Evening star., 1932-02-09
CHALLENGE ON TAX
METHODS IS GIVEN
New Wisconsin Law May
Produce Test of Federal
Levies.
BY JOHN F. MILLER.

For the first time one of the States
has definitely challenged the right OF
the Federal Government to the exclu-
slve use of the income surtax. Gov.
La Toilette has signed the bill under
which Wisconsin will impose an emer-
gency tax with rates ranging from l to
7 per cent. Since the regular rate also
ranges from l to per cent, this means
maximum tax Of IA per cent, which
the Federal levy.
The Federal income tax Is really two
taxes-a normal tax and a surtax. OF
the two, the surtax is by far the most
important. In $780, for example, 210,-
289 persons with net incomes of sis, 1000
or more paid 81 per cent of the total
tax. or course, a part of these pay
ments are normal taxes" but the
largest portion consisted of surtaxes.
If the proposal now before Congress- to
increase the maximum surtax from 20
to 40 per cent, is adopted the surtax
will become even more important.
Proceeds for Relief.
Adding the proposed maximum Fed
eral rate of 46 per cent Is per cent
normal and 40 per cent surtax) to the
maximum Wisconsin rate of ii per
will probably be payable by Wisconsin
residents who are fortunate enough to
be in the upper brackets.
The proceeds of the Wisconsin levy
are to be used for unemployment relief.
There is possibility. therefore, that
the emergency tax will be eliminated
when the need for such relief ceases to
exist. 1t might be pointed out in this
connection, however, that none of the
% States having an income tax have
ever reduced the rates.
One argument against the increase
was that it would induce wealthy resi-
dents of Wisconsin to remove to other
States. In opposition to that, it was
pointed out that when the Wisconsin
income tax was adopted in 1911, it
was said that the State would not only
lose its wealthy residents, but its cor
poration business as we'll Nothing like
that has happened. On the contrary,
the Federal Government adopted a
similar levy in 1913, and since then %
other States have followed Wisccnsins
example.
In the following IT States, the IN
come tax is imposed upon both indi-
viduals and and corporations: Arkan-
sas, Georgia, Idaho, Massachusetts,,
Mississippi, Missouri. New York. North
Carolina, North Dakota, Oklahoma,
Oregon, South Carolina, Tennessee,
Utah. Vermont Virginia and Wiscon-
sin. In California, Connecticut and
Montana, the tax is imposed only upon
corporations. In Delaware, it is i'm
posed only upon individuals, and in
New Hampshire and Ohio only upon in
terest and dividends received by indi-
vidualS.
Illinois will be the twenty-fourth IN
come tax State if Gov Emmerson signs
the bill which his Legislature has just
passed. The Illinois law, like that Of
Delaware, proposes to tax individuals
only.
Mills Suggestion.
The adoption of the Wisconsin
emergency tax is just another illustra
ton of the need for coordination be-
tween Federal and State taxing sys-
TENS. experts declared today. The new
Secretary of the Treasury, Ogden L.
Mills. has suggested survey for that
purpose. they pointed out.
Outside of Wisconsin, the highest
rate of any State income tax is per
cent, excep. that in Oregon where divi-
dends and interest are subject to an
s per cent levy. Six per cent is the
maximum normal tax proposed by the
Treasury Department in its recommen-
dations to Congress.
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