Federal taxation -- 1920-1930; [News items];

              70 HASKINS & SELLS July
Federal Taxation—1920-1930
BY ARTHUR B. FOYE
ASSISTANT MANAGER, NEW YORK OFFICE.
T H E subject of federal taxation will be
of importance for the next decade to
every accountant in his capacity as a citi­zen.
Not only will he be concerned with
the total amount toward which he must
contribute, but with the mode of levy which
will determine his individual share.
In his capacity as an accountant, it has
particular emphasis. The time and energy
to be given to this subject by the staff men
are largely dependent upon the permanence
of the taxes to be studied, the relative im­portance
of tax expense in the statement of
Income and Profit & Loss and the tax
liability in the Balance Sheet, and the value
of the service that may be rendered to a
client in connection therewith. The degree
of attention to be given to organization
for and education of the staff in tax work
by the accounting firm is determined by the
same factors.
As in the case of every vital subject, no
single plan, lucid and concise, which ade­quately
resolves the complex situation has
ever been presented. What national honor
would come to the individual who could
lay down in simple language the unques­tionably
right plan to follow with respect
to the League of Nations! What un­dying
fame would be the portion of the
philosopher who could set forth in a plain
manner the one philosophy which would
infallibly conduce to immediate as well as
future happiness! What gratitude would
be his who could devise an understandable,
satisfactory and adequate scheme of tax­ation!
The problem with which we are con­fronted
in taxation is to determine the rev­enue
needed to sustain the Government
and then to arrange a plan to raise it with
as much equity and as little pain as pos­sible.
Government will continue to be more
costly than before the world war. The
reasons lie partially in the general rise in
the price level, and partially in the ex­panded
functions of government. While
the amount of revenue to be raised auto­matically
increases with a rising price level,
tax rates will naturally not increase in the
same proportion. The creation of new
and the broadening and deepening of old
functions of the government, however, will
require additional revenue that can be se­cured
only through opening new sources
of taxation or increasing the rates of taxes
already in force. The present tendencies
toward governmental control and govern­mental
ownership presage the need for in­creasingly
larger current revenue.
In addition to raising normal revenue,
the cost of the war must be paid. Interest
on the war debt is heavy. "Cleaning up"
governmental war operations will be ex­pensive.
The war debt itself must be
amortized.
It is estimated by competent authorities
that a yearly revenue of $3,500,000,000
will be required for from five to ten years.
Compare this with revenues from 1900 to
1916, which ranged from $567,000,000
in 1900 to $779,000,000 in 1916. The
necesssity for heavy taxation is patent.