The Birmingham age-herald., 1909-09-22
ALI the School Laws.
TAF I SPEAKS TO
 DENVER PEOPLE
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 The President continued:
 part of the republicans and all ol the democrats Of the Senare united ln pressing for consideration a general income tax cn individuals taroughou out the United 5tates. The Ia w'gag as near as 1t co t,u be made to that in- come tax law which had onc.. been considered by tbe supreme coEf- some ten years ago, ana which was held to be unconst .ilttt ral by a vote ot 5 to 4. It was conceded that the tax probably would raise siE0,OO0. .OO0 to sanO 000,- 1 0OO, which Was far in excess of the needs of tho government if the tariff bill was to reteir it's general form as proposed aud so to produce revenues which should be reasonably expected. ''ur friends tie democrats, favCrsl tn Q income tax with a view of sub stitnting 1t for tariff as an income producing measure, thus minimizing the effect of the tariff in promoting the industries or the country. In other words, the passage of the income tax bill would have lent support probably to the prop os1tion to have the tariff for revenue only and would have interfered with tho protective policy 10 which the re- publican party is Iiedged.
 Objections to Tax.
 One of the objections to the income tax amendment was that it had been de- clared unconstitutional by the supreme court, and to invoke a second decision upon that issue was to question the uni- formity of the decisions of the supreme court, which, whatever its conclusion. could not make for its standing as an im- partial tribunal before the people. It in- dicated diversity of view between con- gress and the court-two coordinate oranches-with reference to the constitu- tionality of the law which it seemed un- wise to perpetuate in a formal statute But the income tax amendment seemed quite likely to pass by a vote of all the democrats and a sufficient number of the republicans. Therefore those who were opposed to the income tax amendment looked about to see if a compromise could not be prepared less objectionable than the income tax amendment, which would satisfy enough republicans who were in- ' clined to favor the income tax to pre- vent the passage of the amendment Such compromise was found in proposition 10 pass the present corporation tax and also the joint resolution already referred to, proposing the submission to the states or an amendment to the federal constitu- tlon authorizing the general government 10 impose an income tax without appo,- tioning 1t as a direct tax, according to the population of the states.
 Exemptions From Tax.
 The provisions of the corporation tax in the bill exempt all corporations whose net income does not exceed s5,00O. It is there- Iore' Tn erect, an income tax; that is, 1t taxes earnings actually made. It is a tax upon success and not failure.
 me most objectionable feature of A direct income tax is the premium upon perjury which 1t offers to those who are Willing to conceal their incomes-a matter not at all difficult to do-and who thus subject to much heavier proportional burden those who are conscientious in making their returns and who pay their tax as the law intended. So great was this evil In the levy of an income tax in England that when that. tax was imposed dlrectiy upon individuals as was proposed here In the so-called income tax amend inent Dill, 1t was found that the proceeds or the tax were less than the proceeds of an income tax of per cent imposed as our corporation tax is, not upon the in- alvlduals directly, but upon the income peiore u comes into their hands, This is a practical argument in favor of corpora- ton income tax as against an individual income tax that is altogether unanswer- able.
 How Tax Is Levied.
 Tn England after a hundred years of eXper1ence the income tax is levied in only exceptional instances on the indi vfdual directly It is first levied on tha declared dividends of corporations. sec ondiy, on rents before they leave the hands Of tenants, and finally on the in- diy1dual with respect to matters that are not covered by rents and corporate investments. Another distinction which IS made in the English law and which comments itself to everyone with a sense of justice is that the income tax on pas- sive and permanent investments like the stocks and bonds in corporation should pc nlghef than on earned incomes, that IS, incomes earned by the services of the individual as salary or as a ner sonal income. Earned Incomes thus de- scr1bed are really the proceeds of an ap- plicaton of the capital of individuals which is being consumed and which is entirely used up at the end of his pro- tessional life of 20 or 30 years, whereas the income from corporate and business investments will continue permanently without regard as to whether the owner dies and by succession of law undimin- ished. and without reducing the capital l This distinction justifies making a differ | ence between tax on incomes of cor porations and that of individuals where they earn their income by service, either by making the rate less or by not talk ing the earned incomes at all. The lat ter is the effect of the corporation tax Another Criticism.
 Another criticism of the corporation tax in the present bill is that only shares of stock in corpe.1te enterprises are thus taxed and that Nose who own bonds, secured by nf6D.ges upon the entire property or pkII2f the corporation, do | not pay any IA Frat all This is true l and the defeG 6Is fully recognized by | those who dCEI the corporation tax | They would Pa been glad if possible to impose a thIpon bondholders who | are only les. Arrested in the earnings and success c. fcfe corporations than are | stockholders :-but the difficulty of includ- | ing them and of collecting from the corr poration before the payment of the inI | terest on bonds, an income tax propor- | toned to a per centage of interest to be paid on the bonds, was that Con | gress could not use corporation to re- | coup itself fin payment of such tax from the interest to be paid, because this l to impose a tax upon the bondholders .proportioned to the interest he received would be violation of the constitution, as | interpreted by the supreme court as an | income tax not apportioned among the | states.
 Beneficial Measure.
 Now, if the proposed amendment to l the constitution, authorizing the impos- 1 ing of an income tax without apportion- | ing among the states according to popu-
 la tion, passes, it would be possible to | add to our corporation tax an amend
 ment imposing tax on the bonded inter-