Breakthrough at the Kammer

At the end of January 1910, Mises finished a long report that had consumed his energies in the preceding months. He presented the report to a plenary Kammer meeting. In it he took issue with proposed legislation to increase corporate income-tax rates, to subject corporate managers to additional taxes, and to give the financial administration access to corporate bookkeeping. Mises criticized the bias of this new legislation, which sought to increase government revenue at the expense of Austrian industry—the Kammer clientele—while favoring agricultural producers. Mises suggested that a more reasonable policy would be to apply existing tax laws equitably.⁶⁴

His position with the Kammer left him even less time than usual for his academic endeavors, but he seems to have continued his studies with iron discipline. In 1910, he came out with two new publications: an article (in a new French journal) on the reform of government finance in Austria, and a survey of new literature on money and banking for Böhm-Bawerk's Zeitschrift.⁶⁵

But he was far better known for his Kammer reports, which were followed attentively by friends and foes, and praised in the Vienna daily press as “very thorough,” “exhaustive,” “very well researched,” and “richly documented with statistical material.”

The thoroughness of his work and the intellectual leadership that he exercised in Kammer circles gained Mises a level of public recognition that allowed him to comment on government policy in the central organ of Austria's ruling elites. Thus, in a Neue Freie Presse piece from October 1911, he criticized finance minister Bilinski for his proposed increase of income taxes.⁶⁶ And about a year later, he criticized the tax proposals of MP Steinwender, observing that they would reintroduce the bad old (pre-Böhm-Bawerk) habits of making tax laws based only on immediate concerns such as the present balance of power in the Austrian parliament.⁶⁷

The government's constant drive to increase old taxes and to create new ones was a permanent issue on the public agenda. At the end of October 1911, the Kammer hosted a meeting of various automobile associations to discuss the government's plan to tax cars. Mises was unhappy with the assembly's toothless resolution to appeal to the government not to exceed German automobile taxes and to tax foreigners only after a stay of more than three months in Austria.⁶⁸ He was similarly disappointed in a November 1911 meeting in which the Kammer took up the problem of rising meat prices. Mises's report stressed the commonsense point that the easiest solution would be to open the borders for foreign meat imports. But this solution was not “politically viable.” The reduction of meat taxes—another simple and effective solution—was equally “unfeasible” because of the government's chronic financial difficulties.

Despite such setbacks, Mises tenaciously pursued his strategy of changing the structure of Austrian taxation, and in March 1912 he was promoted to the rank of Konsulent (councilor). The bottom line of his many reports was that the prevailing tax code enshrined the privileges of various vested interests, particularly Austrian agriculture, and hampered industrial progress.⁶⁹ He sought a compromise that would guarantee the government higher revenue while preventing the burden from falling entirely on his clientele. His tenacity eventually paid off. In early 1914, parliament voted a new tax law that granted most Kammer demands. The new law stipulated a tax-exempt income of 1,600 schillings (up from 1,200) and also regulated government access to corporate bookkeeping. On the negative side were new taxes on liquor and champagne, as well as an increase of the income tax, which now reached up to 6.7 percent.⁷⁰

Yes: a progressive tax topping out at less than 7 percent. The good old days!