WORK OF TAXATION

Manawatu Standard, Volume XLV, Issue 127, 2 May 1925, Page 2

WORK OF TAXATION

AN INtEREsf ING TREATISE. MENACE OP PENALISING INDUSTRY. “Taxation: The People’s Business,” is the title of an instructive little book which has been writtoft by Mr Mellon, secretary of the American. Treasury arid in a recent issue of Jo|m O'London’s Weekly Lord Riddell briefly reviews the publication and cites the V main arguments t>f Mr Mellon. Those, state Lord Riddell, affect every man, women, and child in England. “Mr Mellon, ho states, tells us that high super-tax running up to 68 per cent for Very large incomes killed the collections on income* of £60,000 per annum and over,- Tho Collections fell by twothirds in three years and * the number of taxpayers of that class frotn 627 to In 1916 there were five times- as many. According to President Coolidge the groat incomes of over £200,000 per annum disappeared like snow in the sun. In 1916 there were 206. In 1921 only 21 remained to ineet the tax collector. There v-ere wholesale evasions made easy by tho creation by the different states of vast sums of tax-exempt securities which paralysed the efforts of the Federal Government to tax the rich. Mr Mellon and Mr Coolidge, however, view tho matter from another angle. The former says: "National development depends upon personal ability aud surplus income. An expanding prosperity requires that- tho largest possible amount of Surplus income should be invested in productive enterprise under tho direction cf the test personal ability. This will not to dono if tho rewards of such action are largely taken away by taxation. Referring to tho .progressive super-tax, he remarks:

“If wo had a fax whereby on the first working day the Government took 5 percent of your wages, on the second day 10 per cent, on tho third day 20 per cent, on the fourth day *0 per oeht, on the fith day 60 ’per cent, and on the sixth day 60 per cent, how many of you Wuuld continue to work on the last two da's cf the week? It is the tame with caprol. It will refuse to take the risk incidental to embarking in business. Tills will inise the rate which eitablished businesses will have to pay for the raising of new capital and result in a marked increase in the cost of living. If new capital will r.ot flow into competing enlerprues the present concerns teni towards monopoly, increasing again the prices whioa the people have to pay.’ ” After quoting tho above comments of President Coolidge, Lord Riddell proceeds to stato thrtt Mr Mellon’s remedy w.«s a reduction of the juper-tax to a maximum of 25 per cent, ths abolition of Ux-cxempt securities, and, to gild the pill, conceesions to taxpayers in ihe ‘ower grades Tho Tax Reduction Act, ho.vevjr, which followed on its agitation, reduced the mpertax to 40 per cent only. Defending his proposals, states the writer, Mr Mellon says: “I have never viewed taxation as a means of rewarding one class of taxpayers or punishing anotna-. If such a point of view ever controls one r-üblio policy tho traditions of freedom, justice, and ©quality of opportunity, which are tho distinguishing characteristics of Amer.can civilisation, will have disappeared, and in their place we shall have class legislation with all ite attendant evils. The men who seek to perpetuate prejudice aiid class hatred is doing America an ill service, in attempting to promote or defeat legislation by arraying one class of taxpayers against another lie shows a complete misconception of those principles of equality on which the country was ieuuded. Any man of energy or initiative in tins country can get what he wants out of hie. But when that initiative is crippled by legislation or by a tax system which cit-j ies him the right to receive a reasonable share of his earhings then lie will no longer exert himself and the country will be deprived of .he energy on. whiih its continued greatness depends. This ccn Qi - tion has already begun to make itself felt as the result of the present unsound baii3 of taxation.” ?

Further, commenting on the views expressed by tile Arnsrioan statesmen, Lord Riddell ,saya that the doctrines held in that country are widely different ficm those observed in England. The question was, in :brief, whether taxation was to be based and arranged --olCt/ on necessity for revenue or also as an ir.e'.runient to. despoil the rich ard bring about a re-distri-bution of wealth The American idea was “individualism,” to gvo all a fair chance, to applaud tho winners in the ra/e and to regard as benefactors the captains cf industry—not to pi-nn-ise tin-m. 9.he Americans asked of a millionaire not what his profits were but what did he contribute to the happineoi and prospsnty of the country. Americans emphasised the loot that the millionaire did not cat his millions but that they were for the most part invested in industry. The writer proceeds to mention Henry Ford as an outstanding example of American initiative —a. man who bad built up one of the greatest industrial establishments in tho world, giving employment to thousands. In a reccrt interview Mr l Ford had shown hoiv ho could not have done that under tho present high sirtaxes. He showed how ho put hie profits back into tho business and reduceil die price of his motor care, whereas if tho profits had had to De paid to the Government lie. doubted wh-3 Anr it would haie ever been possible to have produiec! a car under 1500 dollars. Hr Ford hiu.ielf had stated: “High taxes on the rich do not take burdens olf ihe peer They iut lurdens on the poor. As far as our company is concerned we can go on about ns we now aro whether the sur-tnx bo 25 (er cent or 50 per cent. We can make some improvements but we cannot do tho grout things which v r © should do had wc the money. We oannot make such progress in the next 15 yetr* as we have in the last 15 and all other forward-looking companies will be in exactly the same boat." There is, of course, points out I ord Riddell, the an i-trust law, but that is not directed against individual onlovpri«-s, In England and Australia and New .SonmhJ the point of view was different. "Wo tolerate captains of industry,” he stale? "We do our b*st to clip their wings and deplore their possibility. At tho same time we are cll anxious for the commercial piospe:ity and comforts of lifo produced by energy and initiative.” Arn erica, he spates might be right or wrong, but she ie going full steam ahead on tho lines described and the gospel of success weildod by a ration endowed with a vast population, vast wealth, and vast natural resources, wai a formiidablo weapon. America bn tho other hand was a land of strange in cons storutiwi. Side-by-side with magnificent universities, museums, art gallorios, and hospitals, she possessed some of tho most poisonous slums in tho world. Mr Coolidgo and Mr Mellon were violent antagonists of taxation, aud Lord Riddell cites further utterances of these statesmen on' that question. Neither, though, explained how much relief wm to bo afforded and probably they wero looking to the payment of Alied debts to relieve the American taxpayer and stimulate American industries. The writer cites the following figures relative to America and Britain, tnooe relating to tho latter being quoted in parentheses : Population, 110,000,000 (42,000,000) j number of income-tax payers, 0,500,000 (2,5(0,000); total income on which tax is paid, £4,000,000,000 (£2,500,000,000); number of super-tax payers, incomes £60,000 and upwards, 246 (650); taxation per head of population, including local taxation, £l4 (£2l). In America a single person paid nothing on tho first £2OO and the married nothing on the first £SOO. Then tho rate went up progressively from 2 per cent for the next £BOO. Super tax began at £2OOO with one per cent and ran up to 40 per cent. Whebe a professional married man in England paid apart from allowances. £330 on an inoorne of £2OOO, in America he paid only £33.