The midland journal. (Rising Sun, Md.) 1885-1947, 1917-06-15


are soon to come.
Great Britain's Policy.
Take Great Britain as an example
During the first year Of the war she
increased taxes only slightly, in order
to keep industries going at top notch.
During the second year she raised by
new taxes only 9 per cent. Of her war
expenditures. During the third year
she levied by additional taxes lover
and above the pre-war' leveD only
slightly more than II per cent. of her
war expenses.
If we should attempt to do as much
in the first year Of the war as Great
Britain did in the third year it would
suffice to raise by taxation $1,250,O00,-
600. If, in order to be absolutely on
the safe side, it seemed advisable to
increase the sum to 81 500, 100000, this
should, in our opinion, be the maxi
mum.
In considering the apportionment OF.
the extraordinary burden Of taxes In
war times certain scientific principles
are definitely established:
How Taxes Should Be Apportioned.
a. 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 &C.
cording to his ability to pay and &C
cording to his share in the Government
e. Taxes on consumption, which are
I'll Nv ho fu nj
large, should be imposed as far as pos
sible on articles of quasi-luxury rather
than on those of necessity.
81 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.
o. Taxes upon income which will
necessarily be severe should be both
differentiated and graduated. That is,
there should be 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.
(0 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-pro1t 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 tosa 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.
It 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 $3.50 O00,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 1t
will reduce the rate en- the smaller in
comes derived from personal or profess
sional earnings.
! If the war continues we shall have to
| depend more and more upon the in
come tax. BY imposing excessive rates
how 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 takes.
| (2) 1t selects an unjust and unwork-
able criterion for the eXcess-proflts tax
81 1t proceeds to an unheard-of
height in the income tax.
| a. 1t imposes unwarranted burdens
upon the consumption of the commu
1 nifty.
! 90 1t is calculated to throw business
| into confusion by levying taxes on gross
receipts instead of upon commodities.
| Co 1T fails to make a proper use Of
/ stamp taxes.
/ @ 1t follows an unscientific system
/ in its fiat rate on imports
(&) It Includes multiplicity of pet
J 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-
Z unoI nm herewith.