The same observations hold good in the case of our proposed inheritance
taxation (maximum proposed here forty per cent., as against twenty per
cent. maximum in England and much less in all other countries). And
again there are to be added to Federal taxation the rates of state
legacy and inheritance taxation.
Inheritance taxation, moreover, has that inevitable element of
unfairness that it leaves entirely untouched the wastrel who never laid
by a cent in his life, and penalizes him who practiced industry,
self-denial and thrift. And it cannot be too often said that the
encouragement of thrift and enterprise is of the utmost desirability
under the circumstances in which the world finds itself, because it is
only by the intensified creation of wealth through savings and
production that the world can be re-established on an even keel after
the ravages and the waste of the war.
Furthermore, business men, of necessity, have only a limited amount of
their capital in liquid or quickly realizable form, and through the
absorption by the inheritance tax of a large proportion of such assets,
many a business may find itself with insufficient current capital to
continue operations after the death of a partner. This effect is not
only unfair in itself, but is made doubly so, as being a discrimination
in favor of corporations as against private business men and business
houses, inasmuch as corporations are, of course, not amenable to
inheritance taxation.
Whilst in the case of the rich we discourage saving by the very hugeness
of our taxation, or make it impossible, we fail to use the instrument
of taxation to promote saving in the case of those with moderate
incomes. And the enormous preponderance of saving which could and should
be effected does not lie within the possibilities of the relatively
small number of people with large means, but of the huge number of
people with moderate incomes.
Moreover, while the rich, in consequence of taxation, limitation of
profits, etc., have become less able to spend freely since our entrance
into the war, workingmen and farmers, through increased wages, steadier
employment and higher prices of crops, respectively, have become able to
spend more freely.
Workingmen are in receipt of wages never approached in pre-war times,
many of them making incomes a good deal higher than the average
professional man, while the profits of business, generally speaking, are
rather on a declining scale and certain branches of business have been
brought virtually or even completely to a standstill.
Of our total national income, conservatively estimated at, say,
$40,000,000,000 for the last year before our entrance into the war, i. e.,
the year 1916, it is safe to say that not more than $2,000,000,000
went to those with incomes of, say, $15,000 and above, whilst
$38,000,000,000 went to those with lower incomes.
A carefully compiled statement issued by the Bankers Trust Company of
New York estimates the total individual incomes of the nation for the
fiscal year ending June 30, 1919, at about $53,000,000,000, and
calculates that families with incomes of $15,000 or less receive
$48,250,000 of that total; or, applying the calculation to families with
incomes of $5,000 or less, it is found that they receive $46,000,000,000
of that total.