The sun., 1909-05-05
INCOME TAKES
rho Present Fedsrai Scheme ImpartiaIiy
Examined.

The Present FEDERAL Scheme ImpartisIi,
Examined.
To THE EprToB OF The SUN-SI: From
Mr.. Roosevslt's urgency In his annual mes
sage to Congress In 1909 has chiefly oome
recrudesoenoe Of graduated tax LAID
by Congress on incomes. creating GLASSES
by exempting incomes less than four OF
FIVE thousand dollars a year, represent.
ing the interest on one hundred thousand
dollars Of capital, and then destroying
uniformity In the tax by putting an In
oreasingly higher rate according to the
size Of the income.
Mr. Roosevelt wrote to Congress and the
country that when next our system OF
taxation was revised the national Govern
ment should impose graduated inheri-
tance tax and II possible q graduated in
come tax He said that Government has
long derived its chief revenue fron>a tarin
on imports and from an internal or excise
tax" thereby implying that an income
tax is direct taI. There has not been
direct tar since 1888. He could have
added that from 1s4S to the war OF So
oession there had not been dollar OF
internal revenue taxes. Indeed there
had been since 1920 only q fsw dollars
collected by such taxes-somo $4,000 In
1921, and then constantly dwindling sum
down to only ts7s in 1s4s.
Mr.. Roosevelt's clearly disclosed object
In urging an income tax was not to pro-
mote Government thrift, put an end to
peouniary extravagance or diminish In
direct taxation. but 1to put an end to enor-
nous fortunes The country was accept
ing, as it did the last legal tender opinion,
the decision by the Supreme Court that
income taxes were direct and II laid
must be apportioned among the States
according to the census, like Represen-
tatives in the House Of Representatives.
The demand by Bryan conventions Tor
an income tax produced little effect on
voters till MIR. Roosevelt had indorsed
it, Then SouthernSenators began stren-
uousy to insist that the income tax deoi-
sion Of 1895 should not stand because
given by divided court Of five to four.
Ii seems not to have occurred to those
Senators to ask what would have be-
fallen those States and the rights Of all
the States had there not been in the re-
construction era and In Interpretation OF
the three war amendments Of the Consti-
tuition many divided court decisions.
1t is true that after the first argument
the court (only eight members sitting).
while it agreed that tax on land and tho
rent OF land is direct tax, stood four
to four on the question whether or not
a tax on income from personal property
is direct" tax, and q rehearing which
occupied three days was granted by a
majority Of the court. That last question
was not put to the court and argued till
1895. Mr. Olney. Attorney General under
argued for the United States that 1t was
not direct tax. Mr.. Choate, Mr.. Seward,
MIR. Burton and Mr.. Guthrie, all Republi-
cans. argued that it was a direct tax.
Mr.. Justice jackson being in his seat,
and the court full. it was adjudged by
five to four that taxes Oh personal prop
erty or on its income are direct taxes.
Taxation by Congress on income from
bonds OF States and cities was forbidden
because 1t constitutes taxation Of instru-
mentalities Of government.
1hO iiud piCNiVuoty' ohu
again. adjudged that State tax on the
income Of United States bonds was tax
on the bonds; that tax on the interest
payable on bonds was not on the debtor
but on the bonds: that State tax on in
come from interstate commerce was on
the comm cree: that q tax on q bill Of
lading was on the merchandise 1t covered;
that tax on an auctioneer's sales was on
the goods he sold, and that all these taxes
are therefore unconstitutional. Thus q
tax on the rent Of land was tar on the
land. and on the income OF personally was
tax on the property. and thus -di-
rect. tax.
1t was aptly said in the argument OF
1895 that Congress had adopted as the
minimum income the limit Of $4,000, which
divides the upper from the lower middle
class in the cities and the middle from the
wealthy GLASSES in the country localities.
thus promoting class war. Any State
Legislature may enact such an income
taI IL its Constitution permits. but New
York is not likely to attempt it. The
cotton producing States argue with great
force that Congress is sectional when 1t
inficts tariff tax on jute cloth and metal
bands for baling cotton and eIempts
binding twine for Northern cereals. but
the Southern States are similarly sectional
when under the lead OF Roosevelt and
Bryan they try to put a sooialistic income
tax on the Northern States.
Ifthere were not large discriminating and
class exemptions in the suggested income
taxes; II tho rates did not violate unifor-
nifty by higher rate on large than on small
incomes; II the income taxes were to be
universal and the incomes OF rich and un-
rich taxed at uniform rate; II every man
and woman were to be compelled to con-
tribute directly as now indirectly and in
the dark, by custom taxes. toward Federal
expenditures; II taxes on the incomes OF
the not rich and the rich alike went down
to the bottom, were stopped and collected
at the source from those who pay tho in
come, or "a in big establishments. who pay
earnings, then very little or nothing would
probably now be heard OF income taxes to
be laid by Congress. A majority prescrib-
ing the income taxes to be paid by taxed
minority, but not paid by the taxing ma
jority, 10 the chief feature OF the income
tax now urged by solicitors Of votes.
No other country, whom our Federal
Constitution was made, put limitations
on the taxing power Of its legislators or
Government. Very few do now. Why
did the trainers Of our fundamental law
thus hamper Congress by requiring ap-
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