El Paso herald. (El Paso, Tex.) 1901-1931, 1913-05-16


M While secretary Of the treasu-
~ Dallas suggested, durine,
the war burdens of the countryshrd
the war of 1912. that the War burdens
Of the country should be borne in part
by a tax upon incomes. the early ter
mination of hostilities relieved the ne
Cessities of the moment, and cOnse-
quently it was not until 1851 that Ihe
first income tax law was written u},s5l
the statute books Of the United tSatcs
1t became known as The Stevens-Morriu
act, from the patrons in the house and
senate.
Opinions Differ on War Fund.
The Civil war had broken out and
president Lincoln called the 3Ith con-
gress into extraordinary session ION ac-
count OF the opposition to and Obstruc-
ton made to the execution of the laws
OF the United States IL certain Southern
states by combinations TOO poWerfI II To
De suppressed by the Ordinary course Of
lu1lcial proceedings or by the powers
vested IN marsEals by the law About
the first duty that devOlyed upon the
congress was to provide sufficient
revenues to meet the large expenditures ,
the war called for There was much diff
ference of opinion as to just what
ought 10 De done IhGddeuS Stevens,
from the ways and means committee. !
brought IN a tariff dill, which he asked
the house 20 vote upon after one hours
CONSIDERATION al amendments To be
voted upon without further debate.
First Income TaA Clause.
Inc next day Clement kallandinE-
nam, aIlerWard the great Ohio copper
head. offered a substitute repeating the
JdrlII law that had been enacted two
days before president Buchanan left
the white house. 1t was rejected but
the Stevens bill was so badly crippled
by the many amendments that were
adopted IN committee of the whole.
that when it was reported TO the
house, Stevens offered his original bill
IS a substitute. When the house voted
to pass the measure it contained a
"a NJ Hnn# 49,
10 the senate that body did not like il,
and amended IL by striking out every
thing but the BE it enacted" clause.
inserting a substitute measure. This
was finally amended by the insertion %
a clause providing for an income tax OF
i've percent on an incomes in excess
derived from United States securities.
The clause made the war tax II
percent on tine income Of Americans
residing abroad. with the exception Of
income from United States securities
and they were TO be taxed , IL ne
cent on their incomes from these. a. IN
me statement that this clause Oh
lowed me rule, practice and Law Of
England for period of 50 years. il
was passed eyer without division
Incomes OF 5000 Taxed.
While the senate was amending the
house bill by complete substitution, the
house brought out another bill prOvid-
ing for a direct tax and an income tax
As II finally passed that body 1t pro-
Vided for a direct tax OF 20 mills on the
dollar and an income take of five per-
cent on all incomes OF 5000 or upward.
This Dill went TO the senate and was
pigeOnhOled- Meanwhile the other bill
had been sent to conference There the
conferees drew new bill, which was a
complete substitute Tor the house
measure and modified substitute for
the senate measure 1t reduced exempt
ed incomes 70 $500, and the tax from
1--WE TO three percent. This action finally
became the law. out il remained on the
statute books for only six months L
was repealed by the act Of July 1, 1852.
which cut Gown the exempted Income 20
$780, and fixed the tax rate at three
percent on incomes below $4,000, and at
five percent above that point The tax
on income from government bonds was
placed 1T 1 - percent
Record Fund Raised From Incomes.
This second income tax law lasted
two years BY that time the man who
new methods OF increasing revenues
from existing laws was regarded as q
patriot and hailed as q sta teSmar- Dur
ing the summer OF 1864 the income tax
law was somewhat amended. with a
view TO increasing the revenues. and
the day before the second inauEura-
ton of president Lincoln il was still
further amend. This amendment in
creased the tax from three percent 10
five percent on incomes between $500
and $4,000. and fixed the tax on incomes
above $4,000 at 10 percent This be
came effective Just about the time the
war closed, and brought the receipts
Of income taxation in America For the
fiscal year ending June 50, 1866, the to-
tai collections under the income tax
law was upward OF $4,000, 600. and the
next year it was out little less.
Expired by Limitation
In -S69, the revenues OF the gov
ing exceeded the needs OF the federal
treasury, 1t was decided to amend the
law Dy cutting out all discriminatory
taxes against large incomes. With this
O.
was levied against all incomes above
$1,000 the amended law also contained
a provision that il should expire by lin
ltauOn al the end or the year 1870.
In 1870. an act was passed extending
the operation of the law for another
year The extension was made in July,
and nDecember an effort was made 20
repeal the law. The act providing for
its repeal originated in the senate,
where it passed, with only one vote 10
spare. When this action was commit
nicated &c the house. Mr.. Hooper, Of
MasSac husetts. arose to a question OF
privilege, ana declared that the SEN
ate had no right TO originate such
measure Samuel j. Randall denied
hat the matter involved question Of
privilege Speaker Blaine OverTuled
RandallS contention. and HOOper'S res
OlutiOn was adopted. sending the act
back to the senate with the polite infOr-
nation that the senate had no right to
originate such a measure
The senate as politely Informed the
house that il did have such right
and requested a conference upon the
subject. While the merry little war
was being waEed back ana forth the
income tax law died by its own limi-
tatiOn and So il never was repealed.
This recalls the fact that the law of
1894 did not need to be repealed after
1900, since it expired by Limitation
that year.
Not Considered Direct Tax.
Tt is rather generally agreed that the
income tax law practically saved the
finances of the federal government
from absolute collapse during the Civil
war. No serious question as to its con-
stitutionality ever was raised. and con-
gress showed that it never had the
slightest idea that IL was direct tax
The house provided for a direct tax of
$4,000, 600. and an income tax, while the
senate held that lnaSmuch as a direct
tax had been imposed upon property il
was well to hold up the exempted in
come higher than otherwise would have
been done.
IL is interesting TO consider the
amount OF money that was raised by
means which the supreme court a quar-
ter Of century later declared to be
Unconstitutional The total collections
under the law from start to finish
amounted to SS76,0O0.0OO The income
tax law, with the exemption OF
$1,000. did not hit any large proportion
of the people In 1858 the revenues