the investment markets of the country, with the
resulting inevitable effect upon the country's general business, and
upon its capacity to absorb Government loans.

IV

The tax recently enacted by Congress imposing a burden of 8 per cent.
on business profits over and above 8 per cent. on the capital employed,
regardless of whether such profits have any relation to war conditions
or not, is unscientific and unsound.

(Incidentally, it is a strange provision of that law that it applies
only to co-partnerships and corporations, whilst an individual engaged
in business, however profitable, is not taxed.)

It is unquestionably right and in accordance with both good morals and
good economics, to prevent, as far as possible, the enrichment of
business and business men through the calamity of war.

But the recently enacted so-called excess profit tax which it is now
proposed to augment largely does not accomplish that. It taxes not
merely the exceptional profit, _i.e._, the war profit. It lays a burden
not on business due to war, but on all business.

It does this at a time when it is more than ever necessary that energy,
enterprise, efficiency, the commercial and financial brain and
work-power of the nation, be stimulated to their utmost in order to
make good, as far as possible, the waste and destruction which go with
war.

Any scheme of taxation which imposes an unnecessary burden upon
commercial enterprise and thereby handicaps the nation in its business
activities--especially in world competition with other nations--is
unsound and bound to be gravely detrimental, both to the business men
and still more to the wage-worker; in fact, to every element of the
population.

It is worth noting that England, the conduct of whose finances, based
upon the experience of many generations as the leading financial power,
has always been a model for other nations to follow, has imposed an
excess profit tax on business during the war _merely_ to the extent
that such profits are attributable to the war, _i.e._, to the extent
that they exceed the profits of normal years.

In principle, direct taxation of business activities should be avoided
as much as possible, apart from a _war profit excess_ tax.

Care should be taken lest the wealthy man least entitled to
preferential consideration, _i.e._, he who neither works nor takes
business risks or business responsibilities, be favored as against the
man who puts his brains, h