The interior journal. [volume] (Stanford, Ky.) 1912-1984, 1917-06-15

the EXTRAORDINARY burden Of taxes In
war times certain scientific principles
are definitely established:
How IsSes Should Be Apportioned.
~ The burden of taxes must he
spread as far as possible over the
whole community so as to cause each
individual 10 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-luyury rather
than on those Uf necessity.
CD Excuses should be imposed as far
as possible uron commodities in the
hands of the final consumer rather
than upon the articles which serve pri-
marily Us raw material for further
production
(D Taxes upon business should be
imposed as far as possible upon net
earnings rather than upon gross re-
ceipts or capital invested.
tJ) Tan, upon income which will
neccssarl,. lie severe should be both
diiferentiatcd and graduated. That is.
there sho''j be a distinction between
earned ani anoaucd incomes and there
should he hiahcr rate upon the larger
incomes. It is essential. however not
to make the income rate so excessive
as to lead to evasion. administrative
difiicultics. or 10 the more fundamental
objections which have been urged
above.
60 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-profit 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 GO
per cent. THIS is sum unheard of In
the history of civilized society. 1t must
be remembered that it 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 42h
per cent.
1t could easily be shown that tax
with rates on moderate incomes sub
stantially less than i'm Great Britain
and on the larger incomes about as
high, would yield only slightly less than
the $532 100000 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 ut the same time it
will reduce the rate ON the smaller In.
comes derived from personal or profes.
sional earnings.
II the war continues we shall have to
depend more and more upon the in
como tax. BY imposing excessive rates
now we are not only endangering the
future, but are inviting al manner Of
difficulties which even CREST Britain
has been able to escape.
Conclusion.
The House bill contains other fuHda.
mental defects which may be summed
up as follows:
ID 1t pursues an erroneous principle
In imposing retroactive taxes.
~ 1t selects an unjust and unwOrk-
able criterion for the excess-profts tax.
81 1t proceeds to an unheard-of
height in the income tax.
a. 1t imposes unwarranted burdens
upon the consumption Of the cOmmu-
nifty.
% 1t Is calculated to throw business
into confusion by levying taxes on gross
receipts instead of upon commodities.
60 1t fails to make proper use Of
stamp taxes.
% 1t follows an unscientifc system
in its fiat rate on imports.
81 1t includes a multiplicity of pet
ty and unlucrative 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:
% The amount of new taxation
should be limited to $1.250,0GO,O00-or
ut the outset to $l,5O0,0OO.00 To do
more than this would be as unwise as
It Is unnecessary. To do even this
would be to do more than has ever
been done by any civilized Govern
ment in time of stress.
% The excess-profits tax based upon
4 sound system ought to yield about
Co The ihcome-taX schedule ought 10
De revised with lowering of the rates
)n earned incomes below $4,000. and
With an analogous lowering Of the
'ates on the higher incomes, SO as not
% exceed "a per cent. A careful cal
'ulation shows that an income tax of
his kind would yield some $4500OO.-
100 additional
"a The tax on whisky and tobacco
'ught to remain approximately rs it Is. |
With yield of about $230,OO0,000.
These three taxes, together with the
tamp tax at even the low rate of the
House bill, and with an improved au-
tax, will yield over 1890
10000, which Is the amount of money
bought desirable.