State and Local Taxes

The unsatisfactory conditions relating to state and local taxation in this country continue to elicit protests from prominent business organizations. Between 1921 and 1923, U.S. Federal taxes have been reduced about a billion dollars, and should continue to decrease in the future by the steady retirements of Liberty Bonds from European debt payments. State and local taxation, however, presents a very different case. Lavish borrowing by the issuance of tax-exempt bonds has been the order of the day ever since the armistice. In 1919, state and local governments in this country borrowed $691,000,000; by 1923, they were borrowing $1,063,000,000 and during the first eleven months of this year they have established a new high record of $1,289,000,000 for such loans. Undoubtedly, as the country grows, it is natural for local governmental indebtedness-- and consequently local taxes from which interest and sinking fund service on loans come--to increase. Yet the recent increase has been out of all proportion to the growth of the country or its genuine local needs. The explanation obviously lies in the eagerness with wealthy investors have purchased nontaxable securities.

The point has now been reached, however, where local taxation is a pressing burden on farmers, merchants, home-owners and even wage-earners everywhere. Local taxes, which were only $2,956,000,000 in 1919, have increased to $4,449,000,000. The tendency is one which may deeply concern all U. S. business interests in coming years.