El Paso herald. (El Paso, Tex.) 1901-1931, 1913-05-10

sive states there has been little eff
fort in the United States to gradu-
ate income taxes, increasing the rate
with expanding incomes. On the
other hand. in Europe and Australia
the general tendency has been In
that direction for years. There it
has been assumed that the right prIn-
ciple Of uniformity in taxation is IN
iformity of burden rather than uni
fOrmity Of rate. As the widows mite
was more than the richest gifts that
were placed in the contribution box
because It was 100 per cent of what
she had, while the other gifts repre-
scented perhaps only the fraction OF
one per cent of what their donors
had, so a tax of $50 may hit the small
taxpayer infinitely harder than q tax
of $500 hits the large taxpayer The
European idea is that each person
shall bear q tax burden delicately ad-
JuSted TO his ability to bear it. and
that the larger the income the higher
the tax rate II can bear WITHOUT put
ting an undue burden upon the tax
payer
Two Forms Of Graduation.
There are really two forms OF
graduation. and in the parlance OF the
tax official they are known as grad
uauon. ana dl11erentlatlon-' Gradu-
alton, under this division, has 10 do
directly with a sliding scale of tax
rates, applied to various-sized for
tunes Differentiation has TO do with
levying of different rates upon in
comes secured from different sources.
Still another form of graduation is
that of eNempting incomes which fall
below a certain fixed amount the
who has no larger income has need
for every dollar of it in maintaining
the proper standard Of living.
The English Plan.
England adopted the plan Of diff
ferentiation, as viii be explained
siTe investigation Of the workings OF
the principle in other countries.
There were those who asserted that
1t would result in great loss OF rev
enue. Others believed that it would
upset the whole tax system. But after
1t was tried out there was no loss of
revenue and the chancellor declared I
UhaI II had worked q moral IS well as !
a fiscal reform After three years
trial IT had proved itself such a sat
isfaetory innovation that the govern I
ment decided to so a step further and /
1lX system OF graduated taxes
Differentiation made incomes that /
were the result of the sweat of the /
brow bear a tax of nine pence on
the pound and investment incomes
tax OF u pence, when the income did
not 60 over 1000 pounds When the
government decided to graduate the
tax the differentiation was increased, Z
still taxed IS cents or nine pence, in
vestment incomes were taxed % cents
instead Of a cents. When gradua-
ton was taken up, the same gloomy
prophecies that were made that DIFF
Ierentiation would not succeed, came z
to be made that graduation would
fail But they were again mistaken, (
and England now regards its income I
tax system the best that civilization Z
has produced.
Different countries approach the
ways Some of them first make an
exemption Of a living income, and as
Sess the tax against nothing but the
excess Of income above that point,
leTying a different rate of taxation
upon each thousand dollars of in
come If, for instance, the exemp-
ton were $1,000 and the total income I
were $4,000, and the rate one per cent I
on the first thousand above that, two
per cent on the second thousand, etc,
the tax would be calculated as fol- !
lows: $1,000 at one per cent, SO; I
$1,000 at two per cent, $50; $1,000 at
per cent, $40; and 81 900 at five per
cent, $50; total tax, $3.50.
Income Of $1,000 Pays $3.50.
On the other hand, some laws pro- I
vide that an income in excess of the 4
exemption. shall be taxed according to 4
its size, the ascending rate applying (
TO all Of the income, instead of to (
each thousand of it on a separate ba- !
empuon IS $1,000, and that the rate is J
made one per cent if the income does (
not exceed $1,000 above the exemp-
ton, two per cent if it does not eX-
coed $1,000, etc Under this plan the 4
man with a $4,000 income over and /
above the exemption would pay five 4
per cent on the entire $4,000, or $3.50 /
on the income.
Strikes Comparatively Few.
Even with graduated income tax, (
and with exemptions amounting to /
$l,lOO as the average for English 1
speaking countries, not a great many I
people are vitality concerned in the 4
tax when compared to the whole pop I
ulauOn- Taking as group England /
and Il of its colonies, and Hawaii, it 4
IS found that the average exemption 4
IS $l,lOO, and that less than one per-
son in 20 has to pay an income tax. !
In England itself, where only those 7
VINO have an income Of more than Z
$500 have to pay a tax, only one per /
son IN 80 has an income that puts him I
IN the income tax paying class. 1t +
therefore follows that under sys- (
tom OF graduation such as England 4
has, perhaps less than one person in 4
several hundred has to pay any more 4
than nominal sum
No other country in the world so I
thoroughly recognizes the principle /
o. graduation as England and its col /
Onles- While in the United States,
where graduation might be taken as 4
an effort fOStered. by demagOgs TO I
shift an undue burden to men of large I
incomes, il can be said that in Eng 4
land the leading tax authorities men
IN no wise influenced by such pOliti- 1
cal considerations, claim that the |
9 graduated income tax, is the only Just
one, and that the. whole tendency Of 1
the times is in that direction
Always Flat Rate Mt First.
When England was considering the !
question of applying the principle Of I
graduation TO its income taxes much I,
testimony from ali parts of the world
was taken upon the subject Some !
that il would tend to drive I
capital out Of the country A com
mittee which summed up the con-
cIusiOns reached from the testimony
obtained declared that the advan-
tages OF graduation far outweigh the \
Disadvantage Be that as it may,
nearly all income tax history shows
that when a country begins to tax
incomes il makes d flat rate, and
then, as efforts are put forth to make
the tax more responsive to the needs !
OF the nation and the necessities of
the people, graduation and differentia-
ton grad ually are engrafted into the
plan Whether America will he an ex-