It is still amazing to me that in reading a book written 90 years ago I find situations that appear essentially the same as those we face today. In Andrew Mellon’s Taxation: The People’s Business he quotes Henry Ford on the effect of high taxes on the rich.
High taxes on the rich do not take burdens off the poor. They put burdens on the poor. As far as our company is concerned, we can go on about as we now are, whether the surtax is 25% or 50%. We can make some improvements, but we cannot do the great things we should do had we more money. We cannot make such progress in the next fifteen years as we have in the last fifteen, and all other forward-looking companies will be in exactly the same boat.
Currently, we hear stories of companies not spending money due to the uncertainty of the tax situation. Between not knowing when the statists in government will begin to push more “tax the rich” plans to pay for their redistribution programs, the unsure impact of the multitude of changes caused by Obamacare, and the uncertainty of what new business strangling regulations such departments as the EPA will promulgate, is it any wonder that businesses are reluctant to expand? When companies do not expand, those that are hurt most are not the owners of the businesses, but rather those who will, as a result, never be hired by those businesses.
Another quote from Andrew Mellon’s book explains this perfectly. This quote is from a Richard Olney, a former member of Congress and now working in the Boston wool business.
As a member of a firm of wool merchants, we have a customer operating about ten sets of wool en machinery, who, about a year ago, made plans to enlarge his plant fully one-half to meet an increasing demand for manufactured goods, but, consulting with his partners, he decided on account of the high surtaxes to invest the surplus balance in profits from the firm in non-taxable securities. In other words, he resented the penalty imposed by the Government upon thrift through a severely high surtax and invested his surplus balance in profits where he would receive a fair income involving no great risk and anxiety.