Fiscal responsibility

“ Finance was in a deplorable state, and as controller-general he formulated a new fiscal policy, consisting of neither fresh taxation nor loans, but of retrenchment. At one fell stroke the two auxiliaries on which he had a right to count failed him: public opinion, clamouring for reform on condition of not paying the cost; and the king, too timid to dominate public opinion, and not knowing how to refuse the demands of privilege. Economy in the matter of public finance implies a grain of severity in the collection of taxes as well as, in expenditure. ”

“ But to make this system work the United States just must bring its balance of payments to - or very close to - equilibrium. We must have a responsible fiscal policy in this country. The passage of a tax bill now, together with expenditure control that the Congress may desire and dictate, is absolutely necessary to protect this Nation's security, to continue our prosperity, and to meet the needs of our people. ”

“ Few, comparatively, as they are, the agents and employees of the government constitute that portion of the community who are the exclusive recipients of the proceeds of the taxes. Whatever amount is taken from the community, in the form of taxes, if not lost, goes to them in the shape of expenditures or disbursements. The two — disbursement and taxation — constitute the fiscal action of the government. They are correlatives. What the one takes from the community, under the name of taxes, is transferred to the portion of the community who are the recipients, under that of disbursements. ”

“ Furthermore, and more importantly, fiscal policy aims to bring together the National Government’s resources so that these are mobilized and utilized in order to gain the maximum benefit and the high multiplier effects for our economy. ”

“ The budget recommendations I shall shortly transmit to the Congress show that we can expect a substantial improvement in our fiscal position over the next few years, as the cost of some of our extraordinary postwar programs declines, and as the Government revenue rises as a result of growth in employment and national income. To further improve our fiscal outlook, we should make some changes in our tax system which will reduce present inequities, stimulate business activity, and yield a moderate amount of additional revenue. ”

“ Public Finance ‘Abdu’l-Bahá suggests that each town and village or district should be entrusted as far as possible with the administration of fiscal matters within its own area and should contribute its due proportion for the expenses of the general government. One of the principal sources of revenue should be a graduated income tax. ”

“ The finances of the United States are characterized by rapid increase in magnitude of fiscal operations, and by the great facility with which revenues are secured, resulting in a general tendency for revenue to outstrip expenditures. While the Federal Government possesses the constitutional right to levy both direct and indirect taxes, the requirement that the former shall be apportioned among the States in proportion to population, and the popular hostility to direct taxation, have in effect practically confined the Federal Government to the field of indirect taxation. ”

“ The fiscal system aims at satisfying the financial needs of the State and other public bodies, as well as a fair partition of the incomes and the wealth. (2) Taxes are created by law, which determines the incidence rates, concessions, and safeguards for taxpayers. ”

“ Clarification and simplification in the tax laws as well as the regulations will be undertaken.
In the entire area of fiscal policy--which must, in its various aspects, be treated in recommendations to the Congress in coming weeks--there can now be stated certain basic facts and principles.
First. It is axiomatic that our economy is a highly complex and sensitive mechanism. Hasty and ill-considered action of any kind could seriously upset the subtle equation that encompasses debts, obligations, expenditures, defense demands, deficits, taxes, and the general economic health of the Nation. ”

“ But it must be remembered that taxation for fiscal purposes is absolutely inevitable; that in most countries it is necessary that a considerable part of that taxation should be indirect; that the State, therefore, cannot help imposing penalties, which to some persons may be prohibitory, on the use of some articles of consumption. It is hence the duty of the State to consider, in the imposition of taxes, what commodities the consumers can best spare ”

“ It will be sufficient to draw attention to the different points of view from which the Eastern and the Western approach the subject of fiscal administration. The latter urges with unanswerable logic that financial equilibrium must be maintained, and [Pg 43] that he cannot frame a trustworthy Budget unless he knows the amount he may count on receiving from direct taxes, especially from the land-tax. ”

“ In selecting your institution as one of the fiscal agents of the government, I not only rely on its solidity and established character, as affording a sufficient guarantee for the safety of the public money intrusted to its keeping, but I confide also in its disposition to adopt the most liberal course which circumstances will admit toward other moneyed institutions generally, and particularly those in your vicinity. ”

“ Its powers, functions, and duties are those which pertain to the collecting, keeping, and disbursing the public revenue. The means by which these are to be exerted is a corporation to be styled the Fiscal Corporation of the United States. It is a corporation created by the Congress of the United States, in its character of a national legislature for the whole Union, to perform the fiscal purposes, meet the fiscal wants and exigencies, supply the fiscal uses, and exert the fiscal agencies of the Treasury of the United States. ”

“ If we persuade him that it is revenue, he will note the vast disproportion of its incidence compared to that of other taxes, and his efforts will tend to remedy the inequality, and to lay upon other classes and interests a more equitable share of the fiscal burden. ”

“ The estimated revenue for the next fiscal year will impose upon Congress the duty of strictly limiting appropriations, including the requisite sum for the maintenance of the sinking fund, within the aggregate estimated receipts.
While the aggregate of taxes should not be increased, amendments might be made to the revenue laws that would, without diminishing the revenue, relieve the people from unnecessary burdens. ”

“ In the sphere of financial policy, it was the Treasury’s own responsibility to plan the appropriate precautions—a programme of taxation without any misjudged mercy in it, and a programme of borrowing to bring in the genuine savings of the people. ”

“ The proposed constitutional solutions provide safeguards against any excessive burdening of personal incomes and of the income of organizations of associated labour. Fiscal burdens - taxes and other dues levied on income - will be determined in accordance with the ability of the work organizations to ensure the satisfaction of the personal and common needs of their workers and a specific level of expanded reproduction, in line with the business results achieved by them. ”

“ But when they, to whom it is permitted to pursue such trade, shall seek to make an unbecoming dearness, the Authority shall with zeal and earnestness forbid such dearness, and command an honest sale; but where an Authority be careless, the Fiscal shall exhort the same to perform his duty within the space of one month, failing such hath the Fiscal power to enter process against him. ”

“ An effort to equalise the tax burden usually makes the state holder of the purse-strings for a large proportion of the local expenditures. This creates a responsibility for wise expenditure that can hardly be avoided by the state, in justice to those who have been taxed on a state-wide basis to replenish the state’s treasury. ”

“ The obligation on the part of those responsible for the expenditures made to carry on the Government, to be as economical as possible, and to make the burden of taxation as light as possible, is plain, and should be affirmed in every declaration of government policy. ”

“ If it implies a collection of all the revenue for the support of the Government, for the payment of principal and interest of the public debt, pensions, etc., by directly taxing the people, then I am against revenue reform, and confidently believe the people are with me. ”

“ Sufficient revenue to pay all the expenses of the Federal Government, economically administered, including pensions, interest and principal of the public debt, can be got under our present system of taxation from custom-house taxes on fewer imported articles, bearing heaviest on articles of luxury, and bearing lightest on articles of necessity. ”

“ I need now only call attention to the necessity of carrying into every department of the Government a system of rigid accountability, thorough retrenchment, and wise economy. With no exceptional nor unusual expenditures, the oppressive burdens of taxation can be lessened by such a modification of our revenue laws as will be consistent with the public faith and the legitimate and necessary wants of the Government. ”

“ Being essential, then it must have funds with which to proceed, and the men devoting their lives to it must be recompensed, so the system we use is the best that can be devised under the circumstances.
“It is like the tariff and internal revenue taxes by which the National Government is run, that is, indirect. The citizen pays, but he does not know when he pays, nor how much he is paying. ”

“ Shall we be bettered by the alternative proposed by gentlemen—by levying taxes in specific articles? How will you dispose of them? Where is the merchant to buy them? Your business will be put into the hands of a commissioner, who, having no business of his own, will grasp at it eagerly; and he, no doubt, will manage it. But if the payment of the tax be left to the people,—if individuals are told that they must pay such a certain proportion of their income to support the general government,—then each will consider it as a debt; he will exert his ingenuity and industry to raise it ”

“ The equitable distribution of the costs of government through the medium of an income tax is a delicate and difficult task. In its performance experience has shown the importance of reasonable opportunity for the legislative body, in the revision of tax laws, to distribute increased costs of government among its taxpayers in the light of present need for revenue and with knowledge of the sources and amounts of the various classes of taxable income during the taxable period preceding revision. ”

“ This brought me to the conclusion that, “when a reduction of taxation is about to take place, it is exceedingly important that great care and judgment should be exercised in the selection of the tax to be reduced, in order that the maximum of relief may be afforded to the public with the minimum of injury to the revenue.” ”

“ It was clear that the Government must have a revenue, and that revenue could only be raised by direct or indirect taxation; and he preferred, under the circumstances of the country, indirect taxes, which the people did not feel, and were not compelled to pay unless they liked; for the poor were not compelled to buy foreign imports, but if they bought them they must pay a tax to government. ”

“ Taxation would not then fall unduly on the man of moderate means; and while none would be entirely exempt from assessment, all, in proportion to their pecuniary abilities, would contribute toward the support of the State. A modification of the internal-revenue system, by a large reduction in the number of articles now subject to tax, would be followed by results equally advantageous to the citizen and the Government. ”

“ All income and expenditure of the State must be pre-estimated for every year, and be presented in the Budget, which shall be annually fixed by a law. Article 100. Taxes and dues for the State Treasury may only be raised in so far as they shall have been included in the Budget or ordained by special laws. Article 101. In the matter of taxes there must be no privilege of persons. Existing tax-laws shall be subjected to a revision, and all such privileges abolished. Article 102. State and Communal officers can only levy dues on the strength of a law. ”

“ It is one of the open secrets of finance that in almost every system of taxation the indirect overcrow the direct taxes by many millions, and have a knack for levying on the small resources of insignificant persons which direct taxes have never learned. They know how to coax pennies out of poor people whose names have never been on the tax-collector’s books. ”

“ From an opinion that direct taxes were recommended by intrinsic advantages, or that the people would become more attentive to the charges against the administration, should their money be drawn from them by visible means, those who wished power to change hands, had generally manifested a disposition to oblige those who exercised it, to resort to a system of revenue, by which a great degree of sensibility will always be excited. ”

“ I heartily approve the Secretary's recommendation of immediate and extensive reductions in the annual revenues of the Government.
It will be remembered that I urged upon the attention of Congress at its last session the importance of relieving the industry and enterprise of the country from the pressure of unnecessary taxation. It is one of the tritest maxims of political economy that all taxes are burdensome, however wisely and prudently imposed ”

“ It is well known that the government, anxious to conciliate the interests of the tributary classes with those of the revenue, frequently commutes the pecuniary capitation tax into an obligation to pay the amount in produce or manufactures. ”

“ As I am pledged to economy in my requests for funds, so you are pledged to economy in the expenditure of the funds which may be granted by Congress. No longer are the funds appropriated by Congress regarded as the minimum amount which is to be expended. Every dollar that is saved by careful administration adds to the amount by which taxes may be reduced in the future. It is practical economy which I have in mind and which we must practice. ”