Evening star., 1932-04-04
How Shall We Balance Budget?
Persons With Net Incomes in Excess of 100000 a
Year Paid Nearly Two-Thrds OF Earnings
Taxes in 1928.

from persons with net income in ex-
cess of 100000 a year. This means
that less than 10000 persons were relied
upon to yield two-thirds Of the income
tax. And the income tax was relied
upon to bring nearly two-thirdS of the
Federal revenue.
All would be we'll, of course, il per-
sons with an income of more than
100000 a year would enjoy continuous
prosperity. The sudden drop in income
receipts this year was due almost entire
" to the substantial losses sustained by
persons in the higher brackets. The policy
of soaking the rich" may be as popular
as ever, but unless there are enough
rich people to tax, or unless the rate is
made high enough to get more revenue,
any reliance on the income tax is
precarious policy. There comes a point
also at which persons at high incomes
seek tax-eXempt securities or fail to
distribute through their corporations
the surpluses that may be earned. Then
there are dozens of ways in which the
prohibitive tax becomes tax on in
centive and ultimately fails to yield the
necessary revenue. This is not ques-
ton of opinion but matter of actual
experience by the Government in col
lecting income taxes.
. Shrinkage in Incomes. at
Some idea in the shrinkage in incomes
OF persons in the, so7called well-to-do
class in America may be gained from
the fact that the gross income OF all
persons with a net income of IS 900 a
year and over was m 1880 less than
20 per cent of the figures for 1929.
In the 10-year period from 1921 to
1881, customs receipts went from
1924 ,0O0,0 900 to practically double that
figure 10 years later. Taxes on estates
declined from $l54 900 900 in 1921 to
s64 600, 900 in 1880. and Congress is
already contemplating Increases in
this particular field of taxation.
One of the most interesting increases
in taxation was in the manufacture OF
tobacco, which yielded 10 years ago
S255, 100000 and now brings in
$3.50, ,00O, 900 and there has been only
a slight decline during the depression
in that tax The Government now gets
40 per cent of the retail price of
cigarettes. This has been one of the
steadiest taxes that has been imposed
and has shown gradual increase In
receipts in the last 10 years. There is
considerable opposition on Capitol Hill
to any further increase in the percent
age of the tax because a belief that a
40 per cent tax is about the maximum
that could be imposed without reducing
consumption. The Federal Government,
therefore, is about a 40 per cent
partner in the tobacco industry.
Back in 1921 taxes on public util-
ities namely transportation, brought in
S273 100000, and in 1922 this, same
source brought in $170000,000. This
form of taxation was abandoned in
1923.
Taxes on telegraph and telephone
and insurance amounted to about S42,-
600, 900 in 1921 and approximately the
same amount in 1922, but these taxes
we're abandoned six years ago.
Looking back to the 1921 record, we
find also that 100000 came from
excise taxes that year, $l43 100000 in
1922, and $177 100000 in 1924, but
that, beginning with 1925, these taxes
steadily declined SO that in 1880 they
brought in. only $4,000 600. This, OF
course, was due chiefly to the revision
of the tax laws.
Another tax which was productive in
1921 and 1922 was the excise tax on
dealers and consumers, amounting to
$51 ,000, 900, and on non-alcohol1c bev-
erages, which brought in $4,000. 900.
Neither of these taxes is at present in
effect.
On the taxes on admission to theaters
and club dues the Federal Government
took in nearly 100000, 900 in 1921, but
from these same sources the revenues
declined as the laws were revised.
Abandoned Taxes Were Profitable.
In other words, there are $670, 100000
worth of taxes in the experience OF 1921
which is not now being received, though
Congress, to be sure, is considering ex-
actly these same items of taxation once
more.
Apart from the income taxes on indi-
yiduals and corporations, the Federal
Government collected 1900, 900, 900 in
customs and miscellaneous taxes In
1921. Ten years later, however, the
Federal budget showed that the de-
pendence on miscellaneous taxes had
gone down to about $1,000, 100000,
whereas the reliance on income taxes
had increased. To put it another way,
in 1930-the last year in which the
Government practically broke even on
receipts and eXpenditures-the income
tax brought in about TO per cent OF the
total revenue, whereas in 1921, with
much higher rates of taxation for both
corporations and individuals, the in
come tax brought in only 65 per cent
of the total revenue.
Rightly or wrongly" said the Presi-
|, dent in his message to Congress last
December "our tax system is very
| largely based upon business profits, and
in consequence is subject to great va
riables.' =. y. -
tcopyright. 1922
Tomorrow's article WIN deal with the
e. - 10,