Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-08-19
METHODS OF TAXATION
NOW PUZZLE LEARNED
Various Systems Have Not Kept Pace
With Great Changes in Struc.
ture of Society.

farms for the population. There are
not enough people to eat all the food
that Is produced. Rural government ex-
penses are heavy Taxation OF the land
must be employed to pay then1-and In
too many cases the land has actually
next TO no value. There Is too much
Of it under cultivation. Taxation main
tsins an artificial and uniustif1ed value.
The change also has affected the cit
los The banker, the lawyer. th5 street
cleaner and the beggar no longer place
their income in real estate investments
to the extent that these are true
index Of their community Responsible
ity. Many cities try to meet this situa-
ton by taxing so-called "intangioles
such as stocks and bonds. money in
bank. diamonds. etc. This Is all very
we'll rs far as il goes. But experience
/ has shown that the rate must be kept
very low or the return will be very
small The efficacy Of the Intangible
tax depends largely on the personal
honesty of the individual. The assessors
must depend on his own statement Of
his property Various penalties are pre-
scri5ed for false returns, and occasion
ally an example is made of somebody
but the likelihood Is remote that any,
| body ever will be caught in a lie in his
tax statement. If he is II simply Is q
| case of tough luck
The risk is small The taxpayer will
| not take this small risk. however, when
| the rate Is very low But experience
| has shown that inevitably as the rate
/ rises the amounts Of concealed assets
| also rise. Human nature has not
| changed with the changing ecoaonnic
| structure of society. Hence the in
| tangible tax is an inadequate sub
/ stitute for the real property tax An
| apartment house however high the tax
| on 1t may be, can't be hidden from the
| eagle eyes of the assessors. and If the
/ levy Is not paid the building can be
seized and sold By the Government. But
| the Government would have a sweet lob
| seizin q block of stock in the Capital
| Traction Co.. or ladys diamond ring.
There is an honest desire everywhere.
! 1t was reported at the Institute OF
| Public Affairs. to lift some Of the tax
burden of general property. But every
plan presents complexities that ere
likely to cause serious trouble. state
| and local governments continually are
/ III danger of being sucked into vicious
circle. Unless the tax is calculated
with consideration for many economic
and sociological conditions the source
OF taxation simply disappears.
Two Most Notable Plans.
The two most notable plans dis
/ cussed at the Institute of Public At
/ fairs round table we're those of the pro-
/ srossivs income tax and the retail sales
| tax. The first. il was pointed out Is
fair so far as it goes-which is to
/ exactly that point where its burden is
/ great enough to induce the recipient of
/ the taxed income to move to some other
/ State with lower rate. The retail
| sales tax now is generally in effect in
/ most ScateS in one specialized form
the gasoline tax. Whether it should be
carried much further was seriously
| questioned by economists gathered at
the University of Virginia round tables.
| 1t was characterized by Mark Graves,
tax commissioner of New York. as a
'regreSsive tax" It is not difficult TO
collect and is certain to Weld con-
siderable income, but Mr. Graves point
ed out that IL should be adopted By
States only 10 ralSo additional revenue
after the general property tax and the
progressive incCrie tax have failed to
meet the bills Of government One Sc
gious objection Is that i isn't fair. Every
/ retail purchase is taxed. the tax being
collected by the Storekeeper Now the
poor man spends all he earns on the
necessities Of life for himself and his
family. Consequently he is taxed on
his entire income, The rich man spends
only small proportion of his income
and is taxed only on that proportion.
The right of determining their own
/ tax system is a 1ealously guarded pre-
/ rogative Of the States Consequently
there are great INEQUALITIES and strats-
/ gems for attracting taxable wealth from
i one State to another.
Southern States Profit.
/ just now the Southern states are
orofiting, Their tax burdens are not
/ 50 heavy. because they haven't so many
nuhlic improvements 70 maintain
+ Hence they ere drawing business from
I the North-notably the textile mills Of
/ New York and New Englsnd. But, Mr.
+ Graves points out. ii probably is short
+ sighted policy on the part of these in
duStries 70 move. because an increase in
wealth and population invariably Is
i followed by correspondents increase in
taxes. and the South eventually will be
/ obliged TO make lust as heavy lsvies as
/ the States which have been abandoned.
/ Taxes, says Mr.. Graves. are increasing
/ everywhere. He does not consider this
a bad sign, but rather an indication Of
/ advancing civilization. There seems 70
/ be normal increase Of or 4 per cent
/ a year al present. This simply means
/ that a people with bigger incomes are
( demanding better schools, streets, sew
/ erS. parks. etc, and 10 obtain them they
/ must pay for them When the tax rate
/ ceases to so up IL Will be sign Of re-
| erosion. The problem Is nor one Nf
/ lowering taxes, but of distributing them
/ equally, and at the same time III a man
ner which will not interfere With the
/ smooth functioning Of the economic
machine
Profound Changes ForeSeen.
But this condition cannot 80 on with
/ out producing profound changes. one
Of these, pointed out by Mr.. Graves. Will
De the necessary depopulation of unpro-
ductive areas-hy the police power Of
! the State as last resort Every state.
! ne says. has sections In which IL can't
afford to let folks live for long time
to come.
These sections gre rundown farming
areas So long as people live in them
, II Is necessary 10 maintain roads, SAINT
! taticn and schools The schools eS-
! pectally, are demanded by the State -
long as there is a single child In the
. district 10 be educated These conf
munal enterprises cost more than can
be raised by local taxation on real es-
| tate which is declining in value. Con-
sequently the State must supply the de-
fciency
The day is bound 20 come. Mr.. Graves
| says, when the State will refuse 70 do
this any longer. II will be cheaper 20
provide the inhabitants Of the unpro-
ductlre areas with homes in pro6uc-
duetIve areas which can maintain lc-el
enterprises with local taxation--an5
simply order them out. Then the absn-
doned district will be allowed 10 revert
10 forest until the population ~ ne
country grows 10 the poin, where n
actually Is needed for agriculture.
As an example. Mr. Graves cited one
large district IL New York state I; Is
Sparsely populated Only one family