The Washington times., 1914-02-28
EXPLAINS FEATURES
OF INCOME TAX LAW
Expert on Corporation Taxation
Says New Act Is Excellent
! Measure.
Bv DIR. T. NEWTON BAKER.

By DIR. ]. NEWTON BAKER.
Professor of the Post Graduate
Course, Washington College OF Law,
The new income tax law has many eN-
client features that recommend it to
he citizen It is a law that should have
neen enacted earlier, SO that every citi-
sen of every State could contribute
oward the support of the Government,
as nearly as possible. in proportion 10
his resources.
This tax is designed to fall upon that
portion of the community hest able to
contribute to the expense of the Gov
ernment in proportion that he who re-
ceives the greatest protection shall like
wise bear the greatest share of the
burden of taxation.
Justice demands that a tax shall be
assessed upon the income rather than
on property, for the reason that a tax
upon income is more equitable and just.
As direct tax it falls greater upon the
richer classes tnan upon the poorer. as
such is the tendency of d direct tax,
by an exemption from taxation on in
The Lowest Point.
The mark of taxation is the lowest at
a point just above the amount of net
income reasonably necessary to sup
port an average family and above this
amount of income the graduated scale
imposes a higher rate upon each sue
cessive category of income. This view
-, y.
teaching that a family is entitled to
subsist before being compelled to pay
taxes to the government, therefore,
when the income increases the amount
Of tax to be assessed increases on a
graduated scale.
A tax falling upon consumption re-
quires a greater sacrifice from the
poorer classes, although it reaches every
class in the community. An income tax
falling upon the class which enjoys an
income exceeding a specified sum does
not effect any particular class Of a
community at the expense of another
class in the same community, because 1t
is Justly and equitably assessed.
Under the new income tax law there
cannot be an inequality of assessment.
and no objection can be raised against
The present mode of assessment of a
moderate tax on all incomes above a
reasonable sum necessary for actual
existence. Assessments are all made on
The net income of the individual, or of
he corporation. and the requirements OF
he law in making the returns make II
incumbent upon the taxpayer to come
forward with an honest declaration
rather than seek some avenue of es-
cape by concealing a part of, or under
1t i,,Na frnr1
The dishonest taxpayer may seek to
evade his burden of proportionate tax,
but should he do so he subjects himself
10 suspicion. and upon detection of max
ing false CT fraudulent return with the
intent to evade. or defeat, the tax, must
suffer a serious penalty.
Some people are disposed to criticise
the new income tax law. which goes int
effect Monday upon the theory that Il
is too complex and for that reason no
subject to equitable administration
Some declare that it is an imposition
he must assume a greatest proportion OF
the burden Of taxation. For this OBJ
lection il may be said that the man oi
wealth has no ground to support hi.
claim for the reason that he has obtain.
ID his wealth under the protection Of
the government, which protection he has
received was far greater in proportion
than the protection the poor man re,
.eived, which fact the man of wealth
should not overlook. but he should b,
AS great a man in character as he IS il
wealth and have the courage to pay hi.
pered under that government which has
been good enough to favor him
Old Law Was Unequal.
The corporation tax act Of 1909 wa.
Unequal in its application in that 1,
taxed the corporation. and not the indi
vidual and co-partnerships carrying or
the same business and deriving net in
come from the same source. 1t is par
OF the history of this country that
much of the personal property, md the
great accumulation of wealth in tn,
hands Of the few, have for year:
oscaped taxation. They could Mt b.
axed directly without apportionmen'
which was not deemed advisable. Con
gress had the power to imnose a Ia,
without apportionment on income:
rom gains and profits, or other acquisi
an excise tax This Sixteenth Amend
nent to the Federal Constitutio" gav'
congress the power to assess tax OF
income from other sources upon which
N excise tax could not be imposed
which fact makes the income tax Law
The rule of Congress is that it ha
absoIute power within its constitutional
limitations TO determine the object o
Iaxation and the method of assessment
# taxes. There is no constitutions
prohibition of retroactive legislation
which can effect this tax. and unless
he Constitution prohibits retroactive
legislation for taxes the basis Of assess
rnent may as lawfully be retroactive
as the reverse. A mans income for tn
preceding year Is the most natura
measure Of his ability. and all prior in
rome tax measures have been levied O!
that basis.
Congress may impose an excise ia.
On all business avocations or only on
Dart of them il it so desires, and il ha.
unlimited power to provide for the Sc
lection of the property to be taxed, ant
70 provide all necessary machinery 70
rhe assessment, and the collection o
such taxes We must not forget that tn
light to select the measure and object
# taxation devolves upon Congress AM
lot upon the courts, and such selection
are valid unless constitutional Limitation
are overstepped.
The right Of Congress to have impose
mis- tax by the new statute, althoug
the measure of il is governed by the in
,Olnc of the past year. can not be doubt
ID much less can il be doubted tha
congress can impose such q tax on tn
incomes Of the current year, though par
Df the year had elapsed when the statut
was enacted.