The Yakima herald. [volume] (North Yakima, W.T. [Wash.]) 1889-1914, 1909-09-22

TAX DEFENDED
BEST CONGRESS- COUlD PASS
Taft Says Income Tax Would Mean
Too Much Revenue and Departure
From Protective Policy.

DENVER, Sept 21.-Making his
way still further west, President Taft
arrived here this afternoon, and to-
night in the Denver auditorium faced
a crowd of enthusiasts that received
him with noisy welcome and contin
uous enthusiasm. The president,
switching from his purpose to discuss
natural resources tonight took up the
corporation tax and defending it as
against the proposition to impose u
direct income tax. The president
strongly urged that states ratify the
proposed income tax amendment to
the constitution in order to make such
tax available in time of necessity.
Taft was Joined here by Secretary
Ballinger. 1t is thought the president
desired further conference with the
secretary before making the final ex-
position of the policy Of his adminis-
tration as to the conservation of r.
sources. Taft probably will not take
up the subject until he reaches Salt
Lake, where he spends Friday and
Saturday, or he may wait until he
reaches Spokane, where at the irriga-
ton congress the Ballinger-Pincnct
controversy had it's first airing.
The president tonight declared that
the corporation tax is the best income
tax that could be levied and pointc.!
out that it contained many of the best
features of the income tax of England.
The president declared it would be
possible to so amend the corporation
tax law as to include within it's scope
every desired fe, 'ure of the income
rived from actual salary and profess
sional services. The president said re
opposed the direct income tax except
in cases of emergency and believed it
to be prime fault in the federal con-
stitution that no provision is made for
a direct levy to meet war or other ex-
traordinary expenses.
Blames Supreme Court.
Taft declared it was the supreme
court decision declaring unconstitu-
tional the income tax law passed by
the democratic congress years ago,
that prevented the leaders Of congress
during the session recently closed
from including in the corporate tax
law a provision for levy upon bonds
anG bondholders. To tax bonds would
result in the reduction of the rate Of
interest and hence would be a direct
tax upon the individual holders of
the bond.
The president based his argument
in favor of the corporation tax as
compared with the direct income tax
almost entirely upon the results of the
income tax in England. He pointed
out that the tax there is not direct
levy, such as was recently defeated in
the senate only through compromise
but that it laid the tax upon the in
come before it came into the hands
of the individual. The English tax is
levied firstly, on declared dividends of
corporations; second, on rents before
leaving the hands of tenants; and
thirdly, on the individual directly. 1t
was found in England that the direct
tax at 10 per cent did not produce as
much revenue as the present method
of taxation. This Taft declared illus
trated the premium the direct tax
places upon perjury and concealment.
1t is a question, the president de-
clared whether the income earned in
salaries and from professional work
should be taxed as heavily as incomes
derived from investments or not taxed
at ALL The latter, he said, was the
effect of the corporation tax. The
president said he had at first favored
the inheritance tax but the objection
that states had preempted that field
had sufficient weight to defeat that
proposition.
Had 30 Meet Deficit.
He also stated during his speech
that, while the tariff revision had
seemed essential, there was also de-
felt in the treasury to be met. This
was partly to be met by a cut of $40,-
900, 900 10 $50,000,000 in the appro-
priations by congress and partly by the
income from the new income tax. He
declared that the income tax passed by
the democrats would have raised
$15O,000,O00 to $200,000,000, which
was far in excess of the needs of gov
eminent if the tariff law were to re-
tain it's general form. The democrats,
he said, favored the income tax, with
the view of substituting it for the