Mexico Missouri message., 1917-06-14

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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 al
large, should be imposed as far as pos.
sible on articles Of quasi-luxury rather
than on those Of necessity.
(3) Excuses should be imposed as far
as possible upon commodities in the
hands OF the final consumer rather
than upon the articles which serve 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 n distinction between
earned and uneaned 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.
90 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 rate OF 60
per cent This is a 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 4215
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 $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 at the same time 1t
will reduce the rate on the smaller in
comes derived from personal or profess
sional earnings.
| If the war continues we shall have to
| depend more and moro upon the in
come tax. BY imposing excessive rates
now we are not only endangering 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:
a. 1t pursues an erroneous principle
in imposing retroactive taxes.
~ 1t selects an unjust and unwork-
able criterion for the excess-profits tax.
90 1t proceeds to an unheard-of
height in the income tax.
a. 1t imposes unwarranted burdens
upon the consumption Of the commu-
nifty.
5) 1t is calculated to throw business
into confusion by levying taxes on gross
receipts instead of upon commodities.
(G) 1t fails to make a proper use OF
stamp taxes.
| "a 1t follows an unscientific system
in its nat rate on imports.
(Sl 1t includes a multiplicity of pet
ty and unlucrative taxes, the vexatious
ness of which is out of all proportion ia
the revenue they produce.
The fundamental lines on which tho
House bill should be modified are sum.
med up herewith:
U The amount of new taxation
should be limited to $1,250, ,000,O00-ot
at the outset to $1,500,O00,0O0 To dc
more than this would be as unwise as
1t 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.
(2) The eXcess-profits tax based upon
sound system ought to yield about
S5OO,OO0,00O
C3) The income-taX schedule ought tC
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 moi
to exceed "a per cent. A careful cal
culatiOn shows that an income tax oi
this kind would yield some $450000,
900 additional
az The tax on whisky and tobacco
ought to remain approximately as 1t is
with a yield of about $230,O000O0.
These three taxes, together with the
stamp tax at even the low rate Of the
House bill, and with an improved au
tomobile tax, will yield over $3.50,
100000, which is the amount of money
thought desirable.
The above program would be in har
mOny with an approved scientific sys