El Paso herald. (El Paso, Tex.) 1901-1931, 1913-05-10
Incomes Must Meet Deficit
Congressional Committee Frames
Bill Which Is Expected to
Bring In S65,OOO,OOO.
Frederic J. Haskin -
by Frederic J. Haskin =

DIT none OF them OF more importance Ut
of wider bearing than the question
of rates or course. the first test Ct
an income tax law in this country
in particular. and in the world in gen
eral, is that 1t shall stand up under the
stress Of public sentiment The uni
versal experience has been that in
come taxes are unpopular at best
when they are first levied. In time Of
great war crises, when nations real
lie that their very existence depends
upon drastic revenue measures. the
people have beeQ patient when in
come taxes have Deen levied even upon
the smallest incomes. But in times
Of peace it has required a long process
of education to get the people to accept
income taxation as a fair plan Of rails
ing revenue.
The committee has framed a bill that
likes the exemptions very much higher
those OF any other national income
tax law.
Remembering that it could aid in
making the law popular by pursuing
this course of low rates and high eX-
empuOnS a the same time ii was nee
essary 10 fix the rates high enough
to insure a. sufficient amount of rev
enue to make up the deficiencies OF
the treasury which viii grow out OF
a reduction of tariff duties. The first
effort was to ascertain the probable
income that will be brought into the
treasury under the new tariff duties
This in itself is a task of large pro-
portions and one in which there are
so many unfixable factors except by
experience. that at best the calcula-
ltons may shoot wide OF the mark II
II were possible to know what the
volume of impOrtatiOnS will be under
the new tariff law the rest would be
easy But that depends on so many
things-the state of the public mind,
the efforts of home manufacturers to
readjust themselves to the competitive
y p H7Ewn 81 rnn- HnH naE
and number Of other conditions
which defy accurate measure.
Must Yield s65,OOO,OOO.
With this in mind, and recalling the
experiences Of the Wilson law and the
Over-estimate Of the revenues that
would be collected through ii, the only
course upon which the committee
could safely calculate was to assume
a safe minimum below which It would
scarcely be possible for the country s
impOrtatiOns to go and to estimate the
customs revenues thereupOn- Using
this as the basis OF its estimates. the
committee calculated that the total
revenues under the forthcoming Gus
toms laws VIII amount approximately
to $265.0OO,0 600. Now the other m
come Of the government amounts TO
about S63O.O0O,OOO. including postal
revenues; and the total annual dis
bursements Of the government, IN
Guiding postal expenditures. apprOSi-
mate $3.50 900, 600 It therefore follows
that if the government is to keep even
it must raise $3.50, 900. 600 a year by
customs revenues and income taxes
other than the corporation tax SO,
if the tariff duties yield S265, 600, 600,
it also follows that the personal in
come tax must afford a revenue Of
sos. 900 900.
Few Make More Than $4,000.
With this situation in mind the
question next turned upon the amount
Of taxable personal incomes there are
IN the United States Having decided
that $4,000 shall be exempt in order 10
prevent the tax from being burdensOme
and that only such income as is above
that amount is taxable 1t became a
problem to measure the number OF
people in the United States who get
more than $4,000 a year. and the total
amount Of their excess OF income over
their exemptions And the standards
by which it might accurately be
measured do not exist We know that
about 5000 corporations out OF nearly
100000 are enjoying incomes OF more
than $4,000 or only a few more than
one out Of six And we also know that
with the exemption at $1,000 and even
less after and during the Civil war,
there were comparatively few taXDaT-
ers- 1t is also plain, when one counts
noses among those about whose incomes
he knows something. that there are
comparatively few people who get
$4,000 a year but further than that no
that can be done is to borrow a page
from English experience and then COM
pare our own situation as closely as
may be.
A few years ago England had tax
able incomes. with an exemption up TO
$500. amounting to $500. 600. 600. OF
this land these figures reckon s. to
the pound sterling. which is of course,
a little over the real valuel incomes OF
from $500 TO $4,000 contributed $780,
100000. incomes ranging between S20Og
and $500 contributed $500, 900, 600. and
incomes ranging between $4,000 and
$4,000 contributed S445,000, 600. Assum-
ing that the natural proportion Of this
S445. 600. 600 was contributed by N
comes ranging between $500 and $4,000.
II will be seen that of the total
incomes amounting to S3,600,OOO, 600,
approximately S215O. OOO. 900 represents
incomes in excess Of $4,000.
Figuring upon a comparative basis OF
national wealth and population, we
find the national wealth of the United
states is one and five-eights times as
great as that OF England. and if IN
come bears the same ratio to wealth in
both countries there would be taxable
incomes amounting to about $3,5O0,-
100000 in the United States Assuming
that the average of taxable incomes
would take two percent rate, the 70
tai taxes would approximate $4,000
OO0 which would, however, include the
corporation tax.
More Incomes Taxable Here.
1t would not be unsafe TO assume,
however, that there are more taxable
incomes in proportion to national
wealth in the United States than there
are in England since the opportunities
for investments Daying profitable divi-
dends are much larger in the United
States than in Great Britain. Taken
in proportion to population. the income
that is taxable in the United States
ought TO be almost exactly double what
it is in ENGLAND. eXempting all incomes
below $4,000. Upon this basis the tax
able incomes in the United States
would aggregate approximately 81
25O, 00O, 600. and If the average tax is !
two percent. it would represent about
SIS. 10000 OF income
There are some English statistics
which are Illuminating as to the num- [
Der of income taxpayers there are IN
that country and the amount Of their /
incomes Tt is estimated that there are
! 100000 income tax payers in Great
Britain. and that OF these only 500. 600 I
have incomes in excess of $500. AS I
suming tAat the United States has I
DrODOrtionately as many incomes OF T
$4,000 and upward as England has Of :
$4,000 and upward, there would be I
about 100000 taxpayers.
The average income Of those people /
In England who have taxable incomes /
in excess of $500 is a shade ]
less than $4,000 year. Upon this \
basis, assuming equal conditions in the
Two countries the average taxable in {