WALTER L. ROTHSCHILD Co. 280 MADISON AVENUE NEW YORK, N.Y. 10016 SPECIALIZING IN TELEPHONE LEXINGTON 2-4833 INVESTORS PLACEMENT OF IN REALTY FIRST MORTGAGES MEMBER WALTER L. ROTHSCHILD REAL ESTATE BOARD OF NEW YORK CAPITAX: A COMPLETELY NEW AND EQUITABLE SYSTEM OF TAXATION by Walter L. Rothschild It is undoubtedly true that most wealthy persons have not been paying their fair share of taxes, while other peo- ple who have been working hard and contributing much to the welfare of the nation, have been paying too much. Under an income tax system, the only way to rectify this is to tax income from the investing of wealth, at a much higher rate, than income from work and labor. Then, to encourage progressive risk-taking by wealth, income from speculative investments would have to be taxed at a lower rate than relatively safe investment income. Unfortunately, such a change in the income tax structure would be much too complicated and just impossible to administer. Fortunately, there is a simpler logical solution sug- gested by the fact that "intrenched wealth does have an undue advantage over work and labor." This undue advantage can be termed the basic safe yield of capital. Currently this safe yield is approximately 5% per year, as 5%+ is the yield on U. S. Government bonds and Government insured savings accounts. For the moment, just accept the fact that ALL WEALTH "in effect" yields at least this safe 5%, including wealth that appears to yield little or nothing. CAPITAX IS THE TAXING AWAY OF THIS 5% BASIC YIELD BY A 5% TAX ON ALL PRIVATELY OWNED CAPITAL. As will be shown, wealth is not entitled to retain any of this 5%. Correspond- ingly, IT IS INEQUITABLE TO DIRECTLY TAX A MAN'S WORKING EARNINGS, whether he be a lowly paid laborer or a highly paid executive. The graduated income tax has evolved into an attempt to make things fairer between rich and poor. It only partly achieves this by reducing the basic safe yield of wealth from 5% to an average of about 2-1/2% net after income tax. Thus,