The herald., 1917-06-14

whole community SO as 10 cause each
individual to share in the sacrifices &C
cording to his ability to pay and nc
cording to his share in the Government.
90 Taxes on consumption, which are
necessarily borne by the community at
large, should be imposed as far as pos
sibe on articles of quasi-luxury rather
than on those Of necessity.
90 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.
"a Taxes upon business should be
imposed as far as possible upon net
earnings rather than upon gross re-
ceipts or capital invested.
5) Taxes upon income which will
necessarily be severe should be both
differentiated and graduated. That IS,
there should be Il 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.
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-prOtit taxes are laid
must be equitable In theory aud easily
Calculablc in practice.
The Proposed Income Tax.
The additional income tax as passed
by the House runs up To a rate OF I'd
per cent This is sum unheard Of in
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 81 per cent, and that
even now in the fourth year Of the war
the income tax does not exceed 42l2
per cent.
1t could easily he 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 $50, 900 600 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 81 per cent. or at most to 10
per cent. and that at the same time it
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
como tax. BY imposing excessive rates
now We are not only endsneering 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:
% 1t purSues an erroneous principle
in imposing retroactive taxes.
90 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.
az 1t imposes unwarranted burdens
upon the consumption CT the cOmmu-
nifty.
90 1t Is calculated TO throw business
into confusion by levying taxes on gross
receipts instead of upon commodities.
o., -
stamp taxes.
% 1t follows an unscientific system
in its fiat rate on imports.
~ 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:
Cd The amount OF new taxation
| should be limited to 81 ,2J0, 900. 000-or
, at the outset to S1.5OO,OO0OO0. 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.
C2) The excess-profits tax based upon
a sound system ought to yield about
$500, 100000.
81 The income-tax schedule ought to
i 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 tax of
this kind would yield some $4,000
900 additional.
az The tax on whisky and tobacco
ought to remain approximately as 1t Is.
with yield of about $3.50. 100000.
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-
TEN. 1t will do away with almost all
of the complaints that are being urged
against the present. 1t will refrain
| from taxing the consumption of the
poor.
| 1t will throw a far heavier burden