El Paso herald. (El Paso, Tex.) 1901-1931, 1913-05-13

Millln stole mdrcn on MIN and forced
I his amendment to the Wilson bill
through the hOuse-that it is a tax
{ upon conscience. The house leaders
were not in favor of an income tax,
and William L. wilson declared that
he favored a corporation tax because
the government had means TO assess
/ corporations properly. but that he
thought it would be difdcClt to coll
/ lect income taxes from 1noI ylduals
He declared that ne believed in the
equity of such a tax, but not in its
TaxatIon at It's Source.
What Mr.. Wilson sought was
means Of imposing tax that would
! make taxation at its source posi-
( bility. Such a method OF collecting
the bulk of their income taxes has
been found to be successful by a num-
Der Of governments In some of the
countries which have national income
tax laws as much as four-1ltthS or
the total possible revenues from these
laws are gathered into the public treas
ury before the incomes upon which
they are a tax reach the bank accounts
of their owners
OF course, one has to look to Eng
land for the best example of a sue
cessful policy OF taxation at the
source. There the government does
made up by the taxpayers, but re-
Quires payment to be made ana an
accounting rendered to the govern
ment by the corporations and other en-
I
Graduation of Tax.
1t is generally agreed that Where
there is a fixed rate, without gradua-
tion or differentiation. the stoppage
at the source system is by far the
best method Even in the case OF
distinction or differentiation between
earned and unearned income there IS
no serious difficulty, but how to mar
monte stoppage at the source with
graduation is a most intricate prob
lem For instance, II man income liC1-l,
is made up Of many ttems-of salary
of interest on bonds, OF DIVIDENDS on
stocks, of rents from houses, ana
profits from farm-hOw IS the gov
eminent, under a graduated income
tax to tell how much to deduct as
tax on each item. until il knows MS
whole incOme2 This is one Of the
many puzzles of harmOnlzing the Two
propositions that England is expert
encing today How to stop the tax
at its sources, and at the same time
not to take too much or too HtIe'
has proved a difficult problem
Incomes Must BE ItemiEed-
The idea of stopping the income tax
at its point of origin is more than a
century old and to England belongs
the credit Of originating II At urst
there was a general practice OF Sly-
ing in incomes in a lump sum- man
simDlv reported that he had an income
of so many pounds sterling. ana ne
was taxed accordingly. Then II came
TO pass that men so perslstentiy esIl-
mated their incomes far below their
actual amount and IN order 10 get a
better line on what the incomes OF
taxpayers really were incomes were
divided up into schedules 1t was no
longer. How much IS your income
but rather, How much DO you Sel
from your bank stock, how much from
your company dividends. how much
from your rentT In other words, IL
became matter Of an itemized ac-
count of income rather than state
ment of the total
The. advantage of the system OF
stopping the tax at its source never 5
was more clearly illustrated than
when England first adopted it in 1865
Before that time the tax rate had
been 10 percent The law that pro-
vided for collecting the major por- {
ton of the tax at its source also con-
tanned a provision cutting the rate IN
half and making il 3 percent And vet
source as a substitute for the lump
sum tax, produced practically the
same amount of revenue as the higher
Every English tax authority, as was
shown by the Investigation Of 1905 /
feels that ii would be an evil day for [.
these two principles Of assessment ]
and collection.
Germans Conduct Inquiries
In Germany the situation is a dit I
ferent one. There inquisitOrial meth f.
DDS are taken as matter OF course, and +
the people seem TO care but little II I
the revenue authorities do pry into +
their private affairs. They permit T
such inquiry into their affairs as
never would be tolerated by British Z
subjects or American citizens. and so I
there is not the great necessity for ]
avoiding inquisltOrlal Investigations I
that there is in England and the J
United States. If a German subject /
reports his income at $4,000 and the I
tax authorities think il is too low they {
may ask him what he pays for his 4.
telephone. whether he has one in his .
private apartments, whether he takes B
box at the theater what he does I
with his income, what he did with the I
money he got from selling some fCTni- (
ture last year, and hundred and one /
other questions. any one Of which, II I
asked of the average American. would I
tempt him to reply 1t isn't any OF I
your business"
But Germany is about the only coun-
try where stOppage at the source has
not proved to be a prime essential to
the success Of the tax. OF course, it is
natural that If A pays B a part Of BIS
income. he is not going to perjqre
himself to save the amount of that
payment from becoming known to the
revenue authorities Therefore. he is
rather certain to tell just how much
income B does get through him. That
is why stOppage at the source sue
ceeds where the old system of simply
letting 3 report his income fails
New Plan for the United States.
The United States heretofore has
made little effort to apply the prin-
ciple of stoppage at the source to it's
tax laws. In the civil war income tax
laws there was almost no effort to
such a system Of assessment
and collection. In the law of 1894 IL
was provided that the government was
TO deduct the tax from the salaries OF
public officials and that corporations
should pay the tax on dividends, but
these were the only provisions look
ing to the collection Of the tax before
1t reached the man who was to pay
II. The law did provide that every
corporation which was paying salaries
or compensatiOns I'm excess of $4,000
should report the names of the en-
plOyes to which such salaries were
,aid, and that each such employee should I (
There was another provision in the
measure wholly Inconsistent with this, I
and which seemed to imply that the !
employer should withhold from the I
salary the amount of the tax to be /
assessed against it. tt deducted from I
the taxable income of such a salaried ,
person that portion of the salary I
which was withheld by the employer
for the payment of the tax. This
would, Of course. imply stoppaee at
he source for salaries. The trouble !
grew out of the fact that the bill was Z
amended in one paragraph to provide
Tor such SrOnn0 nra while the other D