People's Pilot, Volume 2, Number 26, Rensselaer, Jasper County, 16 December 1892 — THE GRADUATED INCOME TAX. [ARTICLE]

THE GRADUATED INCOME TAX.

It Would Exempt Reasonable War** to Labor But Tax lneomea Derived From Ke .t, Interest xn^Prollt Something like two weeks ago the Globe-Democrat published a Washington special reading as follows: Representative Sootl Wike, of the Qulnov (III) district has arrived. He i> mor ■ than ever In favor of on incoma tax. “la is*.'' said Mr. Wike, “this government raised ,72,910,033 of revenue from an income tax. and more than one-half that amount came from incomes of Mir wj My idea of *an inoome tax would practically exempt the mas tea. as I would not tax incomes below 98.000 The great objection to an income tax is that it itorial But to me it seems not more so than the ordinary state tax. I like the inoome tax system of England, which has been in vogue for flttv-ooe years, and successfully, too In England the manner of levying this tax on corporations is to first collect it from the net earnings of the oompany before any dividends are declared, and let the oompany In turn apportion it among the stockholders Under an Inoome tax law. such as I would ley?, there would be no multi-millionaires in this country. Under a graduated income tax I would raise the levy so high on large lnoomes that It would practically be Impossible for a m in to acquire more than f 1,003,000 worth of wealth at the outside." From the Dallas, (Tex.) News we clip the following editorial, which possesses special significance when it is remembered that Gov.-elect Hogg and the populist candidate Nugent, both of whom stood upon a platform containing a demand for a graduated income tax, received a combined vote of more than 885,000. The News says: • It the majority, led by unscrupulous demagogues or by honest but fanatloal crusaders against an allegorical plutocracy, have a right to say how much money a thrifty and enterprising oltixen shall be allowed to acquire ani keep above operating and living expenses, as Congressman Wike, of Illinois, and other statesmen of his stamp contend, then where shall the limit to accumulated savings be drawn? Mr. Wike draws the possible limit, as regards accumulation,at 91,03.),000; but he sets the praotloal limit, as regards income, at aS,'WO. This agrees with the oonflseatory suggestions of Judge Reagan and others of his school In Texas. Their Idea to day Is to begin a system of regulating ani retrenching Incomes and capitals with an unequal scale of taxation applied to Incomes of over 96,000 and upward. How long will this limit last? A majority of the people consume pretty much all they make, year after year. It is doubtless safe to say that on the average with the man who earns 160 per month and with the man who earns five times as much, the balances at the end of the year are about the same. Neither of them has any visible or accessible Inoome to be taxed. This class whose spendings run a neck and neok race with their gettings, however great or small, added to a class who are put to it to earn bread and meat, will mike up, perhaps, nine-tenths of the population. Under inflammatory appeals to their unsatisfied desires -appeals ounnlogly adapted to infeot them with an epidemic craze of self-pity—suoh people are apt to become envious and impatient to the verge of a revolutionary eagerness to pull down all above them In fortune and to revel, at least for a time, in a chaos of ruined estates. In suoh a mood, with the model modern demagogue to lead them, how long would they feel lnollned to stop at a limit of *1,000,030? How long would they feel willing to exempt lnoomes of 96,000? In faot, how many of them agree fully to-day with Messrs. Wike and Reagan upon the temporary limit which these and other politicians have taken It upon themselves to suggest? There Is no telling how many people thero are in the country to-day who consider SIOJ.oOO a high limit for uny man, who, earning less than >1,003 a year thomselves, are quite ready to set the starting point of taxation down Just far enough to exempt their own incomes. Indeed, the system might very naturally be extended to work an equal yearly division all around, as a majority might find such a general partition apparently profitable for them. This would be something like Mr. Bellamy’s Ideal communism but for one radloal difference. Bellamy's plan Is not to destroy the substance of private capitals but to oonserve It by massing and administering those capitals under a system of an allembracing national industrialism. The Reagan, and Wike plan, carried to exhaustion, would dissolve both oapltal and civilization Into a universal oondltion of poverty and squalor.

Assuming that the world has revolved upon Its axis for six thousand years since the creation of Adam, and supposing that Adam had lived until now and had received every day since his creation, Sundayb included, the sum of five dollars, every cent of which he had managed to save, he would have accumulated, if unaided by the factors rent, interest and profit, less than eleven million dollars all told. This being the case, in view of the fact that 81,000 individuals within the past thirty years have accumulated the enormous sum of thirty-six billions of dollars, the term “allegorical plutocracy" is, to say the least, extremely far-fetche<i

The News either has not the faintest comprehension of the subject or else it displays considerable ingenuity in the direction of befogging the issue. The advocates of a graduated income tax occupy something like the, following position. They claim, first, that as all wealth is the product of labor, if any other factor besides labor absorbs wealth, such necessarllly rob labor. Second—They claim that there is a point at which incomes cease to be the legitimate reward of honest labor and become the resnlts of the factors which conspire to rob labor. Third—All standard works upon social and political economy teach that the factors which reap without sowing and absorb without laboring to produce, are economic rent (with all the term implies); all interest above an equitable proportion of the net product of capital and labor, and all profit above fair wages for labor performed and services rendered. Fourth—The advocates of a graduated tax upon net incomes hold that until speculation in land is abolished and land is held by occupancy only; until the people assume, as a public function, the banking business of the nation, and money can be obtained at the cost of such banking system; until one kind of labor becomes as honorable as another and the profits of merchandising afford no better wages than musclo and energy exercised in manual labor—until then all individuals should be entitled, above a good living, to a certain net income for a sinking fund for old age and all untoward contingencies, while those who amass wealth by virtue of the factors rent, interest and profit should be forced to defray all governmental expenses. Fifth—They hold that an individual should be debarred from piling up in a short lifetime more than Adam could have earned in six thousand years, and to this end demand that the tax upon net incomes shall be graded. The eternal verities of equity and justice teach that one man’s work is worth as much as another’s and that brawn and brain should equally share the products of the exploits which brain conceives and brawn puts into execution. Above all they demand that the platforms of the future shall not ignore

the declaration: “Let him that will not work, not eat” In the new and near approaching system of taxation, the taxing prerogative will be utilized: First, to force the sale of all lands not actually occupied by their owners to those who wilt so occupy and ntilize them. Second, to restrict and retard the accumulation of vast fortunes by individuals, families and corporations. Third* to free productive, industrial and distributive laborers from all taxation except an equal per capita proportion in return for governmental protection of their personal, civil and religions rights. Fourth, to force the annual net accumulation of wealth or residual increment to pay the greater portion of governmental expenses The first step would be to entirely abolish the tariff and internal revenue tax, relegating the levying and collection of taxes to the several states, to whom the prerogative rightfully belongs The general government should be supported by a proportionate tribute contributed by each state for that purpose. Bach state should levy a per capita or poll tax upon each and every individual citizen, of the same uniform amount per capita, to the end that each individual citizen may pay an exactly equal tax for the protection afforded to person by the state government. Tlw humblest and poorest citizen should receive the same protection and pay as much therefor as the richest aud most arrogant. Now as to the land tax: A tax equal to the full rental valuation,or economic rent should be levied upon land occupied for business purposes by others than those who owned it There should be levied a graduatedcumulative tax upon all unused and unoccupied lands No other land should be taxed.

The graduated-cumulative tax is called “graduated" because, commencing at a basis rate upon a basis valuation, it increases in rate per cent as tile property to be taxed Increases la value. {Bis called “cumulative,” because, { ™ere an individual or corporation owns more than one piece of land in any taxing district the rate of tax pertaining to the combined valuation of all the tracts is levied upon each separate tract Taking the quantity of land that might be considered the proper amount for a home, the basis rate of tax should be levied upon’ the valuation of suoh quantity of land as indicated. The effect upon holders of large quantities of land for speculative purposes can easily be surmised. The rental value tax, as indicated, levied upon lands occupied for business purposes by tenants would etther cause properties to become vacant, force their owners to. sell, or else operate in the same manner as would the single tax. Such a tax could not be shifted, but must come out of the land owners, otherwise the tenant could not compete in business with those who occupy their own untaxed land. All other land being freed from taxation, rent would at once be reduced by just the amount of the present land taxes No other tax should be levied upon any kind of property, real or personal, except a graded tax upon all net incomes of SI,OOO and over, and a graded tax upon estates, inheritances and bequests. Net Incomes of individuals, corporations or firms represent the “residual Increment” after all demands for consumption or subsistence are supplied. In other words, it is what is left after rent, Interest and profit have taken their portion, and food, clothing, shelter and fuel, as well as all other necessary contingent expenses been met. As.a rule, the property or wealth upon which such an income tax would be levied Would be “unearned increment," being the product of either rent, interest or profit, or else the residue above consumption, and SI,OOO besides, of unreasonable and disproportionate salaries (wages). There should be very little difference in the wages paid to different laborers. Such difference—that is, all honest and fair difference—would be covered by the better style of living, in the ascending grade, and the SI,OOO net income exempted from taxation.

I am aware that single taxers and others will contend that an income tax cannot be collected; that it will be fraudulently evaded or sworn off, or charged up to expenses, or be recouped in higher rents and prices, or lower wages, etc. To this I answer that if use and occupancy were made a prerequisite to land ownership, there would no longer be any rent, high or low, while the competition of those business exploiters who did not receive any taxable income would prevent the income tax from being recouped in higher prices or lower wages So far os evasion is concerned, the efforts in the direction of such evasion would be a matter of indifference to all those whose net incomes did not exceed one thousand dollars. An interesting struggle might be waged in the ranks of plutocracy, but labor would not be in it Lar bor, being assured of its total product, free from rent and taxation, could look on serenely, while the plutocrats watched and fought each other. ® Bnt in case, or rather for fear, that some might yet accumulate too large a portion of the net production of the labor of the nation, every estate should be administered upon by a public administrator, or where there is a will, probated and executed by a public executor, and a heavy, graded tax levied upon all wealth left by deceased persons, t above a certain set and determined amount Brethren in the reform movement: Read the foregoing article carefully and then compare with the following planks of the St. Louis platform: Wc demand a graduated Income tax. The land, Including all the natural resources of wealth, U the heritage of the people, and shonld not be monopolized for speculative purposes, and alien ownenhip of land should be prohibited. All lands now held by railroads and otber corporations In excess of their actual needs, and all lands now owned by aliens, should be reclaimed by the government and held for actual settlers only. Has anyone a better plan to offer?

GEORGE C. WARD.