Word: exempt
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Dates: during 1920-1929
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...fashion and at such times as to accomplish a maximum reduction of taxable income; the exploitation of certain features of the law such as the provision contained in Section 202 of the Revenue Act of 1921 relating to exchanges of securities; but finally and most important, investment in tax-exempt securities...
...this cause. But in this matter, as in other matters, legislation is no panacea. Ways of escape will persist, in spite of legislation, and will be availed of, as long as there is sufficient inducement. No matter what gaps are stopped by acts of Congress, the output of tax-exempt securities by states and municipalities will continue to afford an easy escape from all federal income surtaxes. This broad highway to exemption from taxes can only be closed by a constitutional amendment...
...Many Tax-Exempt Securities...
There are now outstanding approximately $11,000,000,000 of wholly tax-exempt securities. Of these about $8,500,000,000 are state, county, and municipal bonds. It is estimated that state and municipal securities are now being issued at the rate of one billion dollars a year. Here is a ready refuge from surtaxes. A taxpayer in the highest surtax class can now invest in a tax-exempt state or municipal bond paying 5 per cent interest and obtain the same net return as from a surtaxable stock paying dividends of 10 per cent. The average commercial bond, which...
...vice of the situation lies in the existence of high surtaxes in conjunction with the continued issuance of tax-exempt securities. Adoption of a constitutional amendment to restrict further issues of tax-exempt securities, coupled with legislation closing the gaps in the income law, is a final but far from immediate solution. And it will not eliminate tax-exempt state and municipal bonds now outstanding. Awaiting their retirement will postpone the date of complete solution. Only reduction by Act of Congress of the surtax rates to a level at which the inducement to invest in tax-exempt securities becomes negligible...