The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1900-08-05
ONCE COLLECTED HERE
For Nearly Ten Years During and
After the Civil War.
ITS RtPEAL OPPOSED BY Mr.. SHERMAN
He Together With Senators Morton and Howe
Declared it the Most lust and Equitable
M asu'e of Taxation That Was
Ever Devised.
(New York Journal.)

New York Journal.)
Is there any rule for determining the
proportion in which citizens should con-
tribute to the support of the Govern
ment?
Adam Smith suggests a rule which
must commend itself to every fair minded
| person. He says; ''The subjects of every
| State ought to contribute to the support
of the Government as nearly as possible
! in proportion to their respective ability;
| that is, in proportion to the revenue
which they respectively enjoy under the
| protection OF the State. In the observa-
| tion or neglect of this rule consists what
is called the equality or inequality of
| taxation" In other words, q direct tax
| lIDon incomes is the fairest tax that can
be suggested. All taxes are really in
come taxes, because all taxes are paid
out Of income; but an indirect tax may
work great injustice, because it's opera
ton is concealed from the public view
Local taxation in city. county and State
is usually proportioned to the property
of the citizen; but instead of being en-
tirely equitable. a property tax is often
collected almost entirely from visible
property, leaving the invisible property
| free. Those who own real estate, horses,
| ca title, hogs, machinery and hoIrs rses40id
! good, cannot evade the assessor, but
! those whose wealth consists largely Of
money and evidences of Indebtedness too
| frequently escape. Where visible prop
| erty is taxed and the invisible property
| escapes, the possessors of visible prop
erty are overtaxed in order to make up
| for the evasion of those who possess in
| visible property. But even when a prop
| erty tax is honestly collected upon all
| forms Of property, real and personal, it
! is not as fair a tax as an income tax
| Property may be temporarily unproduc~
| tive. If a farmer pays taxes on his land
the tax goes on, even though the crop
may fail. If money lender pays tax
upon his money his security may fail
or there may be default in the payment
| of interest, while an income tax adjusts
| itself to the condition of the taxpayer,
being large when the income is large and
small when the income is small
Then, too, a property tax does not
reach those who enjoy a considerable in
come under the protection of the Gov
ernment and yet consume the income
without investing in real or personal
| property. The income tax reaches all.
While our local taxes are not collected
with absolute justice, we make a nearer
| approach to Justice in local taxation than
We do in the collection of our Federal
revenue. Until the beginning Of the
Spanish war almost all of the revenue
| collected for the support of the Federal
| Government came from two sources
namely, internal revenue taxes and i'm
| 6,rti Ipt hO
ing collected on liquor and tobacco are
not collected from the people in proper
tion to their incomes, but in proportion
to the liquor and tobacco they consume,
and as the consumption of liquor and to-
| bacco does not increase according to in
come, tne taxes collected through this
system are in effect graded income tax
es, the largest per cent being, on the
average, collected from the smallest in
comes, and the smallest per cent from
| the largest incomes. Import duties COL
lccted on consumption are also in eff
| feet graded income taxes, bearing heavi-
| est upon those with smallest incomes. It
must be evident to the most casual OBJ
server that the burdens OF the Federal
Government, instead Of being borne ac-
| cording to the rule laid down by Adam
| Smith, are too heavy upon the poor and
| too light upon the rich The income tax
! provided by the Wilson bill was intended
as partial compensation for the injus-
| tice done by the other systems The 2
per cent assessed upon individual in
comes above $4,000 while not sufficient
| to bring the rich up to an equality with
| the poor in taxation, was a step in the
right direction. Much fault was found
with the exemption provided in that law.
Many who did not understand the reason
for the exemption protested against it
| and insisted that the 2 per cent should
| apply TO all incomes, large and small.
But since excessive burdens are laid up
| on the possessors of small incomes by
internal revenue taxes and import du-
ties, 1T would be manifestly unjust to
continue the inequality by making them
| pay a per cent equal to that collected
from The possessors of large incomes.
The per cent tax upon the net income
of corporations was defended upon the
| ground that the corporation enjoys spe
cial privileges conferred by law and oc-
| cupics much Of the time Of the Federal
| Legislature, the Federal Executive and
| the Federal courts. Just prior to the
| passage of the Wilson bill I obtained,
through the courtesy of Secretary Gres-
! ham, statistics from a number of Euro
| pean Governments.
| | found that in Prussia the income tax
: had been in operation about twenty years,