Watertown weekly leader. [volume] (Watertown, Jefferson County, Wis.) 1906-1908, 1907-04-05

An income tax as a state feature, he
said, would be of doubtful value as mat
tiers now stand
The greatest fault, he said, is in the
administration of the taxation laws. He
forecasted the coming report of the Wis
cOnSin tax commission and says it will
fully discuss taxation of credits. He
depIored that the Wisconsin law was
abandoned at the moment when ii
seemed fairly successful
State Rights May Conflict.
He opposed registration tax on mort
cages and declared our dual form of gov
eminent interfereS somewhat with the
freedom of states i'll leyying taxes, say
ing:
We may simply imagine large ship
ping points like Duluth and Superior i'll
such close proximity and with practically
equal facilities, affected in such man
ner ty even slight interference on the
part Of one Of the state as to drive the
business to the other side Of the line -
Mr. Haugen continued:
1t is advisable in any method of taxation
to avoid any complications of that charac-
ter, and for that reason it strikes me thar
the taxation of transfers of stocks of grain
on exchanges as means of revenue is not
desirable. If such 81 tax is imposed for the
purpose Of destroying speculative values Oh.
stopping gambling in produce, that is an
other question, as to which opinions VIII
differ | know thai some twelve fifteen
years ago when your Senator Washburn adj
Yocated bill with the end in view of put
ting stop to speculation in grain values
on the exchanges, / would have been very
glad to have voted for his measure if it
mad reached the House of Representatives.
Doubts State Income Tax
1t is doubtful whether an income tax in 4
state, at least to some extent undeveIopcd.
Gtltn or. lia,, Of I,,, I
estate tax, is desirable. My idea would be
(and ! may change my opinion upon fur
Their study, that the income tax is desira-
bic to take the place of the personal prop
crty tax, provided the administration of it
is taken away from the present local as
sessing and taxing officials and placed in
the hands of some more central authority.
But an income tax in lieu of a real eS-
tate tax would have to make some pro-
vision, as it does in Prussia, for some pre-
sumption of income in the case of nOn-prO-
ductive property; otherwise, the owner of
wild land could hold it for speculative pur-
poses Indefinitely and let his neighbors pay
all the public expenditures which go with
the development of a new country, await
Henry George terms the ''unearned incre-
ment," which comes not from individual
effort and enterprise but from the growth
of the entire community.
Two Kinds of Income Taxes.
The so-called ''wide-cp pen tax amendment
TO your CONSTITUTION ltaSeS you with freer
hands than does the constitution of our
state. With us, an amendment to the CON
stitutiOn is necessary to warrant the enact
ment of a graduated income tax law.
There are two recognized variations of
the tax rate that is imposed upon incomes
One is graduation; the other is differenta-
ton. Graduation operates on the amount
to be assessed, the rate usually increasing
as the amount of income increases Differ
entiation has reference to the source of i'll
come, it being quite generally deemed adj
rate be greater on an income f"ssh personal
effort such as that of labor or the profess
Sions This stands to reason as the income
from capital continues even though the in
diYidual is disabled or removed from the
head OF the family by death. Professional
income or income from wages seases when
the personal effort of the individual ceases
do not for my part believe that regis
tration tax on mortgages is at all desirable
1t must result in adding the expense of reg
iStration, in most instances, to the cost in
Cured by the borrower As Il source of
revenue it may be successful, but If any
class is entitled to the consideration of the
legislator il is the borrower and not the
lender.
Taxation of Credits
I have referred incidentally to the p1atter
of the taxation of credits. The principal
argument in favor of exemption of credits
is that it would reduce the interest rat
and would i'll that way be benefit to the
borrower.
In one agricultural Wisconsin county
alone. where they had Il very strong and
energetic supervisor of assessment. $1,000
600 of property of this class was placed
upon the assessment roll | have always
thought. and said SO in the report of the
commission of 1908. that it was mistake to
abandon the effort at the very moment
when it seemed to be fairly successful.
Now. what has been the result upon the
rate of interest? Our investigation shows
that the average rate of interest paid upon
mortgages since they were exempted from
taxation docs not very materially differ
from that which was paid for the three
years preceding their exemption. In fact.
the rate for the later period is Il tritle high
or than the former. A full! discussion of
this will be included in our report, which
we hope to get from the printer within a
month. l can here only summarize what it
shows.
Considers Rate of Interest
Why is not the tax added to the rate of
interest? In the first place. - per cent
of all mortgages in the state represent loans
made in the Immediate neighborhood. Th4
man with little capital to spare prefers
to loan it to his neighbor and is more in
terested in the security than in the rate Of
interest This is so whether he is taxed Or
not. As distance separates the borrowef
from the lender, it seems that the interest
rate increases, except in the case of very
large mortgages representing $4,000 or
more where the interest is lower. There
are not enough of those mortgages to enter
into the consideration of this subject seri-
ouSly. nor do they represent individuals
who need the protection of legislation
Following out the Investigation still
further in the state of Wisconsin, we find
that although mortgages command 81 ght-
ly higher rate of interest since they have
been exempt than before. commercial loans
made by banks show Just the reverse of
this. their interest rats being slightly low
er during the later than the earlier period
1t is true that before the passage of our
law of 1903 eXcmpting mortgages the old
mortgage tax laH. was not we'll enforced
1t is equally true that since the passage of
that act the general money market may
have frightened somewhat as TO interest
rates but the change from Il state of ar
fairs in wh;th Il few mortgages were taXe4.
and most of them liable to taxation to
new era in which mortgages are legally eX.
empt. should have resulted in ut last some
slight favor TO the mOrtgagOr. if the adj
vantageS of exemption are correct in their
theories.
Need better Administration.
In all these matters of ass sSmpnt ana
taxation we may well conclude that tn,
personal equation can never be eliminated
from the administration of our tax laws
RecklessneSS and extravaganza if not
downright dishonesty of public officials
necessarily result in xcSsSive taxation.
burdens Nc matter what your laws may
be- they will not supply ability and honesty
where those qualities are wanting I'm
provement in taxation methods must depend
upon honest and economical administration,
and poor system well administered is bet
ter than perfect laws poorly administered.
RGRS WEIGHING 0E S0IJI