New-York tribune., 1918-08-18
Consumption Taxes
To Be Increased

In the budget for 191S-u9 it is pro-
posed to increase these rates by from
20 per cent to 25 per cent, bringing the
maximum rate up to about 80 per cent.
Taxes on war profits are levied at the
rate of 80 per cent. The failure to OBJ
tain greater increase of revenue from
consumption taxes was not due to fail
but to the fact that the rates were in
many instances high before the war
and to the interruption of commerce.,
and consequent curtailment Of con-
sumption, particularly of liquors, which
constitute the nost important source
Of such taxes. In the budget for 1915
'19 it is proposed not only to again
greatly increase the rates Of existing
consumption taxes, but tu extend their
range by adopting scheme of luxury
taxes similar to those established in
France by the act Of December, 1917.
The estimated income under the new
rates exclusive of luxury taxes) is
$793,oO0,OOO.
In the United States the European
war involves an increase of expendi-
ture even before our own declaration
OF war. This increase, as in the case
OF the United Kingdom, was met msinly
by an increase of direct taxation Gin
tie form of income taxes, taxes on the
profits OF the makers of munitions, and
taxes Oh inheritances) which grew
from $50 100000 in 1914 to 1898, AGO.
900 in 1917, while consumption taxes
tcustoms and internal increased only
from $600,000,000 to S63000O,0O0. The
act of October 8, 1917, made substan-
tial additions to internal consumption
taxes, and as a net result of decline
in receipts from customs duties and
an increase Of internal taxes, consump-
tion taxes in the year ended June go
apparently produced about $1,OO0,000,-
000 The main burden, however, was
again borne by direct taxes, which
through the increase of income taxes
and the addition Of a general excess
! profits tax grew to over $4,000 600.
Will Double Current
Year Expenditures
We are told that our expenditure for
tho current year will be double that of
the year just closed. If we arc to
maintain the financial policy already
established We must double our taxes.
There is no doubt that large additional
revenue can be derived from the in
come tax and the excess profits tax.
The rates Of the latter are still we'll
under tho English rate of 80 per cent.
While our income tax rates on the
largest incomes exceed the English
rates, on the smaller incomes thew are
much below the latter on incomes of
100000, 1872 per cent, as compared
with 37.6 per cent; on incomes of s5O,-
900, 10.2 per cent, as compared with
32.7 per cent; on incomes of $50. 900.
80 per cent, as compared with 81 per
cent; on incomes Of $4,000, 36 per
cent, as compared with 1873 per cent
on earned and 22.5 per cent on un-
earned incomes, and on incomes of
$4,000, Id per cent, as compared with
1875 per cent and IT'S per cent 1t il
evident that a substantial increase OF
income tax revenue can be obtained
from the increase in the rates on in
comes below 100000.
TO attempt to raise from excess
! profits and income taxes anything like
the whole Of the increased revenue
needed will, however, push the use of
these sources to, IL not beyond the
danger limit. 1t seems clear that the
time has come when in oEder to pre-
serve we'll balanced tax system which
will utilize the resources of the coun.
try to the full and preserve the scnse
OF an equitable distribution of the tax
burden, 30 essential to the smooth
working Of any system, we must plan
ior large extension Of consumption
taxes which will reach the great mass
OF farmers and wage esrners into whose