The Bulletin of the National Tax Association Volume 7
This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1922 edition. Excerpt: ...that at a similar rate of conversion they would be "scotfree" of all income tax by 1922. It is stated that more than $1,000,000,000 of state and municipal tax-free securities were issued in 1920. If these securities are held by the wealthy, those whose federal income tax is at the rate of 75 per cent, the total annual loss in this one form of tax alone is over $35,000,000, if the interest rate on these bonds averages 5 per cent. I consider it a grave mistake and that it is putting the burden of the paying of the expenses of the government on the poorer class of people, because the rich people are investing their money in these tax-exempt securities. It is a well-known fact throughout the country that those wealthy classes who have been investing their money in real estate and mortgages, are selling their real estate at high prices, and selling their mortgages and investing their money in tax-exempt securities. Granted that there may have been an apparent saving to borrowers of one-half of 1 per cent per annum this saving on $1,000,000 in 5 per cent bonds is only $250,000 a year, or seven-tenths of 1 per cent of the annual loss in taxes. If the rates of taxation are not reduced the loss in federal income tax alone would, for the life of this billion dollars in bonds represent a loss of $700,000,000 against a total saving in interest of $5,000,000. On a most conservative basis the government is now losing annually from one hundred and seventy-five to two hundred million dollars on tax-exempt bonds already issued. The wealthy investor receives as much net return from his 5 per cent tax-exempt bonds as from a taxable industrial investment paying over 17 per cent. Railways, public utilities, and other industrials cannot compete on...
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