Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-03-14
SAYS TAX IS VALID
Defense of Excise Law by
Representative Underwood.
WAYSA AND MEANS CHAIRMAN
Report Submitted Today Urging
Passage Of the Measure.
NEW APPLICATION OF TAXES
Committee Declares, However, It
Conforms to Supreme Court De-
cisions on Income Tax.
NEW APPLICATION OF TAXES

Maintaining the constitutionality of the
proposed excise tax bill extending pro-
visions of the corporation tax law to in
dividuals and copartnerships, submitted
as revenue measure to replace customs
duties on sugar, Representative Under
wood, chairman of the ways and means
committee, made report to the House
today urging the passage of the bill
/ After arguing the constitutionality of
the proposed law, proclaiming it in alb
solute conformity with Supreme Court de-
clsions relating to the income tax. the re-
port explains the provisions and scope OF
! the measure as it would effect individuals
While the BILL" says the report, "em-
bodies a new application of taxes it car
ries all the modern philosophy of taxa
| ton. 1t proposes to oblige the citizen to
contribute annually fair and just por-
ton of his net gains to the maintenance
| of the government. AS already stated,
| this bill, if enacted into law, will &C
complish in the main all the purposes of
a general income-tax law, and at the
same time escape the disapproval of the
| Supreme Court, as it keeps we'll within
the principles laid down by that court in
sustaining the constitutionality of the cor
poration tax law.
| Equities Pointed Out.
ITO illustrate the equitable adjustment
of the excise tax recommended, person
having an income of less than So, 600 per
year would pay nothing, while a person
whose business earns $4,000 net would
pay no tax on the first $1,000, and on the
second 5000 would pay only $50 year"
Continuing, the report asserts that the
| burden of our present indirect taxation
falls upon people having incomes of less
than 5000.
"A large percentage of the customs
| taxes" it says, amounting to 5000, $685.
/ &C. In 1911, was paid by people whose
| incomes did not exceed 5000 a year.
The bill aims to distribute more justly
| the tax burden by shifting an equitable
| portion of the taxes to the shoulders
| of those of larger earnings There are
no statistics as to the number of indi-
viduals firms and copartnerships In the
| United States that would be subject to
| the taxes proposed by this bill"
/ The report calls the proposed bill
! combination of the excise tax of 1898
and the corporation tax law of 1909 both
of which have been held valid in all
| further urging why 1t should be popular,
| says:
! The revenue for the support of the
| government, as raised by taxation, is
/
customs and excise duties. OF the s7O1.-
372,375 taxes collected in 1911 for this
| purpose, the customs amounted to $780,
965, &C., and the internal revenue or ex-
| else duties to 1922, o29, 2O1. These taxes
are solely on consumption. Property,
/ and the income from property as such,
pay no part of these sums.
Says Wealth Escapes Fair Share.
| Under system of national taxation
| based wholly on consumption, wealth
necessarily escapes it's fair share of the
burden of supporting the government,
which gives wealth the necessary pro-
lection under which it increases it's gains
| On the other hand, when he purchases
for himself and family the necessities
| of life. the man of meager earnings con-
| tributes out of his daily wage to the
| lupport of the government.
1 when a citizen pays taxes according
to his earnings, from whatever source
he gives support to his government, and
| receives protection from it in more
equitable manner than under any other
plan of taxation yet devised. If his earn
! ings increase, his taxes increase, and
| justly SO, for he Is better able to pay
| increased taxes. If his gains decrease, so
| do his taxes. fortunately for him, be-
cause he is less able to pay them. There
| is also this striking advantage of tax
on earnings over taxes on bought and
| sold commodities, namely, the rate can
| be raised or lowered to meet the eX
| igencies of revenue requirements with
out consequent disturbance Of prices"
Quotes Chief Justice.
| The report calls attention to the income
! tax law of 1894, and argues that it would
| have been sustained If drawn in the form
of law now proposed, and, in support of
this contention quotes Chief Justice
Fuller who said in the opinion on the in
come tax cases: I'VE have considered
the act only in respect of the tax on in
come derived from real estate and from
invested personal property, and have not
commented on SO much of 1t as bears on
gains or profits from business, privileges
or emplOyments, in view of the Instances
or employments has assumed the guise
of an excise tax and been sustained as
SUCH
That the proposed tax is constitutional,
the ways and means committee demo-
Gratis believe, for the following reasons,
which they argue can be sustained:
THE proposed tax is not a direct tax
| upon the property, real or personal, of
the copartnerships or individuals, but
special excise upon the carrying on or
doing business by such copartnerships or
individuals, and it, therefore, needs no
apportionment among the states accord
ing to population, required by the Con-
stitution with reference to direct taxes.
Tax an Excise, Committee Argues.
1.-THE proposed tax is uniform through
out the United States If it be true that
the tax is an excise, its indirect character
Is at once established.
1.-The proposed tax is an excise because,
to