Page:Walter Renton Ingalls - Current Economic Affairs (1924).pdf/185

Rh to municipalities, is paid for directly, but in the mam the cost of government must be defrayed by taxation. Unwise methods of taxation may have serious economic consequences, and may be contrary to the common welfare. There can be no doubt that the present system of high surtaxes levied on income by the federal government diverts investment to tax-exempt securities, especially the bonds of states, and thereby subtracts from investment in capital goods, i.e., those things that produce more income. Equally without any doubt does the present system of levying income taxes lead to increased expenditures for plant maintenance and extension in times of prosperity, thus increasing the competition for labor and material and intensifying the peak of the business cycle at the very time when that should not be done. In the interest of labor, which more than any other demands equilibrium, the work of extending and improving plants should be reserved for the slumps in the business cycle.

During the last 30 years our national economic affairs have been extensively interwoven with economic restrictions, some of them possibly wise, many of them certainly unwise and all of them tending to delay or defeat the operation of natural laws. Some of these restrictions are legislative and some of them are the results of labor union policy. The uneconomic situation in the bituminous coal mining industry, which is greatly overmanned, to the direct expense of the public, is largely a consequence of artificial restrictions. Free play of the law of supply and demand would compel the surplus men of that industry to seek their livelihood in other occupations. Legislative enactments with respect to railway transportation result in men working