Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1920-11-28
REVENUE BODY HITS GRADUATED
INCOME TAX OWING TO Federal
RATES; PREFERS Low FLAT TAX
Would Allow Same Exemptions as Federal
Tax to Simplify Administration = Expect
Revenue of 100000 Annually From Two
Per Cent Act-Would Exempt Intangibles.
By CLINTON p. ANDERSON.

/ for gauging taxpaying ability. Part
of the states revenue is collected
| by reference to the property n
man owns. the remainder Is raised
| BY reference to the income q man
receives.
While stressing tho importance
% the two standards, the commits
| sion declares that property would
form 4 more satisfactory single
| basis than income In n state liko
New Mexico because the state Is
still on development basis. Many
men and industries are land poor
and their returns are meagre, al
though the potential value of their
property is great.
May Gut PROPERTY Tax.
1t Is expected by the comm!a-
sioners that an income tax such as
they propose would result in a
slight reduction to such property
owners and not In an increase in
Il cir total tax burden. since the
income tax would reach a certain
taxpaying ability which now Is not
topped for state purposes at all.
This class includes laborers who
ut tiVt oNli pioptily phI WhOSc
salary is above the minimum Of
subsistence and also men whose
wealth ia represented by notes and
credits. The commission declares
that only one-fortieth of the In
tangible wealth of New Mexico
comprising monies, notes and
credits is on the assessment books
and there is small possibility that
any great portion of it will ever
be under a lone property tax.
Turning to the question of con"
stitutionality the commission was
confronted by five questions. First,
as to the constitutionality of a tax
on the income of a foreign corpo-
ration apportioncd to the state by
.ome more or less arbitrary
method; second. of "a progressive
rate; third, of n tax on incomes
on Il flat rate; fourth. of a tax on
incomes of natural persons exclud-
ing corporations as such, and
fifth, the question of the constitu-
tionality of personal exemption.
The difficulties involved in the
first and second questions were
avoided by decision to recon-
mend a fiat rate.
Income Not Property.
On the question as to the con-
stitutionality of flat rate income
tax, the commission declared Its
belief that income could not be
properly classed as property at all:
il formed a class or classes of tax
able subjects, and hence accorded
with the New Mexico constitution
which provides that taxes levied
upon tangible property shall be In
proportion to thes value thereof
ana taxes shall be equal and uni
form upon subjects of taxation OF
tho same class
As to the constitutionality OF
exempting corporations as such.
the commission believes that q.
classification which would exclude
corporations but tax their divi-
dends received by resident stock
holders would be upheld by the
courts. On the question of exemp-
tions, the commission holds that IL
income is not classified as property
the courts will allow exemptions.
Opponents to that theory, at the
commissions hearings. attempted
to show that the constitution of the
state of New Mexico only specified
exemptions to charitable and edu-
cational institutions and $500
exemption right which the legisla-
ture might confer on the heads of
families. They held that the fall
ure to mention other rights pro-
hibits them. While the commis-
sion is silent on the point, 1t is In
testing to note that the 1919 legis.
CONTINUED op Page Twp,).