Evening star., 1935-08-07
Taxes and Reform.

The interesting and thorough analysis
of the Federal system of taxation pre-
sented before the Senate Finance Com
mittee by Robert H. jackson, general
counsel of the Bureau of Internal Rev.
enue. concerned itself largely with dis
cussion of three topics: Cd The "un-
sound" shift of the tax burden to con-
sumers from ability to pay: 90 the in
creasing tendency toward the concen-
tration of wealth, and 90 the ease with
which the extremely wealthy escape their
tax burdens.
These are three subjects which are
presumably proving of concern to the
collecting agency of the Treasury.
Is it the purpose of the pending tax bill
to correct what Mr.. jackson points out
as inequities? Does the measure succeed
In bringing about the reforms which Mr..
Jackson deems desirable?
AS for the first subject-the shift Of
the tax burden from ability to pay to
consumers-Mr. Jackson illustrates the
point by showing that in 1880 taxes
levied on ability to pay contributed 682
per cent, while miscellaneous taxes levied
on consumers brought 31.8 per cent. BY
1888 the ratio had changed to Alt per
cent and 58.3 per cent, respectively.
Since then the trend has continued in
the same direction, though the per-
centage of change has been less. The
explanation, of course, is the depression,
with the resulting decrease in the num-
ber of taxable incomes, with increasing
nuisance and other levies, including the
processing taxes, which are borne di-
rectly by the consumer.
The pending tax measure would do
little, if anything, to change that trend.
And it is doubtful that Congress, in ad-
vance of an election, will do anything
to try to reverse the trend. That trend
, will not be reversed by soaking the
rich," but by broadening the taxable in
come base and soaking greatly in
creased number of voters. The number
who paid income taxes in 1888 was
1,747,740. Said Mr.. Jackson: "' The
base for our income tax is now seriously
narrow and results in part from the fact
that the number Of people having in
comes above a generally accepted sub
sistence level is seriously small"
The pending tax bill levies an in
heritance tax which, in addition to the
current estate tax, approaches the point
of conhscation in the higher brackets.
The yield in revenue, however, is small
in comparison with the need for revenue.
And the effect, not in breaking up the
concentration of wealth in the hands OF
o few, but on industry as whole, is
matter for serious conjecture on which
Mr.. jackson does not shed much light.
Whether any beneficial reform would be
accomplished depends entirely upon
point of view and is q matter OF opinion.
AS for the methods Of evading tax
payments, through investment in tax
free Government securities or otherwise,
the pending bill aims only at gifts as
protection against evasion OF death taxes.
While the figures on tax-free incomes
flowing from investment in tax-free
securities are interesting, are they par
ticulariy important? The National
Government, along with the States and
municipalities, will weigh the revenue
lost through tax-free securities against
the increased cost of marketing secrr-
tiles which are taxed. And they have
apparently concluded that the loss, in
the long run, may not be so great.
The tax bill is not essentially rev.
enue-raising measure. And If 1t is aimed
at social reform, the reformatory meas
ures are negligible as concerns the cor
rection of existing inequities, while re-
spected opinion frankly labels some OF
its provisions dangerous. The bill re-
mains, in other words, chiefly political.
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