Evening star., 1935-08-06


enue Bureau counsel, before
n the Senate Finance Committee
today follows. in part:
"As the figures of tax collections
have become available 1t has become
apparent that the present admins
tration inherited in 1888 a tax Struc-
ture which, in terms of making that
burden proportional to ability to pay,
had become out of balance even by
standards adopted during the preced-
ing administration.
Income, gift, estate, capital stock
and excess profits taxes. which are
the taxes that bear most heavily on
accumulated wealth, do not constitute
the entire Federal tax burden.
Poor Bear Brunt.
Miscellaneous internal revenue
taxes and our entire structure of GUS
toms taxes and now processing taxes
have an incidence that has little rela-
ton to ability to contribute to the cost
of Government. 1t is commonplace
that such taxes are proportional to
consumption. hit poorer classes hardest
and rest with greater weight upon large
families with small incomes than they
do upon small families with large in
comes.
1T may be assumed that collections
in the year 1890, governed largely by
the revenue act Of 1928. represented
a ratio of burden between these two
types of taxes, fairly deliberately ar
rived at, without intent to unduly
penalize the more affluent. In that
year we find that those taxes bearing
most heavily on the well-to-do con-
tributed STATS, ,oo0, 900 to the National
Treasury, or 6S.2 per cent of its total
internal revenue and customs receipts,
while miscellaneous taxes and customs
receipts, bearing most heavily upon
the consumer. contributed only ST.
l52, 100000, or 31.8 per cent Of such
receipts. By 1888, however, this ratio
had so changed that only $781 900 900
was raised from the taxes based on
ability to pay and that sum consti-
tuted only Al per cent of the Fed
eral internal revenue and customs re-
ceipts, while taxes based on consump-
ton produced 81 ,0so, 100000, or 5s.3
per cent Of such Federal receipts.
Trend Continues.
"Since 1888 the trend has been in
the same direction but the percentage
change relatively small. In 1885 the
taxes based on ability to pay contrib
uted 1877 per cent of the internal rev.
enue and customs receipts, or q de-
cline since 1888 of only about per
cent, and, during the same period.
there has been an increase In the pro-
portion Of revenues contributed by
taxes based on consumption from 583
to 61.3, an increase Of only about 8
per cent.
while the shift in the tax burden
from those more able to those less
able to pay has been small from 1888
to 1885, this shift, however small, Is
rnsound. The trend should be re-
versed.
I'm weighing this shifting burden
Of taxation, allowance must also be
made for declining incomes which
make the relative weight of these con-
sumner taxes greater than mere yield
would signify. These taxes are paid
largely out of consumers purchasing
power, and are borne to O great extent
by those whose incomes are barely
adequate for maintenance and who
lack other resources to fall back upon.
The burden of taxation should be so
readjusted as to meet the cost of gov
eminent by q recovery tax program
that will eliminate the present in
equities and that will not impair the
purchasing power Of the mass Of con-
Sumers.
More Equitable Basis Desired.
"The cost Of the emergency meas
ures to combat the depression has of
necessity been met largely by bor-
rowing. AS we emerge from the de-
preston, it is time to make such ad-
justments in the tax structure as will
meet the postponed costs of protecting
the social order with a tax structure
in which the balance between taxes
levied on the basis of ability to pay
and taxes based on consumption Is
more equitable.
Added revenue to go toward bal
ancing the budget and toward meeting
the cost of overcoming a depression
which threatened rights of property
should be contributed by the propertied
class in proportion to their ability to
pay
Even informed observers were
startled at the tendency to concentra-
tion and the rate of concentration
indicated by the 1888 returns. The
number of persons filing income tax
returns decreased from 1882 by 3.8 per
cent. Not all who file returns pay
taxes because Of exemptions, SO that
only 1.747,740 persons out of our en-
tire population reported taxable in