64 POPULAR SCIENCE MONTHLY 



PKINCIPLES OF TAXATION. 



By DAVID A. WELLS, LL. D., D. C.L., 



00RRE8P0NDANT DE l'inSTITUT DE FRANCE, ETC. 



XVIII. THEORY AND PKACTICE OF INCOME TAXATION. 



C'^OMMENCING with first principles, the general taxation of 

 ^ incomes is theoretically one of the most equitable, productive, 

 and least exceptionable forms of taxation. What can be fairer than 

 that each citizen should annually contribute an equitable and just 

 portion' of his net gain or income for the support of the government 

 or State under which he has elected to live, and in default of which 

 he would not be likely to have either gain, income, or property? 

 and such a method of supporting a government would therefore 

 seem to be in accord in the highest degree with those canons or 

 maxims of taxation which are regarded by nearly all economists and 

 jurists as the highest embodiment of human wisdom on this subject. 



And yet the proposition is hardly open to dispute that a general 

 income tax, with such administrative features as are essential to make 

 it desirable as a revenue measure, can not be successfully adminis- 

 tered under a free and popular form of government. On this point 

 the comparatively recent experience of the United States, which few 

 now remember, ought to be most instructive. Thus, in 1869, under 

 a Federal law assessing all incomes in excess of $1,000, and with a 

 corps of trained officials to execute it, only 259,388 persons out of a 

 population in that year of about 37,000,000 acknowledged the re- 

 ceipt of any taxable income; and in 1872, when the exemption had 

 been raised to $2,000 and the population had increased to over 

 39,000,000, the number of persons who had an income tax ran down 

 to 72,949 — leaving a presumption that every one of those who 

 did not pay and was made subject to inquisition by the officials 

 in respect to his income, made oath that he was not in receipt, from 

 wages, salary, interest, or profits, of an income liable to taxation in 

 excess of $2,000. From an economic point of view it would be a 

 misnomer to call such a result "taxation"; from a moral point of 

 view its characterization as " appalling " would not be inappropriate. 



Another point which may also be accepted as theoretically be- 

 yond dispute is, that if all were willing to live up to and carry out 

 the correct and rational theory of an income tax, there would be little 

 use for tariffs, customhouses, internal revenue departments, and 

 excises. But that is exactly what human nature, as we find it, will 

 not agree to have done in the one case, or to do in the other. In fact, 

 there is hardly any other one thing which human nature so much 

 dislikes to do as to pay taxes, although it is capable of demonstra- 



