St. Paul daily globe., 1893-12-01
LooPHouEs FOR FRAUD.


to be the knottiest of all the questions
that have come before the committee on
ways and means of the house. 1t has
been under consideration for several
months, but appears to be as far from a
settlement as ever. The latest report is
that substantial agreement has been
reached, and that bill will be reported
that will impose tax on the incomes
OF corporations, of companies holding
valuable and exclusive franchise lega-
cies, inheritances and SUGGESTIONS of all
kinds, and possibly on all income ac-
crulng to foreigners and non-residents
A provision may be drawn to include
English and other foreign capitalists
who own land in Texas, Illinois and
other Western states. In like manner
it will be diligently sought to reach
those incomes which foreigners are de-
riving from American mines and other
industries which have become the spe-
cial objects of syndicate aggrandize-
ments."
There are objections to this plan thai
will readily suggest themselves. and if
insisted upon will prove fatal to the
whole measure. The most serious one
is the double taxation which it imposes.
Ii the income of corporations Is taxed,
as well as the income of the individual
stockholders, the result will be double
lmpost that would be both onerous and
unjust. Yet this may be the only means
by which the foreigner with money in
vested here may be reached. 1t is
well-known fact that many American
corporations, railroad and manufactur-
ing, are owned largely by English, Dutch,
and German capitalists. The Illinois
Central railroad, for instance, is an eX--
clusively foreign corporation, paying an
enormous profit to the stockholders. It
pays but nominal tax to the several
states through which it runs, and
scarcely any to the general government.
Those who own the shares consequent,
ly escape their just proportion of the
taxation. And so with the various
trusts that are owned largely by foreign
capitalists. These can only be reached
by an income tax levied upon the profits
of the corporations, and collected from
them. But the case is different with re-
gard to corporations owned by Ameri-
can citizens. In the event of the levy
Ing of such tax as that proposed they
would be compelled to pay taxes as
corporation and as individuals-a mani
fest injustice, and discrimination in
favor of foreigners that would cast
odium upon the entire system.
The same objection inheres in the
proposition to tax mines and lands
owned wholly or in part by foreigners.
1t will, Of course, reach the foreign
owner indirectly, yet it will reach the
American owner twice, for he would
pay his proportion of the tax assessed
against the corporation as a unit, and in
addition would pay an individual tax
on the same income. A scheme may be
devised by which this may be in part
avoided, but the difficulty cannot be
wholly overcome, no matter what may
be the provisions of the law. Transfers
of stock in these corporations from
home TO foreign owners, or vice versa,
can be made in such manner as to re-
suit in defrauding the government of
its just dues. The many loopholes to
fraud In such proposition condemn it.
would favor the imposition of tax on
incomes, for the underlying principle
of such tax is equity. But unfor-
tunately men will lie concerning the
profits they derive from their business
or investments, and there is no way by
which they can be detected and pun
iSheG. This being the case premium
is placed upon perjury by the attempt
10 levy and collect such tax, and as
result the cost of collection would con-
sumo the entire proceeds.
The committee on ways and means
will have to devise better plan than
the one suggested in order to secure
public approval. The tax must be
made uniform and impartial, and col
lected from all persons liable for its pay
ment. These requisites cannot be OBJ
tanned under the law as proposed.