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The Commoner.
VOLUME 9, NUMBER 29
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EDUCATIONAL SERIES
TJIE INCOME TAX
SDGCch dellvorod by William J. Bryan in tho
houso of representatives January 30, 1894. Mr.
Bryan said:
Mr. Chairman: What is this bill which has
brought forth tho vehement attack to which wo
havo just listoncd?. It is a bill reported by tho
committee on ways and means, as the comple
ment of tho tariif bill. It, together with tho
tariff measure already considered, provides tho
necessary revenue for tho support of the gov
ernment. Tho point of attack is tho income
tax, individual and corporation (which is ex
poctod to raise about $30,000,000) and to that
I will devote tho few minutes which aro allowed
for closing tho debat3.
Tho gen oman from New York insists that
sufficient i "cnuo will bo raised from tariff
schedules, together with tho present internal
revenue taxes, and that it is therefore unneces
sary to seek new objects for taxation. In this
opinion ho Is not supported by the other mem
bers of the committee, and wo have been "on
Btralned to follow our own judgment rather
than his. Tho Intornal revenue bill which is
now ponding as an amendment to tho tariff bill
Imposes a tax of two per cent upon the net in
comes of corporations, and in the nnso of cor
porations no exemption Is allowed.
I need not give all tho reasons which led tho
committee to recommend this tax, but will sug
gest two of the most important. The stock
holder in a corporation limits his liability.
When tho statute creating tho corporation is
fully complied with tho individual stockholder
Is secure, except to the extent fixed by tho
statute, whereas tho entire property of tho in
dividual is ordinarily liable for his debts. An
other reason la that corporations enjoy certain
privilege and franchises. Some are given the
right of eminent domain, while others, such
ns street car companies, are given the right to
udo 'thq streets of tho city a franchise which
Increases In value' with each passing year. Cor
porations occupy the time and attention of our
federal courts and enjoy the protection of tho
federal government, and as they do not ordi
narily pay taxes the committee felt justified
In proposing a light tax upon them.
Some gentlemen have accused the committeo
of showing hostility to corporations. But, Mr.
Chairman, wo are not hostile to corporations;
we simply believe that these creatures of the
law, these fictitious persons, have no higher
or dearer rights than the persons of flesh and
blood whom God created and placed upon His
footstool. The bill also imposes a tax of two
per cent upon individual incomes in excess of
$4,000. We have proposed the maximum of
exemption and the minimum of rate. The prin
ciple Is not new in this country. For nearly
ten years, during and after the war, an income
tax was levied, varying from 2 to 10 per cent,
while the exemption ranged from $000 to $2,000.
In England the rate for 1892 was a little more
than two per cent, the amount exempt, $750,
with an additional deduction of $000 on Incomes
' of less than $2,000. The tax has been In force
there in various forms for more than fifty yenrs.
In Prussia the Income tax has been In opera
tion for about twenty years; incomes under
900 marks are exempt, and the tax ranges from
less than ono per cent to about four por cent
according to the size of the income. '
Austria ha tried tho income tax for thirty
years, the exemption being about $113, and the
rate ranging from eight per cent up to 20 per
. cent.
A large sum is collected from an Income tax
In Italy; only incomes under $77.20 are ex
empt, and tho rate runs up as high 'as 13 per
cent on some Incomes.
In the Netherlands the income tax has been
in operation since 1823. At present, Incomes
under $2G0 are exempt, and the rate ranees
from 2 per cent to 3 1-B per cent, the lnttor
rate belns paid upon incomes In excess of $3 280
In Zurich, Switzerland, the Income tax has
been In operation for more than half a centurv
Incomes under $100 are exempt, and tho rate
ranges from riout 1 per rent to almost 8 per
cent, affording to tho pfre nf tho Income '
Tt will be tluw soonthnt the Income tax Is no
new dovino. and It w'll also be noticed that the
committee has proposed a tax lighter in rate
and moro liberal in exemption than that im
posed in any of tho countries named.
If I were consulting my own preference I
would rather havo a graduated tax, and I be
lievo that such a tax could bo defended not
only upon principle, but upon grounds of public
policy as well; but I gladly accept this bill as
offering a more equitable plan for making up
tho deficit i our revenues than any other w 'ch
has been proposed. Tho details of the bill will
be discussed tomorrow under tho five-minute .
rule, and any necessary changes can be made.
The committeo presents the bill after careful
consideration, but will cheerfully accept any
changes which the wisdom of the house may
suggest. The bill not only exempts from taxa-,
tion, but from annoyance as well, every person
whose income Is below $3,500. This is an im
portant feature of tho bill. In order to guard
against fraud tho bill provides that every per
son having an income of more than $3,500 shall
make a return under oath, but no tax is collect
ed unless the net income exceeds $4,000. Tho
bill also provides severe penalties to restrain
tho tax collector from disclosing any informa
tion gained from tho returns made by citizens.
And now, Mr. Chairman, let us consider tho
objections which have been made. The gen
tleman from New York (Mr. Bartlett) who ad
dressed the house this forenoon, spent some
time in trying to convince us that, while the
supreme court had without dissent affirmed the
constitutionality of an income tax yet it might
at some future time reverse the decision, and
that, therefore, this bill ought to be rejected.
This question has been settled beyond contro
versy. The principle has come before the court
on several occasions, and the decisions have al
ways sustained tho constitutionality of the in
come tax. (Hylton vs. United States, 3 Dall.,
271; Deasle Bank vs. Fenno, 3 Dall., 171;
Densie vs. Tew, 2,3 Wall., 331; Pacific Insurance
Company vs. Soule, 7 Wall., 433.)
In Springer vs. United States (102 United
States, 580) tho question was directlv raised
upon the law in force from 1863 to 1873, and
the court held that the income tax as then col
lected was not a direct tax within the meaning
of the constitution, and therefore need not be
apportioned among the states according to their
population.
But gentlemen have denounced tho Income
tax as class legislation, because It will affect
moro people In one section of the country than
in another. Because the wealth of the country
is, to a large extent, centered in certain cities
and states does not make a bill sectional which
imposes a tax in proportion to wealth. If New
York and Massachusetts pay more tax under
this law than other states, it will be because
they havo more taxable incomes within tlieir
borders. And why should not those sections
pay most which enjoy most?
The census shows that the population of
Massachusetts increased Jess than half a million
between 1880 and 1890, while the assessed
value of her property Increased more than half
a billion during the same period. The popula
tion of New York increased about 900,000 be
tween 1880 and 1890. while the assessed value
of tho property increased more than $1,100,
000.000. On the other hand, while the popu
lation of Iowa and Kansas combined increased
more than 700,000, their assessed valuation in
creased only a llttr more than $300,000,000.
This bill is not in the line of class legislation,
nor can It bo regarded aa legislation against a
section, for .the rate of taxation fs the same
on every income over $4,000, whether Its pos
sessor lives upon the Atlantic coast, in the Mis
sissippi valley or on the Pacific slope. I only
hope that we may in the future have more
farmers in the agricultural districts whose in
comes are largo enough to tax.
But the gentleman from New York (Mr.
Coqkran) has denounced as unjust the principle
underlying this tax. It is hardly necessary to
rend authorities to the house. There Is no
more just tax upon ,the statute bookq than the
income tax, nor can any tax be proposed which
is more equitable; and the principle Is sus
tained by tho most distinguished writers on
political economy. ,Actam Smith aays:
Tho subjects of every atate ought to contribute
to the support of the government, as nearly as
possiblo In proportion to their- respective abili-
ties; that is, In proportion to tho revenue which
they respectively enjoy under tho protection of
tho state. In tho observation or neglect of thl3
maxim consists what is called tho equality or In
equality of taxation.
Tho income tax is the only ono which really
fulfills this requirement. But it is said that
wo single out some person with a largo income
and make him pay more than his share. And
let mo call attention here to a fatal mistake
made by the distinguished gentleman from New
York (Mr. Cockran). You who listened to hia
spoech would havo thought that the income tax
was the only federal tax proposed; you would
have supposed that it was the object of this
bill to collect the entire revenue from an in
come tax. The gentleman forgets that the pend
ing tariff bill will collect upon Imports moro
than $120,000,000 nearly ten times as much
as we propose to collect from tho individual
Income tax. Everybody knows that a tax upon
consumption is an unequal tax, and that the
poor man by means of it pays far out of pro
portion to tho income which he enjoys.
I read the other day in the New York World
and I gladly join in ascribing praise to that
great daily for its courageous fight upon this
subject in behalf of tho common people a de
scription of the home of the richest woman
in the United States. She owns property esti
mated at $60,000,000, and enjoys an incomo
which can scarcely be less than $3,000,000, yet
she lives at a cheap boarding house, and only
spends a' few hundred dollars a year. That
woman, under your Indirect system of taxation,
does not pay as much toward the support of the
federal government as a laboring man whose
income of $500 is spent pon his family.
Why, sir, the gentleman from New York (Mr.
Cockran) said that the poor are opposed to this
tax because they do not want to be deprived of
participation in it, and that taxation instead
of being a sign of servitude Is a badge of free
dom. If taxation is a badge of freedom, let
me assure my friend that the poor people of
this country are covered all over with the in
signia of freemen.
Notwithstanding the exemption proposed by
this bill, the pepple whose . incomes are less
than $4,000 -will still contributd far more than
their just share to the support of the govern
ment. The gentleman says that he opposes this
tax in the interest of the poor! Oh, sirs, is
it not enough to betray the cause of the poor
must it be done with a kiss?
Would it not be fairer for the gentleman to
fling his burnished lance full in the face of
the toiler, and not plead for the great fortunes
of this country under cover of the poor man's
name? The gentleman also tells us that tho
rich will welcome this tax as a means of secur
ing greater power. Let me call your attention
to the resolution passed by '.he New York cham
ber of commerce. I wonder how many poor
men have membership in that body! Here are
the resolutions passed at a special meeting called
for the purpose. The newspaper account says:
Resolutions were adopted declaring "tho pro
posal to impose an income tax is unwise, unpolitio
and unjust for tho following reasons:
"First Experience during our lato war demon
strated that an Income tax was inquisitorial and
odious to our people, and only tolerated as a war
measure, and was abrogated by universal consent
as soon as the condition of tho country permitted.
"Second Experience has also shown that it is
expensive to put in operation; that it can not bo
fairly collected, and is an unjust distribution of
the burdens of taxation and promotes evasions
of the law.
"Third Tho proposal to exempt incomes under
$4,000 is purely class legislation, which is social
istic and vicious in its tendency, and contrary to
tho traditions and principles of republican gov
ernment." Still another resolution was adopted declaring
"that in addition to an internal revenue tax tho
necessary expenses of tho government should bo
collected through tho custom house, and that tho
senators and .representatives In congress from
the state of New York bo requested to strenuously
opposo all attempts to re-impose an Income tax
upon tho people of this country."
They say that the income tax was "only tol
erated as a War measure, and was abrogated
by universal consent as soon as the condition
of the country permitted." Abrogated by uni
versal consent! What refreshing ignorance
from such an intelligent source! If their knowl
edge, of other facts recited in those resolutions
is as accurate1 as that statement, how' much
weight their resolutions ought to have! Why,
sir, there never has been a day since the war
when a majority of the jeople of the United
States opposed an income tax. It was only
repealed by one vote in tho senate, and when
under consideration was opposed by such dis
tinguished republicans as Senator Sherman of
Ohio, Senator Morton of Indiana, and Senator
Howe of Wisconsin. It was also opposed in
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