Evening star., 1943-05-21

first income tax David Lawrence.
law sits in the cabinet of the Presi-
dent today. He is Cordell Hull
then a member of the House Ways
and Means Committee and author
of the first income tax law.
A debate arose in July, 1918, over
an amendment suggested by Sena-
tor Root of New York, who argued
that until the amendment to the
Federal Constitution was adopted
and legislation passed permitting
income taxes to be levied, the money
possessed by the citizen was his
property and could not be subjected
to an income tax retroactively and
could take effect only on the date
Of the passage of the law, which
happened subsequently to be on
October 3, 1918.
Memo Submitted by Hull.
To meet Mr.. Roots argument,
memorandum was prepared by the
then Representative Hull and by
the Attorney General and his as
sistants in the Wilson administra-
ton. In the memorandum sub
mitted to the Senate August 26,
l913-and which helped to sway the
vote against the Root proposal-Mr.
Hull wrote:
THE proposed measure would re-
quire no act of the citizen until the
first Of January next. 1t would assess
and collect tax off the individual
during next year. Until the first
day of January the citizen could not
balance of against his gross profits
his losses, expenses, ETC., and ascer-
tain his net income for the preced-
ing year. Until the close of the year
the citizen could not know whether
his income would be absorbed by
losses, expenses, etc, or otherwise
disposed OF without even being re-
ceived, nor in fact could he know
whether he would have any net
income until he had balanced his
receipts and expenditures after the
end Of the year
within the meaning of the pro-
posed tax the cumulating items of
profit must necessarily remain in
abeyance until the expenditures for
the year are deducted therefrom at
the end of the year before it could
b known whether there was any
sum remaining that would or could
become capital
Basis for Measurement"
AN income tax is assessed and
collected during the year subsequent
10 the accrual Of the income re-
turned and by which the tax is
measured. Under a tax imposed
with respect to net incomes the
citizen may be required to return
for the purpose of the measurement
Of the tax either his income tax for
the preceding year, or his average
hneome for a designated number of
preceding years, or his estimated
income for the current year. That
view Is sustained by previous cita-
tions herein"
What Mr.. Hull insisted on was
that the new income tax law would
provide for the doing of no act prior
to December 81 next, which would
otherwise have been done by the
citizen" and he reiterated that the
income during the year 1918 was
merely basis for measurement"
of the liability due during the year
1914.
The Attorney General and his
assistants in the Wilson admins
tration cited court decisions declar-
ing that it was lawful for the in
come tax system ito take as a
measure Of taxation the profits or
income of a preceding year"
Likewise Senator Shields of Ten
nessee. Democrat, one of the great
constitutional lawyers of his day,
prepared a memorandum which had
the approval of the Senate Finance
Committee in which he said:
"As before stated the provision of
the bill requiring the computation
of incomes received by taxpayers
during the periods mentioned in
the bill is merely the basis for the
assessment of the tax, and 1t is
we'll settled that incomes received
before the law is passed may be con-
sidered in ascertaining the tax to
be paid for the first year.
Would Eliminate Controversy.
Nowhere in these debates can
there be found the slightest justi-
fication for President Roosevelts
contention now that the citizen has
tax liability for the preceding
year and actually owed the Federal
Government. for example, for the
year 1918, when he paid during
1914, or that he today owes for the
year 1912, when in truth. following
the sequence throughout the history
Of the income tax law. the citizen
is paying his 1943 tax bill as meas
ured by his 1912 income.
A simple correction of that fact
by statutory action would eliminate
the controversy over the Ruml plan
altogether.
The President has made the
serious mistake Of misconstruing
portion Of the citizens own property
rs constituting an actual liability
or debt to the Government. There
Is no debt for lo42 and never has
been for the preceding year. and it
is time that the Government re-
deemed the pledge to that effect
given by the Wilson administration
and the Democratic majority In
Congress In 1918.
0eoroduetfon RiRhts Neseryed)