WHO SHALL PAY UNCLE SAM'S TAXES?
Nelson, John M.
Who Shall Pay Uncle Sam's Taxes? Fordney Tariff Bill Would Let the Big Fellows Escape and Put the Load of Debt Brought on by the War on the Masses By JOHN M. NELSON (Congressman from...
...Why are you not satisfied now with your heaped-up wealth...
...My opposition to this measure is therefore also based upon the moral fact that by thus transferring the burdens of Government from the stronger to the weaker this bill, in letter as in spirit, overrides the limitations of the moral law...
...It is expediency that removes from the existing law the excess-profits taxes and higher surtaxes...
...If we cannot prevent its passage now, we can at least make our record right and appeal to the country...
...The 2 1/2 per cent increase of the norpjal tax is an added burden to the smaller corporations...
...Were they limited by any higher law...
...Looking at it from both sides, and especially from the inside, I frankly admit that I am prejudiced against the Fordney bill...
...The acid test of the bill then lies in the word "shifting...
...The fruits of the proposed law, even the members of the committee admit, are veiled in the darkness of uncertainty...
...And, finally speaking again generally, my opposition is strengthened greatly when I endeavor to forecast the harmful tendency, mate-terially and morally, that all such legislation if not repealed inevitably must have on the life, liberty, and happiness of the common people of my country...
...Why will you thus insist on putting the Republican Party in jeopardy of disaster and arousing the fury of Demos...
...Therefore, adding the highest surtax to the normal income tax, it would be 73 per cent on incomes above $1,000,-000...
...Indeed, the special object is so clearly manifest when we study the provisions of the bill that no one can seriously dispute the admitted fact that the bill was framed with the purpose in view of satisfying business...
...Fordney and his committee the full power to do as they pleased...
...In the three months of its existence, this co-operative purchasing association has purchased upwards of (100,000 worth of merchandise for its members, who already number over 1,000 of the Valley farmers...
...Business Special Privilege BUT one does not study the Fordney bill long without noticing clearly that its purpose is to give business a special privilege...
...also a further exemption of 8 per cent on invested capital...
...Is it a verifiable fact that the burdens have been shifted...
...These changes are distinctly in favor of the individuals who have the largest incomes and in favor of the cbrpora-tions that have the largest profits, at the expense of the general public...
...Fordney Tariff Bill Would Let the Big Fellows Escape and Put the Load of Debt Brought on by the War on the Masses By JOHN M. NELSON (Congressman from Wisconsin) INDUSTRIAL conditions are now such that the pocket nerve of the "average man" is exceedingly sensitive...
...This was called the normal income tax, but to get at the higher incomes certain upper taxes called surtaxes were levied...
...Let the idle rich pay, the heirs that inherit vast swollen fortunes, growing from generation to generation...
...And may I add that it is a perversion of the principle of justice as well as equity, shocking to the moral sense of mankind, that these possessors of great properties and incomes use their power in politics and in Government to enact laws to lift their taxes and to shift them to the backs of the common people...
...I prefer a position based on justice and right...
...from $200,000 to $300,000, 60 per cent...
...There can be no "shifting" unless there has been some change in our fiscal policy...
...This is a complete and decisive proof of the productivity of the excess-profits tax and the income tax in the present law...
...From $100,000 to $150,000 the rate is 52 per cent...
...How can you think that you can have justice if you constantly practice injustice...
...All the average men who make up the people of the country are going to listen, because their pocket nerves will be irritated by the heavy, pinching, painful pressure that this bill proposes to put upon them, and which will continue to irritate until this injustice shall be made right...
...I would have the Fordney bill say, let those who are financially strong and powerful pay their full share of the tax burdens—the men who have the capital and the income...
...Of all people, these men have no just complaint against a law that demands payment of taxes proportionate to protection of property...
...Taking up the inheritance tax, we find no material change made...
...Taking up the income tax the experts of the Treasury Department worked out the following progressive rates: First an exemption of $1,000 for a single man, $2,000 for a married man, and $200 for a dependent child...
...To me it says unmistakably, let the people pay the taxes, let the people bear the load of debt brought on us by the war...
...I do not claim the gift of prophecy, but I shall venture to assert that upon this issue—Who shall pay Uncle Sam's taxes?—will be fought out at the next and ensuing campaigns...
...If we cannot defeat this reactionary legislation, we can at least make our protest by our votes...
...Taxing the Poor BUT every material fact has a moral accompaniment...
...Looking at the contents of the provisions of the Fordney bill as to its destructive effect on the present tax system, I find that it tears to pieces a fiscal policy that was built up in our law by the leadership of both parties, the spirit of partisanship banished, and all backs turned to special interests, its provisions elaborated into symmetrical forms by most skillful tax experts, and the whole law vitalized by unanimous votes of representatives of all parties, not only in the committees but also in both Chambers of Congress, patriotically breathing into it the undivided, un-corrupted, and unconquerable will of the noblest spirit of America...
...There is no sign of its looking aside to any special interest...
...from $300,000 to $500,000 63 per cent...
...Many of these minor forms of taxation were changed by committee amendments offered in the House under protest from the people, such as taxes on soft drinks, druggists, insurance companies, sporting goods, and the like...
...Perhaps so, but for the sake of old-fashioned ideals, it should be said that as the present law sought the common good, everybody accepted it in the main as fundamentally right, even its most selfish critics...
...Indeed, it is my opinion that the repeal of the excess-profits tax alone represents a shifting of burdens, even in ordinary times, of at least a billion dollars annually...
...As substitutes for these changes of rates in the two great tax-producing forms, numerous makeshifts were arbitrarily resorted to...
...Consider the material shifting of the tax burdens...
...This is the fourth year of its trial...
...The losses in taxes from this repeal of the excess-profits tax and from the reduction of the high rates of the income taxes, when the times get better and the profits and incomes are again comparable to those of former years, will be from one to two billion dollars annually...
...Contrasting the forms of taxation as formulated by the Treasury experts, the excess-profits tax was worked out in detail thus: An allowance of $3,000 of net income was made exempt from any Federal tax...
...I appeal to the Representatives of the American people...
...So, comparing the purposes of these fiscal policies, we note that while the present law looks to the demands of the country, the proposed law looks to the demands of business...
...If the great special interests shall drive us out of these tax in-trenchments thrown up in the hour of the country's great peril brought on by these same sinister forces insisting upon the protection of their right to traffic in the materials of war with belligerent nations, if they shall now be permitted to keep intact the proceeds of their ungodly profiteering—unconscionable profits wrung out of the people during the stress of war—if we now permit them to shift the burdens of the war debt with its huge interest charges and with the increased costs of government, including the present Army and Navy programs, then we are, indeed, unworthy Representatives of the American people and deserve not their continued trust...
...then a tax of 4 per cent up to $4,000 of net income and 8 per cent above $4,000 of net income...
...I have given careful study to its" provisions, and I have tried earnestly to estimate its effects on the wellbeing of the American people...
...For the year 1920, 73.6 per cent of the taxes came from the income, excess profits, inheritance, and surtaxes...
...Be not deceived...
...California Farmers Organize THE farmers of the great San Joaquin Valley of California have formed an organization for the co-operative purchase of farm implements, seeds, tools, clothing, and other necessities, with headquarters in the city of Fresno...
...The results of these two fiscal policies as to their productivity is also instructive...
...It is force that is applied to drive it through the House under an ironclad rule and by an appeal to blind party spirit...
...By their fruits ye shall know them...
...Abolish Profit Tax THIS whole excess-profits tax is abolished by the Fordney bill...
...Instead of the weak bearing the burdens of the strong, let the strong help bear the burdens of the weak...
...The colossal debts of governments are due to the maintenance of armies and navies in -the magnitude demanded by men of great financial means, and wars are brought upon nations by these international traders who demand the privilege to traffic with belligerents in munitions of war...
...It destroys entirely the chief mainstay of the present policy, the excess-profits tax, and it breaks off from the top halfway down that other mainstay, the income tax...
...The theory of the Fordney bill seems to rest wholly on expediency, favoritism, and force...
...Generally, my opposition to this bill is based on three fundamental objections...
...It is spoken of as "taking the brake off business," "removing the handicap off business," "furnishing relief to business," "bringing about a revival of business activity...
...Had not Mr...
...I watched closely for months the selfish propaganda behind it...
...For the fiscal year 1921 the income and profits taxes alone yielded $3,225,790,653...
...This I shall now do by comparing these two fiscal policies in object, in plan, and in results...
...How can you hope to reap equity if you sow inequity...
...This much we do know now, that the fruits of the present fiscal policy have been sufficient...
...The moral order, which should guide the conduct of nations and citizens, rests upon what is right, just, and equitable...
...Doubtless the Finance Committee of the Senate will complete the program by an increase of revenue through a sales tax...
...By assuming that the promises of heads of departments to reduce the expenses of government will be made good, it promises to greatly reduce the total sum of revenue to he raised...
...In view of the statement of President Harding that the average yearly expense will amount to $5,000,000,000, the Fordney bill is certain to fall short of one or two billion dollars in revenue...
...In other words, the income and profits taxes produced 70 per cent and all the other taxes produced 30 per cent of the total receipts...
...Theefore, as a result of our study of the acid test, suggested by President Harding, a "shifting" which he said the people "did not expect" and "would not approve," and after contrasting the fiscal policy of the existing law with that of the Fordney bill in...
...Has right and wrong any real significance...
...The fiscal policy of the present law has stood the test of experience...
...The need of the country was great...
...Let me illustrate these general objections in some detail...
...He is likely to listen with great care to the representatives of organized farmers, wage-workers, and consumers who appeared before the Ways and Means Committee protesting against the repeal of the excess-profits tax and the higher income surtaxes, and who now when they learn what this bill does to them are making their protest again by mail and by telegram...
...Therefore, the first endeavor should be to determine the exact scope of any change by contrasting the fiscal policy of the present law with that of the proposed law...
...But we shall see what the future brings forth...
...Surely, too, it is no less a true and just principle that individuals and corporations should pay according to their financial strength, and the measure of their individual and corporate income is tbe exact moral measure of their tax-paying ability...
...On this issue, as on every other, there are two sides, and people will take sides dependent upon their point of, view...
...Favoritism grants the additional exemption of $600 to heads of families and $200 for dependent children...
...object, plan, and productivity we conclude that the Fordney tax bill makes radical and far-reaching changes in the fiscal policy of the country...
...that the big fellows add taxes to prices and thus pass them on to the consumer...
...There is poetic justice in the excess-profit taxes and higher income surtaxes being paid by those who wring them out of the American people through monopolies and trusts...
...The effect of this special interest propaganda has been to increase my prejudice against this measure...
...In fact, an organized propaganda seeks to put through what is known as a tax on sales...
...Only 26.4 per cent of the revenue came from consumption and other taxes...
...Against Fordney Bill IFIND myself wholly out of sympathy with the thought expressed by the Fordney bill...
...Out west or down South or up North the Fordney bill will not meet with the enthusiastic favor that it receives in the financial district of the metropolis...
...from $500,000 to $1,000,000, 64 per cent...
...The Fordney bill looks ultimately toward an increase of consumption taxes...
...The Fordney bill, on the other hand, conceding the productivity as claimed by its author, will not exceed $3,000,000,000...
...Those who live about the higher peaks of plutocracy will not look at this issue from the standpoint of those who look at it from poverty hill...
...The first is the material fact that by its provisions Uncle Sam's taxes and war burdens, if the Fordney bill passes, will no longer he paid out of the excess profits of the big corporations nor out of the higher income surtaxes of the very rich but out of the earnings of the general public...
...Bill is Destructive WHATEVER may be one's individual view of moral values, it is the common consent of mankind that Government must conform to moral principles, and looking at the objects of these two fiscal policies, comparing the one with the other ethically, even the man on the street whose moral sense may be debased and dull would unhesitatingly declare that only the law which looks to no special interest but steadily for the common good is fundamentally right, The Fordney bill is virtually constructed without a plan...
...This is mere selfishness...
...On the other hand, a further extension of the evil of exemption of tax-free securities was made as to Liberty bonds and as to capital employed by Americans in foreign trade...
...It would sometimes seem that these terms have no real content in lawmaking and may be ignored at will...
...Various temporary makeshifts are also adopted...
...It is destructive rather than constructive...
...He is apt to be alert to find out how we vote on this tax measure...
...Why are you not satisfied now with your monopoly profits...
...Is the object of a law a mere arbitrary matter...
...This has been prudently left for the Finance Committee of the Senate...
...If so, the bill is directly in conflict with the guiding rule given us by President Harding in his opening address to Congress when he said, "The country does not expect and will not approve a shifting of burdens...
...that it shifts a large part of the burdens of taxation from the financial district of New York to the third district of Wisconsin...
...and above $1,000,000, 65 per cent...
...By pooling their orders the California farmers are able to buy supplies at wholesale and jobbing prices direct from manufacturers and producers, with savings of from 20% to 40% for themselves...
...It gives the Secretary of Treasury power to meet a deficit by issuing $500,000,000 of certificates of indebtedness...
...It is true that the war 19 technically over, but it is equally true that the war debt is still with us...
...Even if partly true, I detest it utterly, and far less do I accept the logic of these gentlemen that the law be made to fit the fact, to conform to established business custom...
...These income surtaxes increased as follows: One per cent to $6,000, then increasing 1 per cent for each $2,000 of net income up to $100,000...
...I don't like the stock argument that the people pay the taxes anyway...
...after that the rate was 20 per cent oh excess profits up to 20 per cent of invested capital and 40 per cent of the net excess profits above 20 per cent of invested capital...
...but this bill, by substituting for these fundamental principles of an ordered moral universe, privilege, expediency, and force appears to me to pervert the very object, institution, and function of civil governments...
...The need of the country for huge revenues to meet the expenses brought on by the war is undeniable...
...Let the profiteers pay the war debt out of their extortionate profits...
...A normal tax of 10 per cent was further levied on net income after deducting excess-profits taxes...
...There is a moral Governor in the universe, and He has said: "As ye sow, so shall ye also reap...
...This object is variously stated and defended in the debate...
...In the Fordney bill this tax is mutilated in that all surtaxes above 32 per cent are abolished, so that an income of $1,000,000 pays no more progressively than an income of $66,000...
...These huge fortunes that mount up to the hundreds of millions and these great incomes which reach into hundreds of per cent are derived from business protected at home by the police power and courts and abroad by the Army and Navy...
...To offset these destructive acts, it increases 2Ya per cent the normal tax on corporations...
...It has produced the revenue, the returns have been constant and adequate to meet the needs of the Government...
...But the Fordney bill saw fit to turn aside...
...It would seem that the Fordney bill should have kept this goal steadily in mind until the staggering problems of the war debt had been justly determined by the American people...
...Changes Fiscal Policy WHEN I think of the future needs of the country, the immediate demands for meeting obligations due in 1923, amounting to over $7,500,000,000, and the expressed promise of a bonus to the soldiers of the World War, if not in words clearly in acts of Congress, it seems to me almost incomprehensible that the Committee on Ways and Means dared to tear to pieces the best producing branches of the fiscal policy—a tree which has not failed to bear constant and sufficient returns with which to meet the greatest needs, and to substitute for it a deformed trunk which can not be depended upon to produce anything near the necessities of the Government...
...A careful study of the law now on our statute books reveals the fact that its sole object was to provide the necessary funds to meet the expenses of war...
...It is the duty of Congress to prevent the shifting, not to legalize it...
...Will you never learn that you cannot safely override the limitations of the moral law ? How can you expect the people to respect your rights if you shirk your duties...
...Wealth Should Pay FROM the point of view of justice and equity there can be no principle more true than that men with great fortunes and excessive incomes should pay for the protection the Government gives them...
...Its purpose was to provide the revenue to meet the emergency of war...
...Destroys Present Law SUMMING up our analysis, it is quite evi-dent that the changes made are a marked deterioration of the skillful and exact formulation of rates of the existing law...
...According to the Commissioner of Internal Revenue, the Government could depend upon the income and profits tax for three-quarters of the internal revenue...
...and by as much as it decreases the taxes of the captains of industry of Wall Street it increases the taxes of the farmer, merchant, and wageworker of the country...
...Bourbons Behind Scenes BOURBONS behind the scenes who are insisting on this reactionary legislation be warned...
...from $150,000 to $200,000, 56 per cent...
...Why are you not satisfied now with your huge war gains...
Vol. 13 • September 1921 • No. 9
