II
The Actual Return Upon Taxable and Tax-Exempt Securities
Dear Sir:
Your letter indicates that you do not sufficiently realize the enormous advantage in interest yield which under the income tax schedule as fixed in the House Bill is possessed by tax-exempt securities as compared to taxable securities, especially, of course, in respect of large incomes.
Permit me to call your attention to the following eloquent facts:
The yield of tax-exempt securities at prevailing prices ranges from 3-1/2% to nearly 4-1/2%. Under the rates fixed in the War Revenue Bill as it passed the House of Representatives, a taxable 6% investment would yield:
| per annum | ||
| 2.28% | on incomes over | $2,000,000 |
| 2.34% | """ | 1,500,000 |
| 2.40% | """ | 1,000,000 |
| 2.69% | """ | 500,000 |
| 2.97% | """ | 300,000 |
| 3.26% | """ | 250,000 |
| 3.54% | """ | 200,000 |
| 3.90% | """ | 150,000 |
| 4.20% | """ | 100,000 |
Or, to put it in another way, the investment in 3-1/2% "Liberty Bonds" is thus equivalent to investing in a taxable security yielding:
| per annum | ||
| 9.21% | in respect of incomes over | $2,000,000 |
| 8.97% | """ | 1,500,000 |
| 8.75% | """ | 1,000,000 |
| 7.82% | """ | 500,000 |
| 7.07% | """ | 300,000 |
| 6.45% | """ | 250,000 |
| 5.93% | """ | 200,000 |
| 5.38% | """ | 150,000 |
| 5.02% | """ | 100,000 |