Evening star., 1938-03-06
By w. r. RAGSDALE,
Associated Press Staff Writer.

ing, three-fourths of the Federal taxes
have some social purpose tied to them
This would cover virtually every
type of permanent tax the Congress
has adopted since the turn of the GEN.
tury Many of them have been used
before in emergencies But the theory
Of the relation government should
bear toward its citizens underwent a
change during the early years Of this
century.
Taxes that hitherto had been used
only when the Government was in dire
need Of funds were adopted as meas
ures of public policy. Some of them
were picked because 1t was thought
that they would achieve some manner
Of regulation in addition to raising
money. Others were worked out purely
as a device for bringing in funds that
were to be used for social purposes.
Aim of Income Tax.
The income tax in its present day
form was born of desire to curb the
creation of big fortunes. 1t had been
used during the Civil War as an emer-
eency measure. The courts had sus-
tained its use then. 1t was repealed
in 1870.
In 1894. the Democrats, backed by
the Populists. put through the Wilson
tariff bill carrying an income tax pro-
vision. The debate was sharp. One
side argued that it was an attack upon
the institution of private property
and step toward Socialism: also, that
wealth was concentrated in the north
and east and that the tax was sec
tional, The other replied that taxes
should be paid according to the abil-
ity Of the payer.
When 1t came to the Supreme Court
attorneys against the tax charged that
it was Communistic in its purposes
and tendencies: that it was an attack
upon property. The other side said
that 1t would equalize tax burdens
The court decided that it was direct
tax and as such forbidden by the
Constitution. One of the justices
called 1t an assault upon capital"
Talk of amending the Constitution
sprang up Immediately Some even
suggested that the court be packed
to gain a favorable decision
Ideas Of Government Change.
In the two decades after 1895 po-
litical feeling and ideas of govern
ment in the United States changed
rapidly. The tight popular grip that
William Jennings Bryan had obtained
was symptom of the impending
change. The political emergence of
Theodore Roosevelt signaled its first
accomplishments. Even today the
final outcome is matter of guess
work.
In 1908 the Democrats declared in
their platform for a constitutional
amendment to allow the income tax
to be levied. William Howard Taft,
the Republican nominee, said in his
acceptance speech that he believed,
II the money were needed, the Gov
ernment could devise an income tax
law that would be constitutional.
The special session of Congress
in 1909 brought the Payne-Aldrich
Tariff Bill, which was one worry for
Taft. But it also brought him COM
bination OF Democrats and insurgent
Republicans which tried to tack the
income tax on the tariff bill. Taft
countered with recommendation
that Congress recommend an income
tax amendment to the States.
1t did, and the tax as adopted in
1913 gave an exemption of $4,000
to single persons and $4,000 to mar
ried persons That portion of the
income which fell outside the exemp-
tions was subject to per cent
tax. Higher taxes, called surtaxes,
were imposed upon incomes of more
than $4,000.
Surtaxes Increased.
During the World War, as needs
mounted, these Surtaxes were raised
until those in. the extreme upper
brackets, with incomes of more than
. million dollars year, paid as high
As II per cent tax on part of their
income. Obviously, however, not a
large per cent of the citizens were sub
tect to such tax.
After the war the rates were lowered
until the top levies were Is per cent
IN 1925. One per cent of this was
knocked off in 1929, but it went back
on the next year. In the tax bills of
depression years these have been
raised until the top rate is now IS
per cent.
Only handful pay this rate, how
ever. 1t applies only to incomes larger
than five million dollars a year. In
comes between half million and five
million are taxed from 10 to IS
per cent. Most of the taxpayers give
the Government just 4 per cent of
what they have left out of their earn
ings after subtracting for their normal
needs. This Is the tax which a single
person would pay on his net income
up to $4,000, and married person,
with no children, up to $6,500. Above
these figures the surtax begins to
operate. 1t starts at an additional
( per cent and climbs gradually.
Changes During Depression.
Most of these surtax changes went
through Congress early in the depres-
sion when Federal revenues had been
beaten down and demands were rising
for relief of the needy. They were
partial substitute for sales tax that
had been drafted. Congress was
echoing them, in debates and private
talks, with the pro and con argu-
ments about redistribution of wealth
and incomes. sA
Whatever arguments havsN been
brought out by tax bills, no Aever,
the deciding factor which in all save
the rarest instances has determined
whether q tax should be imposed, has
been the need of money. In only one
or two cases in the whole of Ameri-
can tax history has levy been put
into a law solely to drive something
out Of the market, or to achieve some
specific regulation, without any ex-
pectation of revenue.
Thus, whatever other purposes may
have been spoken of as behind the
income tax laws. the chief one that
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