The star-independent. [volume] (Harrisburg, Pa.) 1904-1917, 1914-12-30
Federal Income TAX Law
SCORED BY WISCONSIN MAN
T. s. Adams Says Measure Promotes
Glass Conflict and Public Extrava-
gance- Should Not Be Imposed
Upon the Poor

Princeton, N. j., Dec. Se.-The fed |
eral income tax, for which only $751;
oSS returns were received last Year, is
reaching directly less than one,half of
one per cont. of the population, pro-
NOTES class conflict and public extra
vaganee, and is feeble instrument
with which to reduce swollen fortunes,
IN the opinion of L. S. Adams, member
of the Wisconsin State Tax Commits
sion, in an address here before the
American Economic Association here.
Mr.. Adams spoke on 1.-The Effect of
lnceine and Inheritance Taxes ON the
Distribution of Wealth.
The present federal income tax is
y class tax and class taxes breed ex-
travagance,' he said. lit deserves ap-
proval from almost every other stand
point, but in this respect it needs cour-
ageous correction. Income taxes should
not be levied upon the poor-but they
should be levied upon all the rich, i. e.,
upon everyone with income exceeding
the amount required by the American
standard of living. An income tax fall
ing ON all the rich, so defined. would
be the most potent instrument procur-
able for inspiring and maintaining an
effective interest in the conduct of gov
ernment
If swollen fortunes, are bad, they
should be attacked directly and the
cause removed. To let them accumulate
and then tax them 10 per cent smacks
OF hypocrisy, and the attempt to make
the income tax do the work of social
reform is apt TO spoil the income tax.
Its virtues are fiscal. In my opinion the
income tax could perform its best serv.
ice as substitute for the personal
property tax as applied to business en-
terprlse. The loss in modern business
Is enormous, the necessary hazards are
great, and Strikingly large proportion
OF concerns in some lines constantly
totter. on the brink of bankruptcy. To
all such marginal enterprises the prop
erty tax is remerseless 1t falls ON
property as much whether il is produc-
flNe or unproduetive, whether it is
owned free or heavily encountered.
whether ii is part of Trustworthy hut
desperate new business venture or part
OF the salvage of dying concern. The
property tax discourages experiment,
penalties industrial pioneering. retards
production. reduces supply and increas-
es prlees. In short, it is partly shifted
to consumers. reduces the amount of
wealth to be divided and adversely af-
leets the distribution of what is pro-
dneed. In comparison the income tax
wrestS little or nothing from the new.
the experimental or the unfortunate
business enterprise: it helps not only
the small business man, but large con
Germs Is new and hazardous undertak
lnss. 1T helps-or abtains from burden
lng-every business enterprise in a bad
wear.
Inc property tax put the State in
the position of a preferred creditor and
hsrSh one. Its dues must be paid bv
the business man in the DEVELOPMENT
period OF the business, before profits
are earned, and later whether profits
are earned or not. The income +ax
hc"ever, presents the State in the at.
utuae OF a partner or proft-sharer. The
hrst aVsltude Is not wholly iudefen-
Slole' nor altogether unfortunate. But
WITH respect to business enterprise it
heeis to be softened by Increasing EN-
phasls upon ability to paw. There is
growing feeling among the operators
ana owners of public utilities that GOV
efhment ownership is inevitable. This
leellhS or movement is measurahly
stimulated by the rigors of the pron.
erty tax. The railroads of this COM.
tfy, Tor instance, are at present nav.
ing over 16 per cent. of their not
earnings In taxes, and in some States
the proportion exceeds 20 per cent. If
our Tax system gave greater scope to
Ihe nef Income principle, it would ma
leFlally enhance the chances of private
ownership and operation. The income
tax works for the retention of priva 70
management; it makes the State, NOT
preferred creditor, and not the sole
owner out a full-fedged and sympatb.
TIC partner in private industry