The Harrison times., 1917-06-16

war lultH Ntllhlu SCleulluC pTlnclpleH
are definitely established:
How Taxes Should Be Apportionsd.
Cn 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 10 pay and ac-
cordiug to his share in the Government
% Taxes on consumption. which are
necessarily borne by the community at
large, should be- imposed as far as pos
sible on articles Uf quasi-IuXury rather
than on those Of necessity.
CS) EXcises should Le imposed as Tar
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
(5l Taxes upon income which will
necessarily be severe should be both
differentiated and graduated That is,
there should be a distinction between
earned and uneamed incomes and there
should be a 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-protlt 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 a 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 "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 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 II
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
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:
1) 1t pursues an erroneous principle
in imposing retroactive taxes.
(2) 1t selects an unjust and unwork-
able criterion for the excess-profits tax.
(3) 1t proceeds to an unheard-of
height in the income tax.
(4) 1t imposes unwarranted burdens
upon the consumption of the commu'
nifty.
90 1t is calculated to throw business
into confusion by leyying taxes on gross
receipts instead Of upon commodities.
CO. 1t fails to make proper use OF
stamp taxes
% 1t follows an unscientific system
in its fiat rate on imports.
(S) 1t includes 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 81 $50, 900. .0OO-0f
at the outset to 81 500,0O0O00 To do
more than this would be as unwise M
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.
(2) The excess profits tax based upon
sound system ought to yield about
$5OO,OOO,0O0
81 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 si5O,OOO.-
600 additional
a. The tax on whisky and tobacco
ought to remain approximately as it IL,
with yield Of about S230,000000.
These three taxes. together with the
stamp tax at even the low rate Of the
House bill, and with an improved au-