Evening star., 1932-06-05

that there is to be considered the addi-
tional burden proposed by the income
tax on persons who own no intangibles
Means New Taxes as Wen.
soften an income tax is thought of
only as taking the place of the property
of the Wisconsin State Tax Commission
in the January bulletin of the National
Tax Association. 1T was so thought Of
prior to its enactment In Wisconsin,
and for some time thereafter it was
talked about as II 1t were in fact such
tax. The truth is that an income tax
which taxes the net income Of all indi-
viduals and corporations Is a tax upon
income from five general sources: (a)
A tax upon the income from intangibles;
90 q tax upon income from personal
services; (c) tax upon income from
rents; I'D tax upon income derived
from the sale Of property of all kinds:
(e) tax on income derived from busi-
ness"
Mr.. Rosa suggests that income be
classified as to source and that the rates
to be applied In arriving at the tax be
varied according to the source.
If there are inequitable provisions of
the intangible tax law, as mentioned
by Mr.. Richards, 1t has been suggested
that they could be removed by amend
ment directly.
A Conditional Endorsement.
The Presidents Commission on Home
Ownership favors the income tax
principle, in spite Of certain admitted
shortcomings. In its report the follow
ing will be found: "The recommended
tions of the income tax. personal and
corporate, Of the committee, are made
with full understanding Of the weak
nesses and defects Of the State income
tax. These defects are real and grave,
but, In the opinion Of the committee,
they are markedly less serious than the
evils and defects Of the property tax
After all is said, the income tax en-
bodies this great practical advantage:
The taxpayer Is not called upon to pay
taxes unless he has earned or received
In q rough way the income tax, in
practice as well as In theory, is ad-
justed to ability to pay. We repeat,
however, that the introduction of the
income tax is justified only where it
replaces an equal volume Of more
harmful taxation"
Heavy Tax on Real Property Here.
The Bureau of Efficiency also favors
the income tax principle. Its report
points out that property in the Dis
trict bears much more than its burden
Of taxation. OF the cash receipts from
all sources last year of $32, ,147 SOL, the
general property taxes produced $27,-
286, ,3l9. These significant figures, 4"
the report says, show an abnormal
situation, In which real and personal
property are bearing a disproportionate
part Of the cost Of the municipal gov
eminent. Scarcely tax authority can
be found to uphold the property tax as
the chief source Of direct contribution,
and yet in the District it constitutes IS
per cent Of the total revenues"
The report also claims that 1t is
harder to dodge income taxes than per-
sonal property taxes.
Income Tax Evasion.
But it may be pointed out that
evasion Of income taxes as well as OF
the taxes on intangibles has been dis
closed, both in violation of law and
within the letter Of the law though in
violation Of its spirit. Evasions Of
the latter kind are possible and
practicable for the man of wealth
who may act on advice of skilled
counsel - although the man with a
moderate salary and possessed Of no
resources other than that salary, may
find it impossible legally to evade the
law When the income tax returns and
levies were made public several years
ago, many striking examples of evasions
were disclosed. Frequently these
evasions constituted no violation of
the letter of the law. but suggested
various methods under the law by
which its spirit and purpose could be
nullifled.
Tax-Exempt Securities.
In this connection, William H. Blog-
gett. tax commissioner of Connecticut.
points out in the bulletin Of the Ma
tional Tax Association that means OF
avoiding the payment of income taxes
in this country is lawfully provided for
those who avail themselves Of the op-
portunity to invest in tax-exempt Sc
curities. Such securities are over
plentiful. The par value of tax-exempt
Federal, State and municipal bonds is
sued in 1880 aggregated more than
billion dollars. Such bonds to the value
of more than S30000.00 900 are said
to be outstanding in this country. In
comes from such issues of the Federal
Government may be subject to Federal
profit taxes and surtax. but incomes
from bonds issued by States and their
subdivisions are wholly exempt from
taxations The extent to which the an
nual return to the Government is di-
minished by inability to levy upon such
tax-exempt income is now shown. The
amount runs into large figures
The Bureau of Efficiency. moreover.
has given Washington a clean bill of
health as far as regards the efficiency
of collections under the tax on in
tangibles. although interposing the en-
tirely reasonable doubt that all of those
who should pay the tax required on
their intangibles do. as a matter of