Semi-weekly herald., 1917-07-05
MsWCsS~

the extraordinary burden or taxes In
war times certain scientific principles
are definitely established:
How Taxes Should BE Apportioned.
a The burden of taxes must be
spread as far as possible over the
whole community so as to cause each
individual to share In the SACRIFICES ac-
cording to his ability to pay and ac-
cording to his share in the Government
(2) Taxes on consumption, which are
necessarily borne by the community at
large, should be imposed as far as pos
sible on articles of quasi-luxury rather
than on those OF necessity.
(3) Excises should be imposed as far
as possible upon commodities in the
hands OF the final consumer rather
than upon the articles which servo pri-
marily as raw material for further
production.
az Taxes upon business should be
imposed as far as possible upon net
earnings rather than upon gross re-
ceipts or capital invested.
% Taxes upon income which will
necessarily be severe should be both
differentiated and graduated. That is.
there should be distinction between
| earned and unearned incomes and there
should be higher rate upon the larger
incomes. 1t is essential however. not
to make the income rate so excessive
as to lead to evasion, administrative
| difficulties, or to the more fundamental
objections which have been urged
above.
(6) The excess profits which are due
TO the war constitute the most obvious
and reasonable source OF revenue dur
! ing war times. But the principle upon
which these war-pro6t taxes are laid
must be equitable in theory and easily
calculable in practice.
The Proposed Income Tax.
The additional income tax as passed
by the House runs up to a rate of 60
per cent. This is a sum unheard of Ia
the history of civilized society. 1t must
be remembered that 1t was only after
the first year of the war that Great
Britain increased her income tax to the
maximum of "a per cent, and that
even now in the fourth year of the war
the income tax does not exceed 42Ia
per cent.
1t could easily be shown that tax
with rates on moderate incomes sub
stantially less than in Great Britain.
and on the larger incomes about as
high, would yield only slightly less than
the S532, 900 900 originally estimated in
the House bill
1t is TO be hoped that the Senate will
reduce the total rate on the highest in
comes to "a per cent, or at most to 40
per cent, and that at the same time 1t
will reduce the rate on the smaller in
comes derived from personal or profess
sional earnings.
" the war continues we shall have to
| depend more and more upon the in
come tax. BY imposing excessive rates
now we are not only endansering the
future, but are inviting all manner of
difficulties which even Great Britain
has been able to escape.
Conclusion.
The House bill contains other funda-
mental defects which may be summed
up as follows:
D 1t pursnes an erroneous principle
in imposing retroactive taxes.
(2) 1t selects an unjust and unwork-
able criterion for the excess-profits tax.
o. 1t proceeds to an unheard-of
height in the income tax.
a. 1t imposes unwarranted burdens
upon the consumption of the commu-
nifty.
o. 1t is calculated to throw business
into confusion by Ievying taxes on gross
receipts instead OF upon commodities.
(6 1t fails to make proper use of
stamp taxes.
a. 1t follows an unscientific system
in Its fat rate on imports.
C) 1t includes multiplicity OF pet
ty and unlucradve taxes, the vexatious-
ness of which is out of all proportion to
the revenue they produce.
The fundamental lines on which the
House bill should be modified are sum
med up herewith:
O The amount OF new taxation
should be limited to Sl,250 OO0OO0-or
at the outset to S1.50O0o0OO0 To do
more than this would be as unwise as
1t is unnecessary. To do even this
would be TO do more than has ever
btth hoht bg my 1OAtEu-
ment in time of stress.
(2) The excess-proflts tax based upon
sound system ought to yield about
$500 OOO,O 900.
(3) The income-tax schedule ought to
be revised with lowering OF the rates
on earned incomes below $4,000. and
with an analogous lowering of the
rates on the higher incomes. so as not
to exceed "a per cent. A careful cal
culation shows that an income tax of
this kind would yield some $450000,-
900 additional
~ The tax IN whisky and tobacco
ought to remain approximately as 1t Is.
Win yield of about S230000OO
These three taxes, together with the
stamp tax at even the low rate of the
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