St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-11-23
INCOME TAX EXPERIENCE.

INCOME TAX EXPERIENCE.
Whether or no the committee on ways |
and means will report in favor of an i'll !
come tax, it is so long since such tax !
was imposed on citizens Ofthis country, |
and the data relating to it have been so |
inaccessible, that a sort of presentation |
of the tax of 1S6l-7 will be matter of |
present interest. Congress was con-
yened in special session by President
Lincoln on July 4, 1861, and the ways
and means committee Immediately be-
gan the consideration of revenues rem.
dered imperative by the expenditures
of the war. The house passed bill
increasing the tariff and sent it to the
senate, which added provisions for all
income tax of 3 per cent On all incomes
over $1,000. Meantime, the house had
been busy with another revenue bill
laying direct tax and an income tax of
per cent on incomes over 5000. The
senate bill went to a conference, out of
which it came with the limit reduced to
$500 and the rate raised to 5 per cent.
Ibis report was adopted.
The act of 1861 was superseded by
that of July, 1862. which laid gradu-
ated income tax on ali incomes from
5000 to $4,000 of 3 per cent. aud on all
sums in excess of $4,000 of per cent.
Various other acts supplementary to
these acts were passed at later dates,
the last of which was in 1870, which re-
duced the tax to 81 per cent and raised
the exemption to $4,000, and provided
that the income tax should cease in
1878. AS completed by the several
amendatory acts, the sources of in
come. the exemptions and the machin-
cry of collection were perfected.
A study of the revenue received under
these several changes of rates and ex-
emptions brings out some curious and
unexpected results. Such examination
must be made with the attendant
knowledge that after 1861, and as re-
suit of the war and of the tariff laid for
revenue, but in effect protective, there
was an unpal alleled increase i'll the
number of large incomes Ill this coun-
try. Prior to that date our fiscal laws
had INSTRUCTED but slightly the distribu-
ton of wealth, and it was distributed
under the operation of the natural laws
of trade and production. The tax of 8
per cent On incomes of 5000 to $4,000
and of per cent over the latter sum
was in force during the years 1868, 1864
and 1865. In these years the first tax
produced respectively s172.770. 1874
| 154 and 50, 697, PAT, total of S17,S14.171.
| The per cent tax produced during the
same years 1892. 1862, $685., 160 and
50. &c., 339, making total of SIG. 494. 961.
| During part of 1865, and 1866 and 1867,
the tax was 5 per cent on incomes over
| 5000 and under $1,000, and ~ per cent
| on those over the latter. There was
collected during these years respective
ly, from the first class. $3.50, 143; S26, O46,-
760 and s31, 1872, 1894. From the second
class there was derived 1901, 942; S31, :
sol, 1928. and $50, 547, 947. The first class
yielded total of S5S,07S, 597, and the
second, $780, oil. The change to a 5
per cent tax On incomes above 81, 900
operated during the years 1S6S-9-70 and
III, and produced in those years re-
spectlvely, S32, 027, GIL; S25, 025, O69; ST.
rs, O46, and S10,6S0,967. The exemption
of $4,000 took effect in 1871, and fIom
that year until the expiration of the
law by limitation the receipts were an
nuall y So, 753, 9S3; IS, Ale, $50; So, 927, 253.
These figures show some results worth
noting if we are to have further expert
mentation in taxing incomes. The first
effort shows what is claimed as a defect
of this system of taxation, as it is that of
tax on personal property, that it fell
heaviest on the classes having the small
incomes, mainly salaries, accessible to
the collector. and that the incomes de-
rived from profits and dividends largely
escaped. The total derived from the
first class was a million and a half in
excess of that obtained from the second
class. If it is objected that during this
period the fiscal laws disturbing the dis
tribution of wealth had not become fully
operative. and that the era Of large in
. comes due to it had not fully begun; il
becomes palmer under the subsequent
laws of 1866 and 1867, in which the ta1
receipts on incomes from 5000 to 5000
increased 81, 100000, while the receipts
On incomes over $1,000 decreased
50, 600, 600 in those two years. When thu
, limit of exemption was raised to 81, 900
, and uniform per cent tax laid. til,
} receipts fell off rapidly, decreasin!
: from $50, 900 in 1868 to S1O,0OO.OOo il
t 1871. When the limit was 81, 600, which
became fully operative in 1872, the re
7 ceipts fell from SS,O0O.000 that year t,
about 100000 in 1878.
, The figures fully bear out the state
ment then common, that as incomes in
: creased those having them become NOR
4 and more expert in eluding the collector
g They also show that there is such
S thing as revenue point in income tax
d alton; THAT per cent is nearer it tina
s IS, and that attempts at equality by
= graduated tax increasing with incom
e are failure. David A. Wells, who wa
e the commissioner of internal revenu
, during these years, pointed out the i'm
: portant fact that in 1868 only 250,0C
persons out of our population of nearl
It 40.0OO,000 paid the income tax, and tha
e their incomes as returned aggregate
l. $500, 1000, 900. Though these were Les
a than fortieth of the population, the
n bad influence enough with cnngress +