The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-10-02
Taxation in Virginia

by EDGAR sYDENsTRICKER

The Income Taxi. The First experiments.
Since 1898 Virginia has directly taxed the in
comes of individuals with varying exemptions.
OF course there has been the vocational license
tax or faculty tax as It is sometimes called,
such as the licensing of lawyers and DOCTORS
which was levied as early as the end OF the
eighteenth century and reviewed IN Aol4 as VIC
have already seen. and later continued But TINS
facultv tax was an income tax only in the sense
that all taxation, except that on fnherltances anu
"unearned increments" indirectly comes out OF
incomes; the direct income tax is what we call
the Income tax" and Is the supJect "a 'n's W
a succeeding article
In the history of the taxation of individual In
comes in American commonwealth, there have
been two general causes which have resulted In
it's introduction:
First the feeling that the burden OF supply
ing revenue ought to be shifted as much as pos
sible on those who are known to be anie 10 peal
In as the result of a demand for greater justice
In taxation second, the need Tor greater revenue
and the of the income TAX as an @Eai'ao''
source. - .. Eva &,
The latter of these two causes led to the IN
PRODUCTION of the in Virginia so lar as l am
able to Judge. and there can be no question OF
the fact that both of them contributed 10 lts
extension from 1853 (after the Consutulioh %
| 186D until the Civil War, when the need lot
revenue was the predominant, II not me chiei:
cause. Before the constitutional convention OF
I1850-185t the legislature was IN the con'roi .!
| the Eastern planters. who were Tor the most
part the large tangible property owners me ll-
come fax appealed to them, in the dire need for
more money with which to garry on the contn-
naiiv exnandIng system Of internal improve
ments as a which would not burden tnem,
but which would cause the not-propetrlea VIZ
/ earnors and salaried individuals to bear share
Of the burden Accordingly tax of one per
cent or incomes over s40o was imposed 1fls
applied and was generally understood to APP
uiv TO those who drew a fixed stipend in the
! form of salaries and wages. The other class OF
income drawing persons-the capitalists as oIs
tlnguished from those engaged in businesses ana
from owners of real property-were not now
ever, sighted a tax on interest or two ana
half per cent was levied. This was reduced 70
two per cent the following year, and in 1890
the opposition of capitalists was snccesslui
enough to change the income tax to tax on
l"eaiaries" It Is significant however, that the
income tax was a distinct development of the
system Of taxation in this period or virginia S
= history although 1t by means due entirely
to a demand for a more equitable sharing OF the
burden of supplying the State revenue in favor
of those who able to pay except in the case
of owners of intangible property IN tue FORM OF
bonds or loans. 1t is significant also that this
first income tax was the means OF recognizing
two new classes of taxpayers-the wage Garner
and the capitalist-as distinguished from the
small farmer. large planter and merchant ana
manufacturer who already taxed through
property and license taxes. Probably II Is not
going too far 10 say that their recognition was
due in some measure TO their growing impor-
lance in the changing character OF industry at
chat stage of the economic evolution IN virginia
; and other States
for taxation Of incomes on entirely different
principle. This principle reflected the radical
change in the political control OF the STATE the
! change from the East to the central and West,
from the hands of the plantation owner to the
small farmer, which was brought about by re-
, apportionment of representation In the general
, / assembly upon the basis OK white manhood
suffrage. glance at the provisions OF the
! act Of 1S53-I854 will suffice to make this plain
, Incomes tincuding 'salaries'D were taxed on a
= ! graduated basis with the exemption Of all la
! b0rers engaged in mechanic arts trade, handi-
craft or manufacture, and ministers of the COS
=, pei. The provisions We're as follows;
! Incomes up to $25o--One fourth Of one per
incomes $3.50 to s5oo--One-half OF one per
cent.
= Incomes $500 to sl.ooo-Three- fourths of one
incomes over s1.ooo--one per cent
. Interest from stock-Three and one-third per
BY the act Of 1855-1s56 all CT these rates
!, were doubled were the rates on property and
also the license rates as a general rule, because
!. Of the need for more revenue, During the war
. the rates were again greatly increased for the
same reason and the graduated basis discarded
exemrted) were taxed In tS60-61 one pei
. cent; in 1S6l62 at one and half per cent and
; in 1868 and half per cent Interest
: was taxed in iS61-62 at ten per cent, and In
y 1868 at seventeen per cent.
The record unfortunately do not afford enough
data to judge Of the efficiency OF the income tas
I before the Underwood constitution. receipts
n from incomes taxes after 1851 are not listed az
= rule separately in the treasurer's or auditors
: reports. Receipts for the few years prior--un-
: der the s4oo exemption law taxing salaries ant
T. waGes-were as follows; lS44. S5,3b4; ls4I
81. eos; 1851. s5,05s. The revenue was thus In.
significant in amount For 1855. under the new
$ constitution of 1851, I find receipts from in,
! come TO be sl2.5o6 still an inconsiderable reve
nue.. From the tax interest however tho
e revenues were larger-S14S06 in 1874 s123Sl
a in 1917 and $l8,294 in 1851. In 1856 1t wa:
!, $19,l8s.
q Thus, with but almost futile results. Virgins
d tried several experiments with the income ia,
before the Underwood constitution, and with a
, least two distinct purposesfirst, TO obtain
: ings $4oo and on interest forming capital
istic income; second to equaze the burden o.