The Republican journal., 1915-03-18

ciTe5 CAT; now procure Peruna abb
lets.
are undoubtedly many sore abuses in
high finance, as well; and earnings which
should swell legitimate dividends 20 to
pay interest on abnormal issues of stocks
and bonds. But we are considering sole
ly the capital and income of the investor.
Let us take an ordinary illustration, and
try to bring out the above point more
clearly.
A man has $4,000 to invest. If he
puts it into land, he pays taxes on every
dollar. If he puts it into houses for
rental, he pays taxes on every dollar. If
he puts it into bonds, he need not pay
taxes on single dollar. On the face of
1t, this seems a grave injustice. But
what of his income from these different
sources? From his houses he must take
in a gross income of 10 per cent: all
rentals are figured on 10 per cent as a
minimum basis. Say the tax rate is 2
per cent; then there are insurance, wa
ter rates, repairs and general deprecia-
ton, which brings his net income down
to the neighborhood of 6 per cent. If
he bought land and went to farming, he
ought to make from this source gross
income of 10 per cent. think that any
farmer will agree with me that a man
owning a $4,000 farm ought to turn
over 81 1000 iii the course of the year,
and more with Intelligence and a reason
able degree of good luck. But if he puts
his $10,0 900 into securities, he will receive
from it gross income of something like
5 per cent instead. There is not sound
security on the market which pays over
5 per cent. Would 1t be just to apply to
such form of personal property the
same tax rate, for the full face value of
capital invested, which is applied in this
mans community to real estate, a form
of property paying double or triple the
income? Such course would bring the
net income from per cent securities
down to 3 per cent; whereas if he had
bought farm, or some houses, with the
same money, he would derive from it
net income of at least per cent.
In this connection it must be clearly
borne in mind that the owner of securi-
ties does pay, in an indirect manner, a
great variety of taxes; that is to say,
the tax is assessed at the source, and he
pays it by lessened dividend. There
are State and federal corporation taxes;
there are local taxes on the property
owned by corporations, and so forth. If
a company owns phosphate plant or
coal pocket in a small town, and pays
taxes there on this property, the stock
holders of that company are helping to
pay such tax on the value of their secur-
tiles; in other words, if the company
were not paying such tax it would be en-
abled to pay it's stockholders a higher
rate of interest.
1t is on account of these widely diverg-
ing rates of interest from different forms
of property that good many people
have come to see the injustice of apply
ing an equal tax rate to all bodies of cap
ital, no matter how or where invested.
A truer basis for taxation, under our
present capitalistic social system, would
be mans income, not his capitalize
interest, not the principal. But here we
run upon trouble worse COMPOUNDED. If all
of US owned bonds, and nothing else, the
problem would be comparatively simple;
but who is to determine your income, or
my income? A mans income is every
dollar that he turns over. If a farmer
raises his vegetables for winter use they
are as much part of his income as if he
sold them in the market. 1t would be
practically impossible to arrange a just
and universal income basis for the as
sessment of taxes; the life of the honest
man would be made burden by the in
involved system of accounts which he
would be obliged to keep; while the dis
honest man would find even more ways
of escaping taxation than he does under
the present system. The thing that we
should do-to prepare the way for still
more radical change-is to fix upon some
approximation of the income basis which
yet shall be founded upon capital valu-
alton. In other words, have different
rates of taxation for different forms of
property.
And this, in certain measure, is what
we are trying to get at today. Take the
case of man who owns house and
grounds worth $1,000 and who has, say,
$50, 600 worth of securities paying him
about 5 per cent. On his real estate he