_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 The investment in, say, New York City Bonds, being tax-exempt, at their present yield of 4.20%, would represent the following rates of income as compared to investments in taxable securities: PER ANNUM 11.05% in respect of incomes over $2,000,000 10.76% " " " " " 1,500,000 10.50% " " " " " 1,000,000 9.38% " " " " " 500,000 8.48% " " " " " 300,000 7.74% " " " " " 250,000 7.12% " " " " " 200,000 6.46% " " " " " 150,000 6.02% " " " " " 100,000 Of course, all these figures hold good only for the period during which the proposed rates of income taxation would prevail. As the income tax rate decreases, the yield from tax-exempt securities diminishes proportionately. The volume of tax-exempt securities at present outstanding, including the new "Liberty Loan," is estimated at not less than $8,000,000,000.