Evening star., 1932-05-03

new taxes. We have no choice In the
matter. There is no alternative.
In my Judgment, taxes should be
spread as widely and applied as lightly
as possible. In framing a tax bill, we
should recognize and apply the prin-
ciple of ability to pay, which means
taxing at a higher proportionate rate
those who claim the larger portion of
the income and wealth of the country,
vet avoiding as far as possible the plac-
ing of barriers and impedimentS that
will discourage capital from contribut-
ing to the resuscitation of business. by
employing itself in business enterprise.
This principle is not an easy one to
apply and do justice to all concerned.
All are agreed that in the new BILL
the bulk of revenues should come from
taxes on the incomes of individuals and
upon the profits of corporations, as it
has in the past. Under the present law,
single persons pay tax upon 1nd1Vld-
ual incomes in excess of $1,000 per
year. and married persons upon in
cones in excess of $500, subject to
some additional exemptions for minor
recommended, and the House adopted.
a provision lowering these exemptions
to $1,000 and $4,000, respectively.
Affects Larger NUMBER.
The Senate Finance Committee has
voted to retain this lowered exemption.
This is what is usually referred to as
broadening the base of the income tax.
This will increase tremendously the
number of taxpayers, but no married
person will pay a Federal tax until he
has a net income of $4,000, and his tax
will then be 1925; If $4,000 net income,
$40, and thereafter rapidly increasing.
The net income of $4,000 will pay $295.
But in recognition OF the proposition
that an income tax ought to be gradu-
ated in accordance with capacity to
paw, and that persons of large income
may Justly be called upon to contribute
a larger percentage of their income in
the support of their Government, we
have long had a surtaX imposed on the
large incomes.
Under existing law, the surtax start
ing at l per cent, and stepping upward
to 20 per cent. applies to all net tax
able income above $4,000. In the
House tax bill, the surtax starts at
$4,000 and steps upward to As per cent.
The Senate Committee will recommend
increasing this rate on incomes above
100000. Even these high rates are
below the wartime rates of 1918. A
1lOWSNGI, ID W UC uldOc
on the floor of the Senate to apply
these wartime rates that begin with a
normal tax rate of 6 per cent, instead
of ~ per cent as now, and per cent,
as proposed by the Senate Committee,
and reach maximum OF IS per cent
on the highest incomes.
Even with the sharp increase In in
come tax rates over the present law,
made by the House, and still further
slightly increased by the Senate, the
lot of the American taxpayer of moder-
ate means will be a happy one, as COM
pared with that Of the citizen OF Great
Britain.
Under this bill and the Senate Com
mittee proposal, married person
drawing $4,000 would pay no tax,
whereas a citizen of Great Britain
would pay S106 25 in English money,
On a net income of $4,000 under the
House bill, an American citizen would
pay $3.50. Under the Senate Com
mittee proposal, S5625. If he were a
British citizen with this income, his
tax would be $70333. On a $10,000-a-
year income, the American citizen
would pay $6l0 or 1926, depending on
whether the House or the Senate Com
mittee rate is adopted.
A British citizen pays on this income
Sl,628.33. Americans with very large
incomes would pay a tax much more
nearly approaching the level required
Of the British citizen in commensurate
circumstances. This Is because Of the
high Surtax rates on large incomes in
both the House and Senate proposals
Corporation Taxes.
Corporations at present are required
to pay Federal income tax on their
net profits at the rate of II per cent
The Treasury recommended 13 per cent.
The House bill fixed the rate at 1872
per cent. The Senate Finance Com
mittee has voted to recommend a rate
of IA per cent, but in doing this, it re-
moves the tax on the dividends of cor
porations which are exempt now be-