Whilst the House Bill imposes luxury and semi-luxury taxes, it fails--as
I have mentioned before--to resort to consumption taxes of a general
kind--a deliberate but, in my opinion, unwarrantable omission.
My advocacy of consumption and similar taxes, such as stamp taxes of
many kinds, is not actuated by any desire to relieve those with large
incomes from the maximum of contribution which may wisely and fairly be
imposed on them. I advocate consumption and general stamp taxes--such as
every other belligerent country without exception has found it well to
impose--because of the well attested fact that while productive of very
large revenues in the aggregate, they are easily borne, causing no
strain or dislocation, and automatically collected; and because of the
further fact that they tend to induce economy than which nothing is more
important at this time and which, as far as I can observe, is not being
practised by the rank and file of our people to a degree comparable to
what it is in England and France.
The tendency of the House Bill is to rely mostly on heavy taxation--in
some respects unprecedentedly heavy--of a relatively limited selection
of items. I am--as I have already said--in favor of the highest possible
war profits tax and of at least as high a rate of income and inheritance
taxation during the war as exist in any other country. But apart from
these and a few other items which can naturally support very heavy
taxation, such, for instance, as cigars and tobacco, I believe that the
maximum of revenue and the minimum of economic disadvantage and
dislocation can be secured not by the very heavy taxation of a
relatively limited selection, but by comparatively light taxation
distributed over a vast number of items. I believe such taxes would be
productive enough to make good the impending revenue losses from
Prohibition.
I think, for instance, the imposition of a tax of one per cent. on every
single purchase exceeding, say, two dollars (the tax to be borne by the
purchaser, not by the seller) would be productive of a large amount of
revenue and be harmful to none. A similar tax was imposed in the course
of the Civil War and appears to have functioned so well and met with
such ready acceptance that it was not repealed until several years after
the close of that war.
There is apparently small limit to the zeal of many politicians and
others when it is a question of taxing business and business men,
especially those guilty of success. We are, I believe, justified in
inquiring to what extent there is a relation between this tendency and
political considerations which ought to be remote from the treatment of
economic subjects such as taxation.
Let us take, as an instance, the case of the farmer. I do not pretend to
judge whether in these war times the farmers of the country are bearing
an equitable share of taxation in proportion to other callings or not. I
certainly recognize that they are entitled to be dealt with liberally,
even generously, for I know the rigors of the farmers' life, the ups and
downs of their industry's productivity, and fully appreciate that their
work lies at the very basis of national existence. Everything that can
fairly make for the contentment, well being and prosperity of the
farmer is to be wholeheartedly welcomed and promoted.
Yet, we cannot avoid noticing that the average value of farm lands in
this country is estimated to have increased between 1900 and 1918 more
than 200 per cent., that the value of farm products has been vastly
enhanced, but that according to the latest published details of income
tax returns, the farmer contributes but a very small percentage to the
total income tax collected. Of twenty-two selected occupations the
farmers' class contributes the least in the aggregate, although it is
numerically the largest class in the country.
Let it be clearly understood that I have not the remotest thought of
suggesting "tax dodging" on the part of the farmers. I know well how
fully they are doing their part towards winning the war, and am
entirely certain that they are just as ready to carry patriotically
their due share of the financial cost of achieving victory as the
splendid young fellows taken from the farms, many of whom I met in
Europe, have been ready to bear their full share of the cost in life and
limb of achieving victory.
The point of my question is not the action and attitude of the farmer.
But here is a great industry exempt from the excess profit and war
profit tax and apparently not effectively reached by the income tax,
which is entirely natural, because in this case the income tax can
neither be retained at the source nor are the large body of the farmers,
many of whom do not keep and cannot be expected to keep books, in a
position to determine their taxable income.
Is it conceivable that the politicians who are so rigorous in their
watchfulness that no business profit shall escape the tax-gatherer,
would not devise means to lay an effective tax if the same situation
existed in a business industry?
The point of my question is, taking the case of the farmers as an
instance, whether in framing our system and method of taxation, the
steady aim has been to ascertain impartially what is equitable and
wisely productive of revenue and to act accordingly, or whether
considerations of the anticipated effect of taxation measures upon the
fortunes of individual legislators or of their party, have been
permitted unduly to sway their deliberations and conclusions.
V
Turning aside from this interrogation mark, I will only add, in
returning to our general scheme of taxation, that there are numerous
taxes of a tried and tested and socially just kind--some of them applied
in this country during the Civil War and the Spanish War--which would
raise a very large amount of revenue and yet would be little felt by the
individual. Some of them have been suggested to our legislators, but
have not found favor in their eyes. Their non-imposition, taken together
with the entire character of our taxation program, the burden of which
falls to an enormously preponderant extent upon the mainly industrial
States and the business classes, not only proportionately, which, of
course, is just, but discriminatingly, which is not just, seems hardly
explainable except on the theory that the intention of those who were
primarily in charge of framing that program was punitive and corrective
and that they were influenced--though I am willing to believe
unconsciously--by sectional and vocational partiality.
The fact that the revenue bill was passed in the House by a unanimous
vote does not mean, of course, that it met with unanimous approval on
the part of Congressmen. The debate shows this. The bill, as reported
after months of labor, either had to be approved practically as it stood
or rejected and returned to the Committee. It is not possible for a body
of 400 men to deal in a detailed manner with a subject so complex as a
taxation measure of the magnitude of the present one.
The bill could not be made over or materially amended in the House. In
view of the urgency of the emergency and the vital need to raise the sum
asked for by the Treasury, no patriotic course was open to the House but
to accept the bill and pass it up to the Senate.
I know it is not popular to say things in criticism of war burdens of a
financial nature. One's motives are liable to be misunderstood or
misinterpreted and he is very apt to have it scornfully pointed out to
him how small relatively is the sacrifice asked of him, compared with
the sacrifice of position, prospects, and life itself, so willingly and
proudly offered by the young manhood of the land.
It is a natural and effective rejoinder, but it is not a sound or
logical one. Heaven knows, my heart goes out to our splendid boys, and
my admiration for their conduct and achievements and my reverence for
the spirit which animates them knows no bounds. But I am acquainted
with hundreds of business men who bemoan their gray hair and their
responsibilities, which prevent them from having the privilege of
fighting our foe arms in hand.
And I know no American business man worthy of the name, who would not
willingly give his life and all his possessions if the country's safety
and honor required that sacrifice.
Transcriber's Notes:
Passages in italics indicated by underscore _italics_.
Additional spacing after the block quotes is intentional to indicate
both the end of a quotation and the beginning of a new paragraph as
presented in the original text.