Great Falls daily tribune., 1921-01-07
A ALL THINGS YOURS:-seek 20 first
IA Y the kingdom Of God and his righteousness;
1 NX and oil these things shall be added unto \
~ you.-Matthsw 8. 80.
THE TAXATION OF INCOMES

/ introduced to our federal tax
system by the Democrats in the first
administration of Woodrow Wilson
They were designed to supply the
revenue lost to the government
through the lower tariff laws adopted
by Democratic congress and the
placing of most raw materials on the
free list. The first revenue tax bill
was very mild affair. The rates
were low, and these only applied to
incomes of over five thousand dol
lars. The country welcomed the
new tax. The mass Of the people
felt that they were not affected by
it, and those who paid it felt that
it was not very burdensome.
The. theory of the income tax as
distinguished from the tax on &C
CURED or saved wealth is sound
enough A man may have an income
of 100000 a year as salary, and
if he spends it all and saves none
Of it, he may have no property sub
ject to property tax. 1t is just that
the ability to earn lerge sums
should be taxed just as the ability
to save and tranform such savings
into capital or property involves
taxation.
The revenue derived from the in
come tax was large and easily col
lected at first. It was popular
;.ax with those who had incomes
exempt from its operation besides.
Naturally, it would grow with the
growing Of wealth of the country
and the growing need Of the govern
rnent for more revenue. This latter
need grew faster than increased in
comes grew. and so congress in
creased the rates and decreased the
exemption and SO got more money
out of the income tax. and all was
merry as a marriage bill. Some Of
the n1en and corporations with large
incomes were little uneasy, but
their worries worried nobody but
themselves.
Then came the great war and the
good old income tax began to swell
like poisoned pup. 1t grew and
II grew and it grew. until the larg-
est incomes were taxed as high as
seventy per cent Of the whole. Still
there was not much howl over it.
Many Of these men were patriotic
and willing to part with the greater
part oRtheir income to win the war.
And if they were not willing the
public did not give a tinkers oath
for their disinclination to pony up
the major part Of their inc comes.
But the war ended and a change
came over the spirit of the multi
rnillionaires with big incomes. Gen.
orally these men had their fortunes
invested in stocks or bonds of some
productive enterprise II, it was
sound and safe investment it brought
them in from six to eight per cent.
If it was the former rate the income
tax Of seventy per cent reduced 1t to
less than two per cent. 1t 1t was the
latter rate it was reduced to less than
four per cent net by the tax. Such
capitalists soon began to pull their
invested money out of productive
enterprises and invest it in govern
nent securities that were free OF
taxes and that paid them a much
larger net return. Some took their
money out of the country entirely
and invested it IN foreign countries
that paid higher wage to capital
than we do in this country. The
government at Washington began to
find the returns from big incomes
drying up. Instead of collecting sew
enty per cent of them they collected
nothing at all from some of them.
Besides productive enterprises began
to find capital scarce and very high
priced. It was soon apparent that
these high super-taxes on big in
comes must be cut down il we were
to get any revenue al all from such
taxes. They will be. Just how much
they will be cut down we do not
know, but there is no doubt that
congress will keep the rate as high
as they can without cutting the
throat of the goose that lays golden
eggs for them. We have an idea
that this point will be reached when
the tax brings the net wages of capi-
tai much below five per cent, for the
world is very eager to get capital
these days on five per cent net
basis. Uncle Sam is willing to pay
that for it himself.
Now these are facts that are very
pertinent to any consideration of
state income tax as recommended by
Governor Dixon to the Montana leg