The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1917-06-29

tHc extraordinary hurt.Gn OF taxes 1n
war times certain scientific principles
are definitely established:
How Taxes Should &c Apportionod.
~ The burden " 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 to pay and ac-
cording to his share in the Government.
! CD Taxes Oh consumption, which are
necessarily borne by the community at
large, should be imposed as far as pos
stble on articles of quasi-luxury rather
i than on those Of necessity.
1 60 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 MS 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 q distinction between
earned and unearncd 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.
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 rate Of 60
per cent This is Il sum unheard of in
the history Of civilized society 1t must
be remembered that it was only after
the first wear 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 1917
per cent.
1t could easily be shown that tax
with rates on moderate incomes SUBJ
stantallv less than in Great Britain,
and on the larger incomes about as
high, would yield only slightly less than
the $:J32, 10000 originally estimated in
the House bill.
1t Is to he hoped that the Senate will
reduce the total rate on the highest in
comes to "a per cent, or at most to ~
per cent, and that mt the same time Ii
, will reduce the rate on the smaller In
comes derived from personal or profess
! siOnal earnings.
II the war continues we shall have 10
depend more and more upon tho in
come tax. BY imposing excessive rates
now we are not only endangering the
future. but are inviting all manner of
difficulties which even Great Britain
has been able to escape.
Conclusion.
The House bill contains other funda-
mental defects which may be summed
up as follows:
a. 1t pur$urS an erroneous principle
i'm imposing retroactive taxes.
(2) 1t selects an unjust and unwOrk-
able criterion for the exCeSS-prOtits tax.
%, 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 lcvying taxes on gross
receipts instead of upon commodities.
O. 1t fails to make proper use of
stamp taxes
q 1t follows an unscientific system
i'll It's hat rate on imports.
81 1t includes multiplicity of pet
ty and authoritative 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 he modified are sum-
med mp herewith:
GI The amount Of new taxation
should be limited to $3.50 OOOOOO-or
at the outset to &1,5O0.OmOOO To do
more than this would hr a< unwiSe as
it H. unnecessary To do even this
would be to do more than has ever
been done by any civilized Govern
ment in time Of stress
! o. The exrr&S-prD:::, lax based upon
: Il Sound &,<t"m ul.rhi to yield about
! SJOOOUO.O00
al, II. n 70