless never never- the bill which passed the house of representatives carried in the popular mind the stomp stamp of his name I 1 do not want to argue with Congressman Congress Congress- man mm LaGuardia I want to Inform him of the gravity of the current situation situation situ situ- feeling that once he appreciates it it ithe he too will wish to abandon demag demagogic dema dema- g gogie gie appeals and legislation legislation legis legis- lation aimed a against the rich but which in actuality will be productive of little real revenue r I want to ask him to go back to Washington and use the weight of his oratorical ability In support of the economy committees committee's program just submitted to the house and if possible possible possible pos pos- sible work to carry these economies even beyond the limits already proposed proposed proposed pro pro- posed so that our national government government govern govern- ment may at nt last take the needed leadership before the state and nd local governments of this country in effecting ef effecting ef- ef a balanced budget which can only be done by a sales tax When Congressman La Guardia in introduced introduced introduced in- in his tax tox of one-fourth one of 1 per cent with a minimum of 4 1 cents on the sales of stocks and one-eighth one of 1 per cent on the sales of bonds he he perhaps thought that he was soaking the rich or soaking Wallstreet Wall Wallstreet Wallstreet street but he has got another guess s coming In the first place there are arc areno areno no rich left lert to soak because 34 billion of governmental debts and 14 billion of governmental overhead have so decreased the income and value of property that those who were once rich are arc now poor and the only man who whore really J y can ean be considered rich lin in these days is the man who Is drawing drawing draw draw- ing mg an untaxed governmental salary that is paid by citizens who arc rapIdly rapIdly rapidly rap- rap Idly becoming insolvent If It Congressman La Guardia thought he was soaking the stock brokers with this tax he is very much mistaken mistaken mistaken mis mis- taken because the stock brokers donot doriot do donot not riot pay the tax They pass it on to the customer some 25 or 30 millions of people who own securities It Is estimated that in order to produce produce pro pro- duce the 75 million of income that Congressman La Guardia says this tax will produce we have got to do for the balance of the year a daily dally business on the New York stock exchange exchange ex ex- change of about shares and andI I on this stand before you offer to anyone in this audience all I have left Including my shirt If he can produce produce produce pro pro- duce a II daily dally business of shares on the New York stock exchange ex exchange ex- ex change for the balance of or 1932 REAL ESTATE AND STOCKS Suppose we turn to the real estate situation in New York perhaps Congressman Congressman Congressman Con Con- gressman La Guardia does docs not havethe havethe have havethe the same antipathy to real estate that he has to stocks He has apparently not discovered as yet that on Manhattan Manhattan Manhattan Man Man- hattan Island real estate and stocks arc are very closely related In the financial district 12 per cent of the area is vacant In the Insurance district 12 per cent is Js va vacant Vacant vacant va- va cant in the neighborhood of city hall hail 14 per cent is vacant and in the Grand Central zone which is four miles from Wall Vall street 18 per cent is vacant In addition to this rents have declined an average of 33 per cent since 1929 and those of you who are interested In real estate will ill no doubt know without my telling you that when a building is 15 per cent vacant and Its rental roll has declined 33 per cent that it is hardly making enough money to pay its taxes Let us turn for a moment to do- do apartments There arc are Vacant vacant vacant va va- cant apartments on Park avenue the theland theland theland land of those who were once rich Above Thirty fourth street on the east side of Manhattan there arc are vacant apartments and some of ot these are arc in Congressman La Guardias Guardia's district dis dis- Many of these nonproductive buildings and vacant apartments are arc due to the loss in Income that people have received from their securities or orto orto orto to the loss in the value of the ties tics It is is I believe part of the in income income income in- in come tax lax law that a man may deduct other taxes paid from his income tax and if the owners of real estate in NewYork NewYork New NewYork York City are lre not going to get much income out of their real estate and can at the same time deduct their taxes the federal government Is not going to get very much money and Congressman La Guardia will probably probably proba proba- bly have to revise his opinions on the amount of money to be secured by the federal income tax To be concluded tomorrow |