Part 1

Produced by The Online Distributed Proofreading Team at https://www.pgdp.net (This file was produced from images generously made available by The Internet Archive/American Libraries.)

War Taxation

Some Comments and Letters

OTTO H. KAHN

1917

War Taxation

Contents

Some Comments Pages 7 to 42

Letters

I THE INCOME TAX Pages 43 to 60

II RETURN UPON TAXABLE AND TAX-EXEMPT SECURITIES Pages 61 to 70

War Taxation

The recent publication of a little pamphlet entitled "Some Comments on War Taxation" elicited numerous interesting comments by the readers. The points to which these comments mainly related were the statements contained in the pamphlet that:

First. If our neighbor Canada continues her present policy of not taxing incomes, or if she imposes only a moderate tax while rates of income taxation in America are fixed at oppressively and unnecessarily high rates, there can be little question that the ultimate result will be an outflow of capital to Canada, and that men of enterprise will seek that country.

Second. Moneyed men not having their capital engaged in active business, if they are so constituted that their consciences permit them to evade their share of monetary sacrifice, can put their funds into tax-exempt securities.

In reference to the foregoing points, I have written two letters in answer to correspondents. These letters contain an elaboration of certain arguments and viewpoints set forth in the original article on War Taxation and also refer to some additional phases of the subject. Those who have done me the honor of perusing that article may possibly be interested in reading these letters.

In order that they may be presented as a part of the argument as a whole, the original article with a few additions and slight revisions is printed in the first part of this pamphlet, followed by the letters.

O. H. K.

52 William Street, New York, July 5, 1917.

SOME COMMENTS ON WAR TAXATION

This is a reprint, somewhat amplified, of an article printed recently in the New York Times. The original article was written before the recommendations of the Ways and Means Committee of the House of Representatives were reported.

In a time of patriotic exaltation and of universal obligation and readiness to make great sacrifices to bring a most just and righteous war to a successful conclusion, the voice of sober argument and matter of fact considerations is apt to grate upon the ears of the people.

That voice is all the less likely to be popular when the arguments it puts forth may easily lend themselves to the interpretation of being actuated by solicitous care for selfish interests.

I am fully aware that by publishing the following observations I am exposing myself to that interpretation and to criticism of, and attack upon, my motives.

Yet, seeing that certain measures now under consideration threaten to take shape in a way which, from my practical business experience and after mature deliberation, I am bound to regard as faulty and as indeed harmful to the country, I believe it to be right and proper to contribute my views to the public discussion of the subject, for whatever they may be worth.

I can only hope, then, that in what I am going to say I shall be given credit for endeavoring to speak conscientiously and to the best of my knowledge and judgment from the point of view of the welfare of the entire country and not of the welfare merely of the well-to-do.

I shall address myself to the practical aspect and to a few phases only of the question and shall not attempt to enter into the economic theories and the broader and deeper considerations involved.

I shall assume in my argument that what Congress is seeking to accomplish is to impose taxes justly, effectively and scientifically with the desire to disturb the country's trade and commerce as little as possible and to avoid as much as may be the evils of financial dislocation.