Page:Walter Renton Ingalls - Current Economic Affairs (1924).pdf/148

134 the deliberate swelling of legitimate business expenses in times of prosperity in order to diminish net profits, thus intensifying the peak of the business cycle, whereas if such expenditures were deferred the nadir of subsequent depression might be tempered.

The prime consequence of our heavy surtaxes is the withdrawal of large capital from heavily taxable enterprises and developments, as represented by the common stocks of railroads and industrial corporations. All of these are in process of being transferred to small stockholders, to whom income surtax is a matter of indifference. But the larger consequence is necessarily a contraction in business which Wall Street has no difficulty in foreseeing. There would probably be more revenue collected with an income surtax of 20 per cent than with one of 50 per cent. Before there can be any development of business there must be promise of a profit. If the business is more risky than the average there must be promise of a profit higher than the average. Take away this incentive and business stagnates. The government is working to that end when it takes away in the form of taxes one-third or one-half of the profit resulting from a business venture. There is not much incentive to men to take risks in any industry when all the risk must be borne by the individual and if success comes ultimately a large part of the gain is taken away by the government.

The proponents of high surtax justify them on the ground that they are a burden on the rich. In fact the rich are neither so numerous nor so wealthy in the aggregate as is commonly supposed, but even if they were it would be unwise to tax them so severely and by thus reducing their surplus curtail what otherwise