The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1911-08-31
RESUME OF INCOME TAX Law.

The bill for taxing incomes which
became a law by virtue OF the COVER
nor's signature on June Ii constitutes
a radical step in the direction OF tax
reform. After 125 years OF experience
with the general property tax, it is the
consensus of opinion among the best
authorities that it has utterly "broken
down." particularly. in respect to the
taxes on personal property. As was
said in recent report OF tax commits
sion: "The system is condemned by po.
litical economists, writing from theo-
retical standpoint, by practical tax Off
cials, speaking from practical expert
ence, and by dozens of select tax CON-
missions appointed to investigate its
workings. Indeed, its failure is shown
by Testimony overwhelming in quanti-
ty, unimpeachable in quality, and, so
far as we have read, without dis
senting voice."
But while it was evident that the
tax on personal property was unjust
and iniquitous, there was great diver
sity of opinion as to what tax could be
devised to take it's place. 1t has SEEM
ed to the Legislature of our state that
the income tax offered an acceptable
substitute. If, as is claimed, it will
operate to apportion the tax burden
more e4uitably, then it can be
strengthened in its weak points, and
become a permanent part of our fiscal
system. If, on the other hand, it proves
to be mere plausible theory an ir-
ridescent dream-incapable of practical
realization, then the people of the state
will have to console themselves with
the reflection that they have indulged
in highly edifying but rather costly
experiment.
In general, it may be said of the new
law that it is very moderate in its pro-
visions. In fact, the exemptions are
so liberal and the rates SO low that it
will no doubt fall far short of yielding
the amount which viii be needed to
meet the deticie v -aused by the
abolishment of the personal property
tax. Whatever else may be said
against the bill, it certainly does not
bear heavily upon persons receiving
small salaries or incomes. The single
man who does not earn over $500 year
has no tax to pay. The married man
with an income of $1,000 is exempt
from the tax. The married man with
two children or dependents pays only
on that portion of his income, if any,
which exceeds $500, and chen only at
the rate of per cent. on the first $1,000
of excess. If he is blessed with four
children he has 5000 of income exempt,
and if he has a total income of $4,000
his whole income tax would be only
$40. From this point upwards salaries
can hardly be called small, and the
ability to pay the tax increases even
more rapidly than the rate.
Many people evidently do not under
stand the difference between the usual
percentage of tax on property and per-
centage of income. They look with
horror at the tax of per cent. on in
comes in excess of $4,000, translating
it into property tax" terms. In order
to make this clear it may be well to
give concrete example:
A man with wife and two children
who had 100000 in per cent. bonds
which was taxed per cent, would
pay a property tax of $1,000; but his in
come tax would be only $3.50 or the
very minute fraction of 2S5-l0,0 900 of l
per cent. on his property, or 40 of l
per cent. of his whole income.
A person with $4,000 of taxable in
come over and above exemptions will
pay an income tax of 1855; but the
amount of property which would be re-
quired to produce that income on 4
per cent. basis would be $500, 900, the
per cent. property tax upon which
would be $4,000. In this case it will be
observed that in order to have the in
come tax equal the property tax in
yield it would be necessary to raise the
percentage from the present figure of
little less than per cent. on $4,000
to so per cent.
The Wisconsin law differentiates
sharply between taxes on persons and
taxes on corporations. The rates for
taxes on persons, (after making the de-
ductions and exemptions allowed) are:
One per cent. on first $1,000 of taxable
income.
One and one quarter per cent. on Sec
ond $1,000 of taxable income.
One and one-half per cent. on third
$1,000 of taxable income.
| One and three-quarter per cent. on
fourth $1,000 of taxable income.
Two per cent. on fifth $1,000 of tax
able income.
Two and one-half per cent. on sixth
$1,000 of taxable income.
Three per cent on seventh $1,000 of
taxable income.
Three and one-half per cent. on
eighth $1,000 of taxable income.
Four per cent. on ninth $1,000 of tax
able income.
Four and one-half per cent on tenth
$1,000 of taxable income.
Five per cent. on eleventh $1,000 OF