, 1917-07-05


% The burden of axe mus 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 hhe community at
large, should be imposed as far as pos
sible on articles of quasi-luSury rather
than on those Of necessity.
49, Excuses should be imposed as far
US 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.
"a Taxes upon business should be
imposed as far as possible upon net
earnings rather thai upon gross re-
ceipts or capital invested.
C5l Taxes upon income which will
necessarily be severe should be both
differentiated and graduated. That is,
there should be a distinction between
earned and %unearned incomes and there
should be n 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 wal constitute the most obvious
and reasonable source of revenue dur-
ing wal times. But the principle upon
which these war-proflt taxes are laid
must be equitable in theory and easily
calculable in practice.
Tho 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 in
the history of civilized society. 1t must
be remembered hat it was only after
the first year Of the wal that Great
Britain increased her income tax to the
maximum of "a per cent, and that
even nov In the fourth year of the war
the income tax does not exceed 42l&
per cent.
1t could easily be shown that a 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.OOO.O00 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 II
will reduce the rate on the smaller In.
comes derived from personal or profes
sional earnings.
If 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 e~ndangering 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 principle
in imposing retroactive taxes.
(2) 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 IN gross
receipts instead of upon commodities.
g. 1t fails to make n proper use of
Stamp taxes.
ca 1t follows an ~unscientifc system
in its fiat rate on imports.
ROY u tnal,,lnr &. -ar,It;pItntt- 80 not
ty and unlucrative taxes, the vexatious-
uess 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:
IN The amount of new taxation
should be limited to $780, 900, OOO-or
at the outset to 81. 500. 900, 200. 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
been done by any civilized Govern
ment in time of stress.
(2) The excess-profits tax based upon
a sound system ought to yield about
$50O,000,O 00.
(3) The income-tax schedule ought to
be revised with a 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 81 per cent. A careful cal
culation shows that an income tai of
this kind would yield some 100000
900 additional.
~ The tax on whisky and tobacco
ought to remain approximately as 1t is.
with a yield of about $230,OOO.OOO.
These three Tn together with the