The Eureka sentinel. [volume] (Eureka, Nev.) 1902-current, 1913-04-12
INCOME TAX MEANS ABANDON
MENT OF DIRECT TAXATION

That the adoption of the Sixteenth amend
ment to the Constitution of the United States,
which provides for a tax on incomes, means a
revolution in the entire method of taxation in
this country has been accepted by the fnan-
cial interests as inevitable. So high an au-
thority as the National City Bank of New
York, a Morgan institution, says in its latest
letter to its patrons:
.This method of taxation will involve, for
q few years at least and probably permanently
a radical departure from the system of raising
governmental revenue by indirect taxation
that has obtained for more than leo years.
1t is now apparent that. within a comparative
ly short time. the old system will be sup
planted by a direct tax upon incomes.
This amendment was submitted to the Leg
~islatures of the different States by a joint res
olution of Congress passed at the special tariff
session in the Summer of 1909. Its adoption
by Congress grew out of the efforts of certain
Senators to incorporate all income tax pro-
vision in the tariff bill. After some prelimi-
nary skirmishing. and considerable debate. a
compromise was reached, through the inter-
v~ention Of the President, by which the exist
ing excise tax on the profits of corporations
was made part of the tariff bill and this
amendment was submitted to the people.
I'm the debat on the amendment resolution
stress was laid by some of its supporters upon
the proposition that the adoption of the amend
ment did not necessarily mean the immediate
exercise by Congress of the power it confers
upon that body. They contended, however,
that the power to tax incomes should rest un-
questioned with Congress as an emergency
provision, and they cited, as an argument, the
contingency of q great war which would strain
the financial energies of the Government and
render imperative the need for such relief as
they proposed.
There is no reason to doubt the sincerity
of these arguments. Nor is there reason to
doubt that now the power has been conferred
on Congress to lay a tax on incomes it will
proceed straighway to do SO, and the emer.
gency argument which secured the power will
be ignored, if not forgotten. The contin-
gency which now presaees the enactment Of
an income tax is not the dread nergency Of
war. 1t is merely the elimination of the long
continued unrest in the country which has
found one outlet for its dissatisfaction in COM
plant about the high cost of living. The be-
lief that high rates of duty have an effective
share in increasing the cost of living has re-
suited in a widespread determination to re-
duce tariff rates, and the new administration
comes into office pledged to bring about a
radical revision downward of the whole tariff.
"The promise for the proposed revision
downward is that it shall be effective in re-
ducing the cost Of numerous articles of food
and clothing-that it shall give genuine help
in bringing down the cost of living. In
evitably that means a reduction in the total
amount of customs revenue now collected. In
fact, one of the proposals for tthe impending
revision is that sugar shall be placed ON the
free list. This means the looping off of more
than $50, 000, 900 Of revenue at one stroke.
And it is probable that reductions on other
items Of the dutiable list will cause a further
lowering of the total collected. For instance
there is strong pressure for the abolition of
the duty on wool. which would mean a cor
responding reduction in the rates on manu-
features of wool. There is now collected
more than 500, 900, 900 annually on importa-
tions of wool, with a similar amount ON its
manufactures. Free row wool with corre-
spending reductions on manufactures of wool
would mean the Topping off of S25, 900, 900 or
more of customs receipts.
''These are the considerations which render
inevitable the resort now to a direct tax on in
comes. There is no hope OF equalizing gov
ornamental income and expenditures by any
process of economy. Many millions Of words
have been uttered in Congress and elsewhere
in enthusiastic advocacy and praise of econo-
my in Government expenditures. But the
Uninterrupted march of events in this country
for l20 years or more demonstrates that the
expenditures by the Government will never
be less than at present"
Plans for the impending income tax are
already well under way. 1t is stimated by
those engaged in drafting the measure that it
will be necessary to raise about s100, 900, 900 by
this means. They contemplate abolishing
the existing corporation tax. which has raised
about $50. 900. 900 a year since its establish
ment. but will raise the same sum by a pro-
vision of the income tax. 1t will also cover
the $50. 0O0, 900 or $50 900. 900 additional
which it was estimated that their pro-
posed extension of the excise tax last year
would have produced. Thus far no announce
ment has been made of the rate which it is
proposed to fix, but there has been talk that
it would be / per cent on all incomes above
$4,000. 1t seems probable now that no at
tempt at graduation will be made, and there
seems to have been no discussion of the plan
of making collection at the source. The Six
teenth amendment distinctly includes all in
comes from whatever source derived" so that
salaries of Government officials, and incomes
from State and Federal funds will be taxable,
if the law so provides.
What is so rare as q day in June?" Why,