New-York tribune., 1909-09-22
DECLARES TT BEST FORW
OF INCOME TAX.
Urges States to AdOPt Constitutions!
amendment To Speak on Cor
SGrUatiOH Later.

thUs1aSm recalled some Of the scenes OF cOuVsn-
tion week
Mr.. Taft changing his purpose To discuss the
conservation of natural resources in his Den
Yer speech. took up the corporation tax adopted
as a part Of the Payuc tariff bill. and defended
II as against the proposition 20 impose direct
income tax. which he said seemed likely %
pass the Senate when the corporation tax WAS
devised a compromise. He strongly urged
that all the states should adopt the prOposs9
amendment to the Constitution to make an IN
come tax possible.
The President declared that the corporation
tax was the best form of income tax that rouid
be levied, and declared that it contained many
OF the best features of the income tax law of
England. In urging that the states should vote
for the amendment to the Constitution permit
ting the Ievying of a direct income tax without
apportoning the levy among the states se-
cordlng to their population. he said it would he
/ possible to amend the corporation tax SO as O.
include within its scope every desired feature o.
an income tax except that levied on incomes
derived from actual salary and professional ser
vices.
/ He said he opposed a direct income tan s
cept in cases of emergency, and believed it,t1 Ne
prime fault in the federal Constitution ths,t lo
provision made for a direct levy to uees
war time OF other extraordinary expenses.
| Mr.. Taft declared that the Supreme Court de-
/ eision declaring unconstitutional the income tax
| law passed by a Democratic Congress some
| years ago prevented the leaders in Congress AZ
the recent session from including in the corpo-
ration tax measure provision for levy on
/ bonds and bOudholders. To tax bonds would re-
4 suit in reduction OF the rate of interest and
/ hence this would be direct tax the indi-
| vidual holders of the bonds and would cone
into conflict with the decision Of the cOurt that
no direct tax could be levied by the national
| government without appOrtioning the proceeds
among the states
/ INCOME TAX IN ENGLAND.
The President based his argument in favor 81
| the corporation tax. compared to the direct
| income tax. almost entirely on the results Of
| the income tax in England. He pointed out thai
the tax there is not direct levy, such a. wa
recently defeated in the Senate through COM
promise. but that it laid the tax on the income
| before It came into the hands Of the tndittduaL
The English tax. be said levied. first. ON th-
declared dividends OF corporations: second. ,sIt
! rents before leaving the hands of the tenants.
! and, third. the Individual directly. u was
| found in England that direct income tax Of 10
| per cent did not produce much revenue as the
| present method of taxation at ) per cent This.
he declared, illustrated the premium that ths
direct tax places on perjury and conceaIment
/ 1t was a question. the President declared.
! work should be taxed as heavily incomes de-
rived from investments or not taxed at all. The
latter. he said. the effect of the corporation
| tax
| THE TREASURY DEFICIT.
After few preliminary remarks OIr. TAN
spoke briefly on the tariff, saying that while re-
vision had been deemed essential there was
also a deficit in the Treasury to be met. 'Tfis
would partly be met by a cut of S4OO0O.ossN 70
| SJ0,OO0OO0 in the appropriations 20 be made ~
Congress and partly by income from the nsa
| corporation tax law. He said he favored an m
heTitance tax at first, but the objection that
the states had pre-empted that field had sufi-
! cient weight to defeat the proposition. He con-
! tinued;
part Of the Republicans and all 6f the
Democrats of the Senate united in pressing for
4 consideration a general income tax on iu5i-
VidualS throughout the United States. The 'avr
was as ne2r as II could be made to that income
| tax law which had once been considered Ey ere
/ supreme Court some ten years ago and sy1fich
| was held to be unconstitutional by a vote =
hVe 10 four. II was conceded that the tax would
probably raise $15O00O000 to 100000 OOO .vrhfos
| was far in excess of the needs Of the govern
/ ment If the tariff bill was to retain its general
| form as proposed and so produce revenues which
! should reasonably b. expected
| Our friends the Democrats favored the incOrls
| tax with view to substituting il for the tariff
| as an income producing measure, thus miniuaiz.
ing the effect OF the tariff in promoting the in
/ duStrleS of the country IN other words the
I passage of the income tax bill would have lent
! support probably to the proposition TO have a
/ tariff for revenue only and would have inter-
| fered with The protective policy to which the
| Republican party is pledged
1 One further objection to the income tar
| amendment was that it had been declared un-
| constitutional by the Supreme Court, and TO
/ invoke second decision upon that issue ygas y,
| question the uniformity of the decisions - A.
/ Supreme Court and to drag the courC into =
| political discussion which. whatever its decision.
I could not make for its standing as an impartial
| tribunal before the people. II Indicated az
Verstty of view between Congress and the cOuic
/ two coordinate brancheS-With references To
the constitutionaIity of the law which IL Seemed
/ unwise TO perpetuate in formal statute.
THE COMPROMISE IN CONGRESS.
/ RIIt the income tax Amendments secn,a.4 ..,,,,.
| likely 70 pass by vote of all the Democrat.
| and a sufficient number OF Republicans. There
1 fore those who opposed the income sax amend
| ment looked about To 81 a compromise could
/ not Do 1Ound-a compromise which would satisfy
| enough Republicans tavoring the income tax ~
\ prevent the passage of that amendment Str.h
\ "a compromise was found in the present es.ss~~ss
/ ZION tax. and also the joint resolution Already
/ referred To, proposing an amendment Of the ted
| eral Constitution by the states authorizing tn
| general government To impose an iucOuc tax
/ without appOrtioning it as direct tax accord
/ ing to the population OF the states.
| The provisions for the corporation tax In ths
biu exempt all corporations whose net incou.
does not exceed $4,000. IL is therefore In S.ffec
| IN income tax II is tax upon success ans
not failure.
| The most objectionable feature Of a DIRE.
/ income tax is the premium upOn Derhlrx yxhicl
IT offers To those who are willing 10 conceal tn,
l incOme-a matter not at all difficult 20 40
and VINO thus subject to q much heavier pro
in making their returns and who paw their "a
as the law intended. SO great was This ev
IN the levy of an income tax in England thu
| Whtn that tax was imposed directly upOR fr
| dlVtd'lals. as was proposed here IN the sO-calle
income tax amendment bill Il was found m.
.he proceeds OF the tax at 10 per cent we're le'
L ~ Efa Of