Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1909-05-20
The Theory of the income Tax.


that such a reduction would leave the
government without the necessary
revenue to pay it's current expenses
with the suggestion of a resort to direct
taxation to make up the denciehcy
Such taxation. they think. should take
the form of an income tax, incomes OF
less than $4,000 being exempt from the
operation of the law. The theory OF
the income tax as propounded by those
| gentlemen is that it would place a
larger part Of the burdens of revenue
upon those who are best able to bear Il.
| If it were true that such law would
so operate there would be little to be
said against it, but theory is one thlns
and it's practical working out in actual
operation is sometimes qaite another.
Experience has shown that the income
tax which has heretofore been used in
| this country only as war measure,
has never had the equality i'm operation
that was anticipated for it by its pro-
| jectors During the Civil War tn"
| revenue from such tax grew steadily
| less and it was found as a matter of
| fact that it Oftentimes rested most
| heavily upon those who We're least able
to bear it. The theory is that men Of
a greater proportion of the public bur
dens, but in actual operation this has
not always been found to be the case,
such men frequently escaping entirely,
while men of fixed income were made
to pay taxes that should have been
more equitably distributed. 1t was
generally conceded that the law while
in force put a premium upon perjury
and made the way of the honest man
much harder than it would otherwise
have been.
In discussing this matter at some
length, the New York Press asserts
that an income tax would bear with
inequality and injustice upon the man
of mere salary, possessing not one
dollar of material wealth and exposed
to the loss of his earnings any time,
with no permanent provision for the
support Of his family in the event of
his death or of the loss OF his employ
ment through sickness or other causes
1t illustrates this by taking the case OF
n mo che e rn;n
Pacific stock paying 10 per cent div-
dendS and quoted at about 100 at
present. This means that the man who
owns them is worth $4,000 outright at
the market valuation, and that from
this property he has an income of $1O,-
900 a year. Now, he can avoid the tax
if it lies against the individual in this
way: He can transfer 400 shares OF
his stock to his wife; this will show on
the records an income for her of "a 900
not subject to the income tax, be-
cause the tax does not apply on in
comes below $1,000. He can transfer
POO shares to his son, or to his
daughter, or to trustee for his chill
dren, or to his brother. or to his secrr-
tary. or to his clerk; this will show on
the records an income for the one to
whom that stock is transferred of $2-
000-again not subject to a tax. He
can retain 400 shares in his own name,
this amount showing on the records an
income for him of $4O00-again no.
subject to a tax. Now, he and his
family still possess all their wealth
They are receiving the same income OF
$4,000. But they are not paying any
TOW
those shares has enough Of them on the
books of the railroad corporation to
make the income of the individual
holder in excess of $4,000. But see the
difference with the man on a salary IF
800 week. He is worth nothing
outright in the way of property He
works for his income of S. 200 a year
If his employer fails or if he himself
becomes incapacitated he loses his
salary. If he dies his family are de-
prived of that income At best it is
only one half the income from the 900
shares of stock we have discussed. It
is uncertain. 1t must not only be the
present support of that family, bur
make provision for the future of that
family when the salary has expired. On
| the other hand, the railroad stock is
permanent possession. 1t will go on
being the wealth of the family when
the father dies or the mother dies. L:
| will give the income-twice that of the
salary-in sickness or in health
whether the holders of the stock work
or are idle, whether they live abroad or
| stay at home
1t strikes us that the foregoing
argument is sound and that it embodias
in very forceful way the strong st
objection that can be urged against the
income tax There is wide difference
| between property and income and one
that is too often lost sight of in the
| 'eVying of taxes. 1t seems to us that
the method of securing public revenue
though tariff on imports secures y,
more equitable distribution of the
burdens of taxation than is possible by
any other method. inasmuch as it en-
ables such burdens to be imposed
most heavily upon the luy,lries of