Evening star., 1924-07-27
BY EDWARD NELSON DINGLEY.

IL ED AMI NELSON
NE of the newest and finest
buildings in Washington,
acposs the street from the
Treasury Department. is a
magnificent structure over the portals
of which are inscribed these words
Income Tax Unit" Here are the
headquarters of the officials having
In charge the personal income tax.
Several blocks away, in one of the
temporary war period buildings
known as Annex No. 2" with 1000
rooms, hot in summer and cold in
winter. are the thousands of clerks,
accountants and auditors, whose duty
1t is to examine all the personal in
come tax returns. many of the cases
two or three years behind. Over on
10th and c streets. a quarter of a
mile from annex No. 2" and a long
distance from the Treasury and the
Income Tax Unit" Headquarters. is
the Income Tax School of Instruc-
uon In another building on 18th
street. near the Unit Building" in
Annex No L. is the manager of the
Income Tax School and personnel of
the income tax unit. The chief of this
widely scattered division of the fed
eral government, the commissioner of
internal revenue, sits in the northeast
corner of the Treasury Building.
Inc internal revenue bureau is
popularity known as the meal ticket"
OF the Federal Government-thatis is. il
supplies the bulk of the revenue of
the Federal Government, out of which
all salaries and expenses are paid.
This important branch of the Govern
ment, with it's priceless documents
and records, is scattered in at least
six or seven buildings, some of them
hretraps. The palatial building hous-
ing the Veterans Bureau, constructed
during the World War, is one of the
biggest money outlets of the Govern
ment establishment. and is housed in
magnificent building. The Internal
Revenue Department, the biggest in
come-getting branch of the Govern
ment, Is scattered all over the city.
ana poorly housed, in the main. This
is one argument for a new Federal
building devoted entirely to the In
ternal Revenue Department.
When President Taft in his mes
sage to Congress, June 16, 1909, rec
commended that Congress offer an
amendment to the Constitution for
ratification by the States providing
for an income tax that would stand
the test of the Constitution neither
he nor the country realized to what
vast proportions this source of Gov
ernment revenue would grow and
how accurately it would reflect the
growing wealth and prosperity Of the
nation
Income Tax Not New.
An income tax was not new thing
in 1909. 1t was suggested by Secre-
tary of the Treasury Dallas way back
in 1915 as a means of assisting in
defraying the expenses of the War
of 1912. but little attention was paid
to it until the outbreak of the Civil
War in 1861. 1t was matter of sur
prise that, in view of the hostility to
any tax savoring of inquisitorialness
it should have passed Congress. This
tax of 1861 was a direct or appor-
tional tax, in accordance with the
provisions of the Federal Constitu-
tion, mo capitation or other direct
tax shall be laid unless in proportion
to the census or enumeration" etc.
The income tax of 1861 was tempo
rary and imposed with a view of
raising money quickly and not inter-
fcring with industry. All personal
incomes below $500 were exempt; all
above that taxable at the uniform
rate of 3 per cent, irrespective of the
source. The income tax Of 1862 re-
duced the exemption to $500 and made
the rates slightly progressive. The
income tax of 1864 was still more
progressive, from per cent ($60O to
S5.0OO) to a uniform rate of 10 per
cent above $4,000 income. Later
incomes over $4,000 were rendered
dutiable at the uniform rate of 10 per
cent.
Income tax receipts from 1853 to
1866 climbed to $73,434,000, then
gradually declined until 1877 when
the amount raised was only $97.79.
The total revenue from this source
of taxation from 1863 to 1877 was
more than $3.50, 200, ,000-a sum sorely
needed by the Federal Government
to conduct the Civil War and take
care of postwar conditions. This In
come tax was an experiment, unpop-
ular, vet effective. Economists point
ed out that under the same law the
returns in 1867 were $7,0O0,000 less
than in 1866, and $6,50O,000 less in
1859 than in 1865; the argument being
that an income tax is "evaded al
ways, and promotive of fraud"
Rejected by Court.
President Tafts suggestion was the
result of the failure of the income
tax of 1894. The income tax provision
of the tariff act of 1894 marked a
new era in American finance. How
ever, the Supreme Court declared 1t
unconstitutional because it violated
the apportionment rule of the Consti-
tuition. The court assisted Congress
by pointing out way to remedy the
difficulty, and the result was the six
teenth amendment to the Constitu-
tion, ratified by all the States except
Connecticut, Florida, Pennsylvania,
Rhode Island, Utah and Virginia.
This amendment gives Congress
power ito lay ana collect taxes on
incomes from whatever source de-
rived, without apportionment among
the several States, and without regard
to any census or enumeration"
The words from whatever source
derived" caused some confusion Of
thought and hesitancy Of ratifica ton.
much favorahlo pnhlfc sentiment