The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-10-10
Taxation in Virginia

ny EDGAR sYDENsTRTCKER

| The Income Tax.--u From 1870 to 1913.
The Underwood Constitution of 1859 permitted
tax income in excess OF 5000. This meant
that If the tax levied. all the income of
every individual over and above the specified
| exemption. which could not be less than $500,
would be taxed In my first article the in
come tax during what might be termed the
period of experimentation from 1913 to 1865,
/ It was pointed out that at first income meant
salaries or wages of employed persons, while n
specific tax interest levied 10 tax the
capitalists income then, under the constitution
of 1851, q graduated income tax was tried, but
Il forwards abandoned and the method was
changed back TO the flat rate with exemption
OF $500. besides a tax on interest In 1870, since
under the Underwood Constitution there was
| but definition OF income which "all
! income" flat rate of two and one-haf per
cent. incomes over $500 levied This
rate reduced 10 and one-half per cent,
in 1871. and the exemption lowered 10 $1,000.
! In 1874 1t again reduced 10 per cent.
! of incomes with the exemption placed at 5000,
and at this figure and this rate ii remained until
1908, In 1908 the same rate was continued but
the exemption raised to 81. 900 The ex-
emption was again raised in 1910 to $4,000.
Incomes in excess Of $4,000 are now taxable
at the rate Of one per cent, the rate having
been unchanged since STA.
! Tho income tax in Virginia occupies n posi-
ton Of rather unique Importance. Virginia is
one of very few states now having an income
tax and 1t is the only state which gets any con-
siderable amount OF revenue from II. There
a number OF states which specifically tax
ucular source. Some nave specified salaries
as did Virginia before the Civil war; some have
specified profits, others have taxed interest. as
did Virginia But Of the sixteen states that have
employed the general income tax-that is, tax
alton of income from all sources--only four
maintain 1t; the other twelve have abandoned
il. These four Massachusetts, North Caro-
lima South CHrolina and Virginia There arc
several qualifications in tine OF Massa-
chussetts' income tax, however, that really rem
ders the operation of the tax in that State uu-
comparable with the tax in the three Southern
states mentioned.
| The operation Of the income tax in Virginia
is therefore OF larger interest because of the I'M
usual example 1t presents. 1t cannot Ne said
that 1t has presented example of the success
ful operation of "a state income tax. certainly
not until very recent years From 1870 until
sos the revenue never reached total in any
year of 500, 000 Until 1902 the revenue never
reached half Of that amount. and some years
! II was less than quarter of II. 1t has always
been "a tax the honesty Of the citizen'--or,
! II put in more justly and more exactly. a tax on
I the conception Of honesty existing in COM
munity, During the past decade DIR. Mac
gruder points tRecent Administration in
In from twenty five to thirty per cent. OF the
counties The individual taxpayer assesses his
own income. He may deliberately give false
return; he may conscentiously believe that he is
entitled 10 reductions exemptions not
( specifically mentioned in the statutes but In
I Guided under the head Of losses which may
mean anything from what he spends piai o
4 or "A home, TO what he has lost at cards or In
a real estate speculation he may not return any
income above the exemption stipulated in the
statute because Mr.. Brown his neighbor, who
he knows believes has greater income than
himself. returns no taxable income; he. may not