September 19, 1912
The Independent, a Weekly Magazine est. 1848
130 FULTON STREET - NEW YORK. CITY
The Income Tax
BY WILLIAM LYON PHELPS, Ph.D.
LAMPSON PROFESSOR of ENGLISH LITERATURE AT YALE UNIVERSITY.
T here are many people who believe that an income tax is bound to come in America, and await its appearance with that dull resignation characteristic of the attitude of the ultimate consumer toward our lawmakers in Congress assembled. Like sheep led to the shearers they are dumb, while the professional politicians open their mouths. This curious and revolutionary scheme of taking money away from those who have earned it is discussed usually only by legislators and economists; the vast number of those who will have to pay are not considered qualified even to have an opinion, much less to utter it in public. But it might be interesting to consider the effect of the income tax on that huge class of Americans, who are neither poor nor rich, but are just able to support their families on a fixed salary or a fairly regular income. The man on a steady salary does not seem to gain directly during seasons of great national prosperity. He finds his income the same, with its purchasing power considerably decreased. If he were forced to pay, in addition to his living expenses (which already make it impossible for hits to save anything but his life insurance), a section of his salary to the national government every year, he would find it necessary to give up, not the luxuries of life, but same of the things his wife and children regard as necessities. He should be pardoned if he does not welcome the idea of a national income tax with enthusiasm. Suppose his income were four thousand dollars, with the cost of living steadily increasing. This figure would make it certain that if the income tax slid not hit him on its first imposition I use the ward in all its senses it would on the second or third amendment. Fortunately, his moral character would not suffer, for any temptation to conceal from the taxgatherer the exact amount of his receipts would be overcome by the known impossibility of success. It is quite easy for the inquisitor to discover the exact income of a man on a fixed salary.
The income tax is a great feature of life in England, where the proposition seemed originally not only feasible, but desirable; there being no protective tariff, it was thought that the poor and those of moderate means could buy the necessities of life cheaply in the world's cheapest market, while the rich could support the government out of their superfluous incomes. At first the tax was imposed only on large incomes, and only a small percentage had to be paid in; but naturally enough, with the increasing expenses of national budgets, the range of the tax was steadily widened to cover moderate incomes, and the amount of the tax increased as well. Now every one who has an annual income of $700 must pay the tax, and the percentage is so great that, what with local rates plus the income tax, many Englishmen are forced to pay in taxes seven shillings in every pound, or a little more than one-third of their entire income. Persons, therefore, of moderate "leans are having a desperate struggle to pay the tax and live, while the condition of the very poor has not improved at all. There is no country in the world that has been more torn by strikes and labor troubles during the past two years than Great Britain. The reason is that it is impossible under the present condition of affairs in England to give workingmen high wages; and the absence of protective tariff has very little effect the price of food, which is the big item in every poor man's expenses. The Poor in England do not receive enough wages to buy a sufficient amount of good food, and the manufactories, railways and employers in general cannot afford to pay them much more than they now receive. Hence, constant strikes, struggles and universal discontent, with the black shadow of revolution.
The Englishmen of moderate means with whom I have spoken are not very keen in their support of the income tax as a means of national revenue. They are hard hit.
Altho I do not care to discuss the income tax as a political measure, and have nothing but contempt for the cheap demagogery of some of its advocates, it seems to me somewhat strange that either of our great political parties should have coquetted with such a scheme. From the point of view of Federal control, the determination to centralize as much power as possible in the Government at Washington, to the exclusion of the rights of the separate States, it might be a logical plank in the platform of the Republicans-, but on the other hand, the Republicans have always set their faces against direct taxation, believing that the easiest way to raise all the immense expenses of the national government is by high impost duties. All taxes are odious; even the most patriotic citizens do not overvalue their property, except when they wish to sell it, nor do they greet the arrival of a tax bill with a shout of joy. But the least odious way to pay taxes is when they are indirect; when all luxuries and some necessaries cost a little more than they would without an impost. Thus, for the Republican party to abandon the indirect system of taxation for the direct would be a right-about-face in party tradition and party policy.
But this is nothing compared with the situation from the Democratic point of view. The historic position of the Democratic party, and to my way of thinking, its finest attitude as an organization, is its old and firm belief in local self-government. Historically, the party resists strenuously any attempt on the part of the Federal Government to assume powers that belong to the States or to interfere with the rights of individuals as citizens in States. Everyone, by a little effort of memory can recall the rage of the Democrats some twenty years ago, when it was proposed by the Republicans to pass a Federal Elections bill, which meant that national elections in the States should be under the supervision of Federal officers. Southern gentlemen dubbed this Republican partisan measure the "Force bill," and they fought it with fury, and finally succeeded in talking it to death in the Senate. The idea of a Federal officer at a Southern polling station was to them intolerable, and they were quite right, it seemed to me, in their fierce opposition. But now we see many good Southern Democrats cheerfully voting to sanction the visit of a Federal officer into every Southern home, an inquisitor who has the right to ask the most personal questions as to the source, nature and amount of every individual's earnings. This has a humor all its own, for not only is the State's sacred right of taxation to be surrendered, but the privacy of every individual is to be invaded by a Federal officer. I suppose some of the Democratic enthusiasm for this arbitrary and dangerous power to be given to the Federal Government is caused by the belief that more Republicans than Democrats will have to pay the piper. But let no man deceive himself. Even if this thing starts as a rich man's tax it will soon cease to be such, and the weight of it will eventually fall on the great army of men and women who have only moderate means, where it may become a burden well nigh intolerable. And if in the future the Republicans should once again endeavor to establish Federal control of State elections, the Southerners who have voted to bring Federal officers into Southern homes would find it difficult to assume their former attitude of pious horror. Nothing is more dangerous than to surrender personal liberty and local self-government into the hands of a centralized force.
In England, every man or woman who owns a little stock receives the dividend shorn of the income tax. The tax is first taken out and the stockholder gets what is left. How will this proposition be greeted by the vast number of people in America who own only a few shares?
I refrain from speaking of the enormous expense
necessary to collect this tax, of the amount of fraud and lying that it will
cause, for the reasons given above are sufficient to condemn so unAmerican, so
inquisitive and so odious a scheme of taxation.
SEVEN GABLES, LAKE HURON, MICH.