Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-06-27
THE TEACHERS C o
TAX.

income tax prepared by the state
Teachers association. Our esti-
mate is that it would take about
TWO pages of The Tribune reading
type to print it. Very few people
who will vote on it next fall it
the necessary number of signatures
are obtained to initiate the bill
will take the time to read 1t
through, as we have just done.
We confess to a feeling of dizzi-
ness as we finished following its
multitudinous lines. The conclu-
sion we reached however is that it
is a bad bill and should be voted
down if it comes to a referendum
next fall. 1t violates the princi-
pies of sound taxation in many
places to our mind. In particular
it violates the fundamental princi-
pie of all taxation-that is to say
that taxation should be equal. In
that respect it follows the lines OF
the federal income tax. In fact
it seems to be largely formed on
the federal income tax. That is
concededly a bad model. The au-
thor of this tax publicly stated in
congress that it was unsound in
principle and violated equity and
economic law, but asked congress
to shut its eyes and vote for It,,
because we were in the midst OF a
great war and had to grab money
where it was easiest to get it. All
the worst features of the federal
income tax law are repeated in the
teachers state income tax law
sought to be initiated and passed
by a vote of the people.
Let us try to make clear the in
justice and inequity of n feature
Of this tax. Any income tax is
tax on the ability of the owner OF
the income to pay. Where the
owner is an individual it may be
assumed that the owner of a large
income has more ability to pay
than the owner of a small income
and therefore should pay a higher
rate than the small income owner.
But that principle should not ap-
ply to a corporation engaged in
business. To apply it there works
rank injustice and inequality OF
taxation. Let us illustrate the
case.
Suppose three men invest their
whole capital of $4,000 each and
form a $4,000 corporation which
makes a net profit of 10 per cent,
or $1,000 for each of them. Under
this bill they may deduct $1,000,
leaving $1,000 subject to the teach
ers' income tax. The rate would
he II of one per cent in super tax
il addition TO. normal tax, or a tax
Of $3.50, or 80 cents for each of
,i.e three rnen who put $4,000 into
it to come out of their $1,000 divi-
dcnd and be deducted at its source.
Suppose 80 men each put $4,000
into a similar corporation doing
the same sort of business and it
also made 10 per cent net profit.
or $1,000 for each of its stockhold-
ers. The total income would be
$685. and from this the state
teachers income tax would collect
at it's source four per cent in super
tax in addition to normal or flat
tax. That would make a total super
tax of $1,000 to be deducted from
each of he thirty stockholders
share of profits, or $40 each. So
here is one set Of men paying 80
cents tax while another set of men
with precisely the same ability to
paw must contribute $40 because
they happen to have invested Slo,-
600 in a large corporation instead
of a small one.
The thing is unjust, inequitable
and in violation of every sound
principle of taxation. Progressive
income taxes may be applied to in
dividual incomes. though even there
they are likely to work some in
Justice. They should W be ap-
piled to business corporations.
Mere size or bigness of the bust
ness is no measure of its ability
to pay The corporations income
does not belong to it anyway but
to the individual stockholders who
comprise the corporation and whose
ability to pay may be SO limited
that it should not be taxed at ali.
A stockholder in a very large cor
poration may have only a few hun
dred dollars a year income as his
share, and be entirely dependent