Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-11-30
An Income Tax Shown to Be Not
the Thing Now.
IT WOULD NOT BE AVAILABLE
To Meet an Emergency Which
is Now Present.
A SIMPLE PLAN PROPOSED.

revenue question:, TO a Star reporter, lies
between an increase Of the whisky tax and
an issue Of bonds. The financial problem
before Congress 50 far as 1t relates to the
raising Of internal taxes" he said. 'is an
urgent one. There is assurance Of a de-
hciency during the present fiscal year.
which must be met before the 1st of July
either by raising revenue or using the
credit Of the government for the issue of
bords. The fundamental difficulty with the
proposition to meet this eXigency by the
imposition of an income tax of any sort
Is that the tax would necessarily fall upon
future incomes and would yield nothing
during the fiscal year 1894 and would not.
in fact. be readily collectable until near
the close of the fiscal year 1895.
Expense to Collect nm Income Tax.
Meanwhile much expense would have
to be incurred through the appointment and
fitting out Of very large number Of new
officials and the preparation of costly and
elaborate blanks needed for the assessment
of an income tax The official corps would
have to be large enough to cover the whole
country and investigate not only the affairs
Of those whose incomes would be beyond
the taxable limit, but all other incomes
also.
"All this outlay would have to be made and
everybody's business and personal affairs
pried into with a view to receipts the first
or which could not reach the treasury for
at least fifteen to eighteen months from
this time. Meanwhile the emergency for
which the increased internal taxation is
Iequired win have passed away: II the
democratic theory of revenue tariff be not
radically wrong, within year from the
taking effect of the new system the govern
ment receipts from customs will be ample
II not redundant and there will be no cur
rent deficiency to supply. The income tax
proposition is therefore necessarily one to
defer the raising of larger revenues until a
time when We will not need them. 1t is to
De assumed that Congress would not think
OF putting. tax upon incomes already
earned and spent. Even If it were consti-
tutional no legislation could be more unfair
than this. For example, 1T would be cruel
hardship to expect a man who having an
income Of 5000 had regulated his affairs
accordingly and disposed Of the whole of IL
to mortgage his future by borrowing 500 to
pay the debt imposed by such ex post facto
legislation Were the passage OF such a
statute possible the Supreme Court of the
united states would make short work of it,
A Demagogical Idea.
The fundamental objection above set
forth applies not only to the general in
come tax upon all unofficial revenues or
earnings larger than fixed sum, but also
to all other income tax propositions, such as
the one for taxing the incomes of all cor
porations- This idea is demagogical and
founded in ignorance, however eminent the
reputation of its proposers may be- The
corporation is no longer the manager of
very large enterprises merely. Many lines
OF business are conducted by corporations
as limited liability companies or otherwise.
Inc old-fashioned copartnership of Smith
& Brown has given way to the business or
Sanlzation known as the Smith & Brown
Manufacturing Company trading COM
pany. Comparatively few of the old-style
firms are now conducting a large business
Ine majority of extensive establishments
have. for reasons satisfactory to them,
taken advantage of the development of the
corporate principle in business affairs and
turned their Establishments into Joint stock
companies. If Mr.. Shearman of Brooklyn
ana his allies do not intend to tax these
business and Industrial or trading COM
Panles where are they to draw the line?
II IS said that they can easily tax ONLY the
pupnc corporations. such as railroad and
insurance companies. To do this they would
nave 70 create an artificial distinction for
sne wnole United States upon different lines
rom % thoSe existing in the several states
whose corporation laws vary.
" ii.-t Are Taxable Corporations,
III woCld be well nigh impossible to de-
nne what was and what was not a taxable
corporation under the federal statutes IL
ohly transportation and guarantee associa-
tiohs We're to be mulcted. their earnings
would De harder to grasp than a will-o'-the
"Isp- me railway company would return
no pronts at all or very light ones, while
the industrial construction company engag-
ed in building the road or equipping IL with
apparatus and supplies would absorb all
the profits Again the difficulty of assess
ment would be very great from anotbar
cause There are a great MANY CORPORA
ions organized under the laws of one
state ana doing business in another This
is notably the case as between the sta tes
OF New York and New Jersey A majority
OF the corporations recently organized for
Susll business SE WITHIN INN tne state of New York
to avoid certain taxes upon cornorot tion
capital imposed by the laws of New Yorx
The legal domicile Of these companies Is
New Jersey, yet thev have nothing tbara
TO pay taxes on, their property being in
the state across the Hudson and scatterad
throughout that state. and. in fact much
OF II IN the shape OF rolling stock or other
wise IN other states than the one of their
legal domicile or their actual business Not
even on this plan of CORPORATION ta.atiop
would the labors and expense of assessment
De IN falr proportion to results obtained
Corporations. even under state laws ora
notorious fer evading tax obligations In
this respect especially is 1t true of them
that corporations have no souls" Whether
the income tax was general or special. there
would be no longer any sentiment OF ma
triotism or desire for business advertising
to induce the making OF full returns
An Income Tax Would be sworn Down
THE income tax would be sworn down as
personal taxes notoriously are. Nor would
tHlS dIWayS or generally be dishonesty
done In times like these an individual
man or corporation composed of a number
or business men is justified in carrying an
ample reserve fund from profits for contin-
gencies- If they, for example. could fairly
compute from last years comparative pros
perlty the results to an undertaking con-
tinued through this year. and much of this
year losses are necessarily in failure to
coHect nnally upon transac ctions and deemed
hiShly prohtable when last years business
Is written up on firm or corporate books
An income tax would he sure to yield less
revenue than could likely be expected from
IT, while the expenses of collecting it would
be disproportionately large to the receipts
and the annoyance Notifications and lti-
cations growing out of it would be enormous
in extent
AT the end of a year this resort to an
extreme war tax measure in time of pro-
FOUND peace would turn out to be the most
unpopular tax ever adopted in the coun-
Try. France has just refused to adopt the in
quISl'oIietI income tax project. But to re-
vert-the fatal objection to any sort of an
Income tax proposition is that II does not
meet the requirements of the treasury and
cannot until too late TO be of use.
One Simple Way.
II the income tax proposition be rejected
now Is the government to get the money
II must have by any plan of taxation .