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Show Lower Taxes Not Yet In Sight, SAVS UAB.SO.V StaListii an lii-piuls on Tin Situa-j linn in Washington for I$unlnesn Men and Inventors, j AVellesley Hills, Mass. Feb. 8.1 ;'Vljen will taxes be reduced'' ( The problem is uppermost in I i the mind of the American busi 1 Jness man and investor as he I (figures his report for VJ'2'2. I j To get the answer linger V. Babson, statistical lias spent j a week in "Washington study-ling study-ling the tax situation. His first (hand findings ami unbiased re-1 port of vital interest. , "Future taxes," says Mr. Bab.son, "depend, in part, upon I future expenditures- The iig I ;ures for the past year on this score, at least, are very hope i I f ul- Whatever criticism may1 e made of the continuous of-1 l fort to reduce expenditures. An honest attempt is being madej to introduce and operate a bud-j I get system. At the confer- ence of Bureau Chiefs, held re- 'cently at the Continental Memorial Mem-orial Hall some u'UO men met to affect further economy in the -operation of the Government ( 'business. j "Fixed charges, interest rates, and previous obligations, of course, cannot be changed, and in spite of the splendid work done to cut down current i expenditures, the expenses of itiie Government for 1922 reach-fed reach-fed a total of $3,795,302,499.80-i $3,795,302,499.80-i Nearly one billion of this a- mount was paid out as interest on the public debts such as Liberty Bonds and other out-fed out-fed a total of $3,715,302,499.80. i'nited States; $253,800,000 wars used in pensions to soldiers, or their dependents, of the "War of 1812, Mexican War, Indian Wars, Civil War and Spanish American War while $450,000,- 000 was paid for compensations, compensa-tions, care and training of veterans of the World War. Approximately $-155,000,000 jlwent for the army, and $475,-1 $475,-1 000,000 for the navy. About 1 50 per cent of our total expenditures expend-itures go to the payment of 1 interest, sinking funds, pe'i-isions pe'i-isions and the relief to veterans. "During the fiscal year of 1922, the Government collected 4,109,-104,150.94. 4,109,-104,150.94. Present prospects, however, indicate thai no such a-mount a-mount will be collected In 1923. The Excess Profits Tax has bean removed and general business is not as prosperous, and therefore will not yield as much In taxes as In previous years. To meet this situation, situa-tion, President Harding has earnestly earnest-ly requested that expenditures be cut ; by $92,000,000 more, f "If we look at the United States 1 Government as we would a corporation, corpora-tion, there is no cause for alarm. Expenses have increased, to be sure, but expenses have increased in all businesses. On January 1st, 1923,, we had in the United, States, In gold. ' $3,933,475,615, about 45 per cent of all it he gold in the world. Of ibis, over three and one quarter billion is held in the treasury mostly in the foran of bullion. If we look at the ledgers, we find that 3,600,000 tax payers and 101,300 coroporatlous contributed $2,068,128,192.68 in 1922. While only $356,443,387.18 was received from customs and duties. du-ties. "Further study Indicates that the problem during the next few years is not one of trying to decrease the present budget, but rather of trying to hold it where it is and keep it from going much higher. "Unless a miracle happens, some sort of bonus bill will be passed in 1924. If not passed with the President's consent it will probably be passed over his veto. This will call for a huge additional sum of money. Then there is a tremendous tremend-ous road 'building program, the proposed pro-posed nationalization of coal mines ; and the demands upon the treasury by the Farmer Bloc. "When I talked with financiers regarding possible measures of taxation taxa-tion to meet these additional expenditures expendi-tures and proposed increase in our national budget, the suggestions are as follows:- (1) A Sales Tax. (2) A tax on Light Beer and Wines. jj (3) Further Customs and Inter- i national Revenues. (4) Collect- j ing from Europe the $10,000,000,000 owed us and, (5)) The Restora- j tion of the Excess Profits Tax. j "The keener students of taxes al- most universally recommend the Sales Tax, but politically there seems . to be little chance of the new Con- j gress putting it thru. A tax on : light beers and. wines at the present j time is certainly out of the quostion. j! Both custom and internal revenue j taxes are as high as the public can stand. Hence, toy the process of J elimination the political leaders -j strenuously refeuse to (cancel, the i European debt for fear of the re-; enactment of the Excess Profits Tax. j "Their fear in this regard is well j founded not from a purely selfish j point of view on the business man j who must pay such a tax, but because j of its effect on the prosperity of thej whole country. The" re-enactment J of such a tax would be a distinct set- j back to every one. Natural re- ! sources, available labor, nor even J capital, is sufficient to make a country coun-try prosperous. Russia is rich in . l-atural resources. Africa abounds in available labor, and in every country where money is cheapest business is at its worst. Prosperity is really the result of initiative cour-agej cour-agej and hopefulness. These intangible in-tangible but all-important forceB ar the result of encouraging business. We cannot get prosperity by putting a ball and chain on the enterpriser. "Inheritance taxeB may be increased increas-ed without affecting business. Congress Con-gress may even increase the tax on; , incomes from stocks and bonds with-j out hurting the farmer, but a re-: enactment of the Excess Profits Tax, which paralyzes efficiency, enterprise iniiiQiivo would he distinctively I harmful to all sections of the country 'and to farmers, businessmen, and wage workers alike. "These figures on Government. J 'receipts and expenditures have a direct relation to investors. They j mean that the present demand for 'non-taxable bonds will continue. A j good many people who have their .money in taxable securities have continued con-tinued to hold these securities and pay a tax on them with a sub-con- , scious hope that some time, some 'day, some how, some where, their j ' taxes would be reduced. A statistical statisti-cal study of the situation leads one : to believe that higher taxes are here ' to stav, and that it will be a real feat t o keep them down to present figure, i "An interest in tax-exempt securi- ! ties may al30 be increased by a con- j ' stitutional amendment preventing ;the sale of any more 'tax-exemptg.' j A resolution to this effect is before j 1 Congress at the present time. If it i is passed, it will go before the states j , for ratification. It will be a long . time time, however, before such a bill will get the necessary two-thirds j of the states to sign it, that it may become a constitutional amendment. Even if enacted it, of course, could ( not be retroactive and cannot agect i the tax-exempt securities already Issued. Is-sued. The very agitation may tend to bring a rush of new issues which I will have a depressing effect on the j municipal bond market in spite of the strengthening tendency which many people expect. "All this means, "concluded Mr. j ,Babson, "that the very large inves- 1 tors will continue to hold tax-exempt securities but there is no reason why the average investor should stampede , to secure such issues. The bond crop is. one crop that has never yet been known to fail. Many people believe that owing to the improved . conditions, money will be much higher high-er and that all bonds will decline in price during the next few months. This may be true, but I seriously doubt it. Altho the Babsonchart stands today at 3 per cent above ,'norinal, which would ordinarily signify that we are entering another period of inflation, a statistical study strongly suggests that this present optomistic figure is only temporary. The great readjustment which started start-ed over two years ago is only about 60 per cent complete. My prediction predic-tion is thut bond prices in 1923 will average about the same as the bout prices In 1922, and' the 'tax-exempts' will follow the general market. "It will be safest for ivestors to : count on present high taxes continuing, continu-ing, even if Congress has sense e-Inough e-Inough not to re-enact an Excess Profits Pro-fits Tax." |