Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-05-11
Worked Both Moral
and Fiscal Reform

-, nj = eStigatioh
iugs of the principle in other countries.
There were those who asserted that IL
would result in great loss of revenue.
Others believed that it would upset the
whole tax system But after il was
tried out there was no loss of revenue.
and the chancellor declared that ii
had worked moral as well fiscal
reform. After three years trial ii had
proved itself such a satisfactory inno-
walton that the government decided TO
90 a step farther and fix a system of
graduated taxes.
Differentiation made incomes that
sWere the result of "the sweat of the
brow bear tax of pence on the.
pound. and investment incomes tax
iof II pence, when the income did not
lGo over 1000. When the government
sdecided TO graduate the tax the diff
;ferentiation was increased. SO that
while earned incomes were still taxed.
us cents, or {? pence. investment in
comes were taxed % cents, instead Of
80 cents.
: When graduation was taken up. the
same gloomy prophecies that We're
,Inade that differentiation would not
succeed came to be made that gradua-
sIion would fail. But they were again
smistaken. and England now regards
lIts income tax system the best that
civilization has produced.
Different countries approach the ques-
xtion of graduation in different ways.
Some of them first make an exemption
@of living income. and assess the tax
against nothing but the excess of in
scome above that point. levying diff
ferent rate of taxation upon each $1,000
sof income. If. for instance. the exemp-
ton were $1,000 and the total income
were $4,000. and the rate l per cent on
the first thousand above that. per cent
or No ~
would be calculated as follows: $1,000 at
/ per cent. $40; Sl,o)o at per cent. $50;
.Si.nD at :. per cent $50: 81 800 at per
cent $40, and $3.50 at ) per cent. $50:
stotal tax. $50
on the other hand. some laws provide
THAT an income in excess of the exemp-
ttion. shall be taxed according to its
size the ascending rate applying to all
of the income. instead of to each thou
sand of IL on A separate basis For in
stance, suppose the exemption is sl,ND.
and that the rate is made | per cent if
the income does not exceed Sl.U0 abOyS
sthe exemption. per cent if il does not
exceed S2.pg,. etc. Under this plan the
man with a tve-thousand income over
and above the exemption would pay j
per cent on the entire 5000. $50 on
the income.
1t has been found upon a careful
investigation of the income tax laws
.of the various countries that ST per
cent of the aggregate population OF all
the countries having such laws are res
idents of countries where graduation is
= recognized principle. OF the nifty odd
countries which tax incomes. forty-siX
use some form OF graduation In large
group of countries the average tax rates
on incomes OF varying sizes were cal
.culated. and il Is shown that taxable
incomes of $-s@. paid 1i2 per cent. in
comes of S1.GD Eaid la per cent, IN
comes of 5000 paid 2,3i per cent and m
comes of $500 paid 2@ per cent. The
average of all these countries on incomes
of 100000 $50 per cent These fig
HreS are on incomes arising from per.
sonal eXertion: those derived from in.
vested capital are somewhat higher.
: y tabulation of the tax rates in twenty