Income tax

“ We believe that the Income Tax would be the fairest of all taxes, because it would take for the support of the government, not the property of the citizen, but a portion of the income which the citizen derives from that property, or from his individual exertions, and the tax would be proportioned to the income. ”

“ Believing thus, the plain people of America see no good reason or argument in the cry that an income tax will be productive of perjury and that it is a sufficient reason to prevent its passage. And, therefore, a graded income tax becomes the most desirable measure possible to introduce for the advantage of the people who elected the incoming administration, November 8, 1892. ”

“ Many of the States impose an income tax, but I observe no particular increase in that kind of taxation in the legislation of the last twenty years. A man's income is commonly taxed with his other property. It is a form of tax far more evaded here than in England, probably because the English law provides a machinery for collecting a large part of income taxation from the persons from whom the income is derived, as, for instance, from the tenant who pays rent to a landlord; just as with us a corporation is made to pay the tax on its capital stock nominally due from the individual owner. ”

“ The very essence of taxable income, as that concept is used in Section 22 (a) , is the accrual of some gain, profit or benefit to the taxpayer. This requirement of gain, of course, must be read in its statutory context. Not every benefit received by a taxpayer from his labor or investment necessarily renders him taxable. Nor is mere dominion over money or property decisive in all cases. In fact, no single conclusive criterion has yet been found to determine in all situations what is a sufficient gain to support the imposition of an income tax. ”

“ Reverting to income, as distinguished from accumulated wealth, it is illuminating to note that only one person out of every 50 in the United States has a net income of sufficient size to require him to pay a tax upon it to the Federal Government. About 2,500,000 persons, or 2 per cent of the population, pay all that is collected under the Federal income tax ”

“ Five per cent per annum was then levied on all incomes above $600 and not in excess of $5,000; seven per cent on all incomes in excess of $10,000. In the income tax of the United States as it existed at one period there was, therefore, recognized the principle not only of exempting incomes below a certain amount from all taxation, which amount, in order to keep up the appearances of equity, was allowed to be equally deducted from all larger incomes ”

“ THE MAIN INSTRUMENT OF TAXATION THROUGH the income tax we go directly to the person upon whom we desire to levy taxation, and take from him such portion of his earnings or other profits as we consider to be his just contribution to the revenue. Through the income tax we can, if we care to do so, cause each subject of the State to contribute towards the expenses of government according to his ability. ”

“ We should contend for an income tax not simply for the purpose of raising revenue but for the purpose of framing a revenue system which will distribute the burdens of government between consumption and accumulated wealth, which will enable us to call upon property and wealth not in an unfair and burdensome way but in a just and equitable way to meet their proportionate expenses of the government, for certainly it will be conceded by all that the great expense of government is in the protection of property and of wealth. ”

“ But, wholly apart from extrinsic circumstances, the statute itself in terms seems clearly to impose an income tax. The tax is not one upon the privilege of doing business, but it is an annual tax for the privilege of doing business, to be computed upon the basis of the net income for the year next preceding. ”

“ Indeed, it is obvious that an income tax, levied on the profits of any business, does not fall ultimately on the consumer or patron of that business, in any other sense than that in which a poll tax or land tax may be said ultimately to fall, or be charged over by the payer of those taxes upon the persons with whom and for whom they do business, or to whom they rent their lands. ”

“ An income tax is really a tax on business, either present or past.
In either case, whether the levy is on his poll, upon the assessed valuation of his property, or upon his declared income, the taxpayer contributes, theoretically at least, in direct proportion to his ability to pay. The amount of the tax is definitely ascertained some little time in advance of payment and is collected directly by an officer of government. ”

“ Again, an income tax which exempts $4,000 of income in the United States can not be defended by any rational rule or doctrine, legal or economic, for the property and income exempted would be infinitely greater in the aggregate than the property and the income of the same class made subject to the tax. Under this form of an income tax there could be no equality between taxed-producers and non-taxed-producers, and more especially as the non-taxed-producers will be the most numerous and the greatest producers in quantity as a body. ”

“ The income tax applies to net income from employment, and net profits from business. There is an absolute exemption of $1,500, except in the case of absentees, and companies whether absentees or not, and a further additional exemption up to $250 a year for life insurance premiums, if the citizen wishes to spend his money that way. All income derived from land or from mortgages, so far as they represent realty, is outside this tax, which affects only income from employment or business. The farmer, who derives all his income from land, pays no income tax. ”

“ It is to be feared, therefore, that the fairness which belongs to the principle of an income tax, cannot be made to attach to it in practice: and that this tax, while apparently the roost just of all modes of raising a revenue, is in effect more unjust than many others which are primâ facie more objectionable. This consideration would lead us to concur in the opinion which, until of late, has usually prevailed that direct taxes on income should be reserved as an extraordinary resource for great national emergencies, in which the necessity of a large additional revenue overrules all objections. ”

“ Moreover, if we add to our income tax our so-called excess profit tax, which is merely an additional income tax on earnings derived from business, we shall find that the total tax to which rich men are subject is in the great majority of cases heavier here than in England or anywhere else. ”

“ when there is an income tax, the just man will pay more and the unjust less on the same amount of income; ”

“ So if you are a wealthy person and you earn money from dividends—I believe the overwhelming majority of those capital gains accrue to the top 1 percent—you are going to be paying a tax on that income of 15 percent, which is less than you pay if you are a fireman, a police officer, a teacher, or a nurse. So what we are doing there is extending not only the personal income tax breaks for the very rich but a host of other taxes as well. ”

“ The only notable extension of income tax legislation is in the establishment of the principle of the graded income tax, which is beginning to be adopted in a few States, as in North and South Carolina in 1897. ”

“ The income tax involved is uniform in its application to all income within the description of the act of all inhabitants of the state without regard to the taxing subdivision in which they may reside. ”

“ Moreover, the present method of collecting revenue under the income tax is speculative and uncertain, because the profits of industry and business, upon which the income tax is based, are subject to vast fluctuations. ”

“ The income tax as at present levied is in reality not a single uniform tax, as might at first sight appear, but a tax on the various species of rent, interest, profits, and wages. The anomalies which arise from practically taking income as uniform have often been pointed out and acknowledged, but the authority of Mr Gladstone may be quoted in support of the view that the practical difficulties in the way of a readjustment more in accordance with theoretical principles are insuperable. ”

“ A tax upon the assets of a corporation is bad if obligations of the United States are included in the assessment. [25] A gross income tax is invalid to the extent that it is laid on income from federal securities. [26] The reason is that 'the tax * * * is a tax upon the contract subsisting between the government and the individual. ”

“ Some of the official returns made in connection with the income tax show that the immense increase of wealth of the last thirty years has been far from being reaped by any single class, but has been shared pretty evenly by all the classes included in those returns. We possess detailed accounts of the number of persons paying income tax in each grade of income under Schedule D, from the year 1849, and if we compare the figures of that year with those of 1879, we shall obtain a fair index to the movement of distribution during those thirty years. ”

“ Many, perhaps most, courts hold that a net income tax is to be classified as an excise. [7] 'The tax levied on income is not a property tax, but is a percentage laid on the amount which a man receives, irrespective of whether he spends it, wastes it, or invests it.' Featherstone v. ”

“ Income taxes.—A favorite device in some countries, [pg 361] and often advocated in this, is a direct tax upon incomes above a certain amount, graduated so as to give a much larger rate upon large incomes than upon more moderate ones. The most obvious reason for such a distinction against the large incomes is the evident failure of our national system of taxation to distribute the burden according to ability. ”

“ Title VIII, as we have said, lays two different types of tax, an 'income tax on employees,' and 'an excise tax on employers.' The income tax on employees is measured by wages paid during the calendar year. Section 801 (42 U.S.C.A. § 1001) . The excise tax on the employer is to be paid 'with respect to having individuals in his employ,' and, like the tax on employees, is measured by wages. ”

“ Wherever you find an article, a product, a trade, a profession, a sale, or a source of income, tax it! And so an edict went forth to this effect, and the people cheerfully submitted. Incomes under five thousand dollars were taxed five per cent, with an exemption of five hundred dollars and house rent actually paid. Incomes in excess of five thousand dollars and not in excess of ten thousand dollars were taxed two and a half per cent in addition, and incomes over ten thousand dollars, five per cent additional, without any allowance or exemptions whatever. ”

“ The income tax law levies on all citizens or residents of the United States a normal tax of 12 percent. upon the amount of income in excess of exemptions, except that on the first $4,000 of the taxable amount the rate shall be 6 percent. ”

“ At the low end of the income scale, the bottom 40 percent of people who have income do not basically pay income taxes. Obviously, they pay withholding taxes, but as a practical matter that segment of our society pays virtually nothing in income taxes. They get money back, in fact, on the earned-income tax credit and other benefits the Federal Government puts in place. ”

“ A person below a certain threshold receives money instead of paying it. The negative income tax can be presented as a ‘basic benefit’: all members of society receive allowance A from the state, and pay taxes only on their additional income. The negative income tax or basic benefit is often presented as a solution to the current unemployment problem. ”

“ 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. ”

“ By an enactment of Congress, August 18, 1894, establishing an income tax for the United States, a tax of two per cent was imposed on the gains, profits, and income of persons derived from any kind of property, including rent and the growth and produce of lands, and profits made upon the sale of land if purchased within two years. Every element that could make real or personal property a source of value to an owner was taxed. ”

“ I therefore reckon that, without remissions, the tax of sixteen-pence in the pound down to £156 a year would produce about £30,000,000, and that the tax down to £52 a year would about produce the rest. The total income that income tax is now levied on is nearly £600,000,000. We need not be surprised at the productiveness of the income tax. A man of £10,000 a year pays tax on that. ”

“ Next we should give Americans a tax cut. We've already cut taxes for 15 million American working families through our dramatic expansion of the earned income tax credit. This year that tax reduction will be worth about $1,000 to a family of four with an income of $28,000 a year or less. ”