Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-05-15
THE INCOME TAX.
VII.-Exempting Small
Incomes.
By Frederic ]. Haskin.

By Frederic j. Haskin. HI
The first problem in passing an income
tax is to determine what limit shall he
fixed below which incomes shall not be
taxed 1t is always recognized that peo-
pie have a right to an income large
enough 10 maintain themselves under de-
cent standards of living free from taxa
tion. To deny them this right is practi-
cally to force them upon the charity OF
Others or the aims of the state. The ex>
emption is generally known to econo-
mists as the minimum OF existence.
and. OF course. it varies with the many
standards of living in the several coun-
tries WHAT would be low exemption in
the United States would be a rather
high one in England and very high one
in Germany. There is tendency IN
England and its colonies in favor of high
exemptions. since there is desire to
shield from undue burden the people
whose incomes but little more than
suffice for the needs of their families
ON the continent. on the other haho
the tendency is to tax everybody, put
10 make the rates for the people or
small income so low that their taxes
are only large enough to teach them
proper interest in the government and a
proper appreciation of its powers In
some countries there is system or
attachments which lowers the tax rate as
the ability to pay grows less in the in
dividual
There is usually limit. however, be-
low which any country will not go in
taxing incomes This
Every Country not only arises from
:. the fact that money
Places Limit. taken from people
who have no margin of profit above
,he mos, pressing needs. and peremptory
requirements may have to be refunded
to them in the form of charity. but more
SO from the fact that the cost OF collect
ing and keeping the record of very small
sums is greater than the amount col
lected. AS no government cares to pay
ont more than it gets in for the mere
purpose of getting 1t in, there is limit
beyond which reasons other than con-
sideration for the taxpayer prompt the
taxing power not to so.
On the other hand. when eXemptions
are raised to point too far up the scare
II throws the burden upon such com
paratiyely few people that 1t comes 10 De
dangerous class legislation In repuphe
such a policy restricts the NUMBER Q!
TAXPAYERS that the masses never 1eei
the tax. and often it leads them to unjust
discrimination against the Wei-to-uo.
When the majority. and especially an
overwhelming majority. of the voters are
not affected by an income tax law 1t Is
but natural that they should. in the be-
ginning. look with equanimity upon heavy
taxes against the minority. and fnaHy
come to be dissatisfied with anything but
the heaviest burdens for the shoulders OF
the rich. in order that the burden may
be taken off their own.
Mr.. X. X. Herman, the Milwaukee tax
hzfr tI,n fnYIr n or
nual convention of the International Tax
Association that from a tabulatiOn OF
exemptions in fifty -six countries he round
that the average exemption. or. in other
words, the average living wage that
ought not to be taxed. in these countries.
was $4,000. Taking the English-speaking
countries. the average was 1,1OO. while
in forty-one other countries the average
was only $153.13 Under the proposed law
here it will be $4,000.
*
There are two methods Of making ex-
emptions under various income tax laws.
Under one method
Two Methods the law says that in
comes below a GER
In Exemptlons. tain sum shall be ex-
empt. while all incomes above that amount
shall be taxed at their full amount. Un-
der the other method the exemption ap-
plies to all incomes no matter what their
amount. Under the former plan. where
there was an exemption of 1000, and
incomes above that amount were taxed
at per cent, an income OF 1899 might
nay nothing. while an income of $1.OOl
would pay $1,000. Wherever the income
exceeded the exemption the entire income
would be assessed at the regular rate.
Under the latter plan. where there Is an
exemption of $1,000. and a mans income
is So OOO the man would have to pay his
per cent on the second thousand only.
There are many cases where the laws
have been entirely ambiguous upon the
subject and judicial construction had to
be obtained. In the United States it has
been the practice to exempt everyoo
from the payment of tax upon the por-
ton of their income below the point of
exemption. In other words. il there be an
exemption of $4,000. as there was under
the last income tax law, and man may
have an income Of 5000 he would have
TO paw his tax only upon the difference
between his total income and the legal
exemption, or, in this case, upon only
$1,000
Exemptions from the payment Of taxes
extended to people of small means are by
means new
Custom in France development. As
Bates Back to 1908 Er s paet ss as n' ,s
classes These exemptions became SO
numerous that after awhile IL almost
wholly undermined the existing system Of
taxation. In 1903 England established
scheme OF exemptions that not only eX
empted all incomes below $500. but which