AMERICA & THE INCOME-TAX.

Dominion, Volume 6, Issue 1721, 11 April 1913, Page 4

AMERICA & THE INCOME-TAX.

The other, day we noted that frorii the Treasury point of view the wholesale remission or reduction of Custom duties by the United States Congress is robbed of its terrors by the> recently consummated "Sixteenth Amendment" of the Constitution giving Congress express authority to levy a general tax on incomes. This amendment of the Constitiitior, has many aspects of interest, not the least notable residing in tlic iKct Xrlitit lfc is over 40 years since the Constitution amended at all—a fact which..showsaip in A very bad light the anxiety of the Australian Labour Government to tear , up the thirteen-year-old Federal Constitution. No tax is so fair, from the viewpoint of the ordinary just man, or,from the viewpoint of the most rigorous political economist, as a tax on incomes. No tax is so fair from any point of view, _or so natural. It does not. penalise or discourage investment; it not make hateful classifications ; it is tho right tribute for the State to ask from its citizens; it is tl)c one tax which forces everyone to count, as a. inatter of concern to himself, the pounds and pennies of the spending officers of the State. Strangely enough, the income tax has never legally levied, ■ although it actually has been levied, in America._ The American Constitution provided that no capitation or other direct tax should be imposed except by apportioning its incidence among the several States on the basis of their population. When the Constitution was written this was a wise and reasonable enough' idea: we cannot to-day blame Hamilton and his friends for not foreseeing all the changes of conditions that the future would bring forth. lii 1780 the Supreme Court of America decided that the income" tax .was not a direct tax, and need not therefore be apportioned among the States. During the Civil War an income tax was levied, and was Mllected up to 1872, although only a small fraction of those liable to pay—2so,ooo out of 37,000,000, which is less than one per cent, of the population—admitted their liabilities. In 1880 the Supreme Court xeaffivmcd its century-old decision of 1789, and the Democrats who came into power in 1893 proceeded to make a tax on incomes a part of their budgeting. ~ But in 1895 the Supremo Court reversed the 1789 and 1880 decisions by declaring that the income tax is a direct tax, and therefore impossible of levy under the Constitution. That decision of 1895 has stood ever since. The Constitution has now been amended to permit of the levy, without question, oi a, tax on iijcomes. Such information as is available indicates that the Democrats propose to exact a uniform percentage of all. incomes sxceeding £1000 a year—an obviously foolish idea, which time and thought will correct. Tho ideal income tax is, of course, a graduated tax on all incomes, ranging, say, from half a crown or five shillings a year—which is a halfpenny or a penny a week—on incomes of £50 or £100, with progressively higher rates for incomes of, say, £1000 and upwards. A judiciously imposed income tax would solve all the problems of the Treasurer, and would solve a good many other problems as well. The habit of the Radical, here and in Great Britain, is just now to urge that the landowner, big and small—to urge, that is to say that agriculture—shall ' pay for everything. But even such a journal as the Nation, which nobody can accuse of Conservatism in these matters, admits that the taxation of incomes is "as, eciuitable a system of taxation as any that has y£t been devised."