ABSTRACT
Taxes become so burdensome when prices fall that the tax question is a leading political issue. Public debts must be paid, and unemployed persons must be fed. Usually the cost of such charity more than equals any possible savings made by reducing salaries and eliminating services. The tax problem is primarily a problem of income. When prices rise, taxes rise less rapidly, but there are so many things the public desires that there is a demand for increased services which can be readily paid for with increased income. The government is the biggest debtor; hence the taxpayer is the biggest debtor and is vitally interested in deflation. In a panic period, it is impossible to reduce taxes much except by issuing bonds. Public debts must be paid, and unemployed persons must be fed. The national debt increased, tax rates increased, and new taxes were levied.
