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The Commoner.
5
APRIL 18, 191 J
000,000 in revenue may be derived from this
new tax, including the corporation tax, that
amount making up for the deficit In revenues
to be derived from Imports by virtue of the
greatly reduced tariff rates and the transfer to
the free list of articles that are classed as neces
saries of living.
Incomes of taxable persons shall include
gains, profits and income derived from salaries,
wages or compensation for personal service of
whatever kind and in whatever form paid, or
from professions, vocations, businesses, trade,
commerce, or sales or dealings in property, also
from interest, rents, dividends, securities, in
cluding income from property, also from but
not the value of property acquired by bequest,
devise or descent, and also proceeds of life in
surance policies paid upon death of persons in
sured. The bill allows as deductions in computing
net income all necessary expenses actually in
curred in carrying on any business, not includ
ing personal living or family expenses, interest
accrued and payable within the year by a tax
able person on indebtedness, all national, state,
county, school and municipal taxes, not includ
ing local benefit taxes; losses incurred in trade
or from fires, storms or shipwreck not com
pensated by insurance or otherwise; debts actu
ally ascertained as worthless and charged off;
also reasonable allowance for wear and tear on
property; but no deduction will be allowed for
expense of restoration or improvements made
to increase property value.
It excepts also, in computing net income,
amounts received as dividends upon the stock of
any corporation, joint stock company, associa
tion or insurance company which is taxable upon
its net income under the corporation tax pro
vision of the bill.
The bill excludes the compensation of the
president of the United States during his term,
judges of the supreme and inferior courts of
the United States, and compensation of all olll
cers and employes of a state or any political sub
division thereof.
It establishes a system of collection of the tax
at its source, requiring all persons, firms, co
partnerships; companies, corporations, joint
stock companies, associations or insurance com
panies and all trustees, executors, adminis
trators, receivers, etc., and officers and employes
of the United States having the control or dis
posal of salaries, wages, interest and other
profits and income of another person to withhold
and pay to the collector of internal revenue the
amount of income tax due from such person.
All such persons or firms are made personally
liable for such tax.
PENALTIES FOR EVASION
Persons or corporations liable to make return
on incomes who fail to do so at a specified time,
are made liable to a fine not exceeding $500
and the penalty for false or fraudulent returns is
fixed at $1,000, or imprisonment not exceeding
one year, or both.
"In formulating this additional impost," said
Chairman Underwood in his report, "the attempt
has been made to provide not only a source of
revenue, but also a means of redressing in some
measure the unequal tax burdens which result
from the practice of basing the federal income
entirely upon customs and internal revenue
duties. "This is a system of taxation which in
evitably throws the burden of supporting the
government upon the shoulders of the consum
ers. It correspondingly exempts the money of
larger income, whose consumption of the ordi
nary necessaries of life is subject to tariff tax
ation in a far less aggregate degree than is that
of smaller income earners, who expend the
greater proportion of their resources for the
ordinary necessities of life."
EXTRA TAX FOR DELINQUENTS
The hill provides that all taxable persons
shall be notified of the amount for which they
are liable, under the law, on or before June
1. For delay in making payments, and ten
days after notice, there shall be added the sum
of 5 per cent on the amount of tax unpaid, and
at the rate of 1 per cent a month from the time
the tax fell due.
The corporation tax provision, it is directed,
shall be computed upon income for the year end
ing December 31, 1913, and for each calendar
year thereafter. It is provided, however, that
corporations may designate the last day of any
month as the day of the closing of the fiscal
year, and may have the tax computed on the
basis of net income ending on its designated
day. All labor, agricultural, horticultural, fra
ternal, religious and mutual benefit societies
are made exempt from this proposed tax.
Mr. Underwood's Explanation of the Tariff Bill
Washington, April 7. In a statement accom
panying the tariff bill, introduced today, Chair
man Underwood said the measure, in the opinion
of its makers, would revise the tariff "to a basis
of legitimate competition, such as will afford a
wholesome influence on our commerco, bring
relief to the people in the matter of high cost
of living, and at the same time work no detri
ment to properly conducted manufacturing In
dustries." "In Its tariff revision work the committee has
kept In mind," ho said, "the distinction between
the necessities and the luxuries of life, reducing
the tariff burdens on the necessities to tho
lowest points commensurate with revenue re
quirements, and making tho luxuries of life
bear their proportion of tho tariff responsibili
ties. Many items of manufacture controlled by
monopolies have been placed on the free list."
Chairman Underwood's statement giving the
changes in detail continues as follows:
"In the chemical schedule the rates on cer
tain commodities show heavy reductions. For
instance, boraclc acid Is cut from 78.70 per
cent to 21.43 per cent; glue from 35.06 per cent
to 14.29 per cent, and red lead from 60.35 per
cent to 25 per cent. Moderate reductions have
been made on medicinal preparations, which are
cut from 25 per cent to 15 per cent; blacking
from 25 per cent to 15 per cent; drugs from
12.55 per cent to 10 per cent, and olive oil from
25.18 per cent to 21.05 per cent. The schedules
contain a number of articles on which either no
reduction has been nrade or au advance pro
vided for.
RATES ON BRICK AND TILE CUT
"Rates on all brick have been cut on tho
average from 30.23 per cent to 10.28 per cent,
tile from 47.84 per cent to 23.36 per cent,
asphalt from 37.05 per cent to 9.62 per cent.
Ordinary earthenware, which already was rela
tively low, being subject to an average duty of
24.67 per cent, has now been cut to 15 per cent,
while window glass has been given .an average
reduction on all glasses of from 46.38 per cent
to 28.31 per cent. Plato glass, which may be
considered a luxury, still retains a duty of near
ly 40 per cent, the average being 38.45 per cent,
in place of tho duty of 63.95 per cent in the law.
"Pig iron and slabs, which -were 16.35 per
cent and 17.79 per cent, have been cut to 8 per
cent in each case; beans from 23.20 per cent
to 12 per cent, and forgings from 30 per cent
to 15 per cent. On tho other hand, bicycles,
a much more highly manufactured product, are
dutiable at 25 per cent, as against 45 per cent,
and razors at 35 per cent as against 77.68 per
cent.
EXTENSION OF FREE LIST
"The idea of the large extension of the freo
list for the manufactured products has been the
fundamental conception, while tho effort has
been made to improve the status of the manu
factured lumber. Thus sawed boards, other
than cabinet wood, have been carried to the
free list, while sawed cabinet woods, which were
12.75 per cent in 1912, now are 10 per cent;
casks, barrels, etc, which were 30 per cent, are
now 14.77 per cent, and house furniture, which
was 35 per cent, now is 15 per cent.
"Tobacco and spirits have been found to be
good producers of reveriue and have, therefore,
been left at the same rates as in the present
law.
SCHEDULE G REVISED
"In the effort to relieve the consumer and to
mitigate the high and rising cost of living,
schedule 'G, which deals with agricultural pro
ducts, has been thoroughly revised and im
portant reductions have been made. For in
stance, the duty on horses has been reduced
from 25 per cent to 10 per cent, cattle from
25.07 per cent to 10 per cent, sheep from 16.41
to 10 per cent, barley from 43.05 per cent to
23.07 per cent, macaroni from 34.25 per cent
to 23.81 per cent, hay from 43.21 per cent to
26.67 per cent, fruits from 27.21 per cent to
15.38 per cent, figs from 51.53 per cent to
42.10 per cent, lemons from 68.85 per cent to
24.03 per cent, live poultry from 13.10 per cent
to 6.67 per cent and vinegar from 33.03 per cent
to 17.3 a per cent. Other changes are in pro
portion and the general effect has been to re
duce in a very material proportion the heavy
taxes upon imported foodstuffs.
REDUCTIONS ON COTTON GOODS
"In Schedule I, dealing with cotton, compari
sons of the principal items show reductions on
cotton throad from 31.54 por cent to 19.29 per
cent, on spool throad from 22.95 por cont to
15 per cent, on cotton cloth from 42.74 per cont
to 26.69 por cent, on wntorproof cloth, from
50.56 per cent to 25 per cont, on roady-mado
clothing from 50 per cont to 30 por cont, on
collars and cuffs from 64.03 per cent to 25 per
cont, on plushes from 51.40 per cent to 40 per
cent, on handkerchiefs from 59.27 por cent to
30 por cent, on stockings from 75.30 por cent
to 50 por cent, on gloves from 89.17 per cont
to 35 per cent, on underwoar from 60.27 por
cent to 25 per cont, and on cotton damask from
40 por cent to 25 per cent.
"Flax, hemp and tholr products, have been
similarly dealt with. Raw (lax and raw homp
have been reduced from $22.40 and $22.50 por
ton, respectively, to $11.20 each; Jute yarns
have been cut from 2 6.90 per cont to 15 por
cent, cables and cordage from 6.43 per cent to
4.55 per cent, ollclotliB for floors from 44.29 por
cent to 15 por cent, handkerchiefs from 50 por
cent to 35 per cent.
"Schedule K, dealing with wools and woolen
manufactures, has been tho center of criticism
for many years and the committee has glvon It
very careful study. Tho result has been to mako
raw wool free of duty, to reduce yarns from
79.34 por cent to 20 per cont, blankets from
72.69 per cont to 25 per cent, flannels from
93.29 per cent to 25 and 35 per cent, dress
goods from 99.70 per cent to 35 por cont, cloth
ing from 79.56 per cont to 35 per cent, wob
blngB, etc., from 82.07 per cont to 35 per cent,
and carpets from rateB ranging from 60 per cent
to 82 per cent, to rates ranging from 20 per
cent to 35 por cent.
"Inasmuch as silk and silk goods aro dis
tinctively to be classed as luxuries, It has been
deemed wise to mako only very moderato reduc
tions in tho rates of duty. Partially manufac
tured goods havo been cut from 21.01 per cent
to 15 per cent, spun silk yarn from 37.09 per
cent to 35 per cent, sewing silk from 35 por
cent to 15 per cent, silk goods from 52,58 per
cent to 50 per cent, silk handkorchiofs, plain,
from 50 per cent to 40 per cent, ribbons from
50 por cent to 4 0 per cent, artificial silk yarns
from 41.79 por cent to 35 per cont, and braids,
embroideries and tho like of artificial silk from
68.49 per cent to 60 per cent.
DUTY ON PAPER REMOVED
"Print paper, whoso cost of production is as
low in this country under favorable conditions,
as it is anywhere in the world, has been trans
ferred to the free list when worth less than 2 Vfc
cents per pound, while tho higher grades havo
been given a tariff of 12 per cent, in place of
15.80 per cent. Copying paper has been cut
from 42.32 per cent to 30 per cent, bag enve
lopes, etc., from 49.92 per cent to 35 por cent,
parchment paper from 47.92 per cent to 25 per
cent, photographic paper from 29.99 per cent
to 25 per cent, writing paper from 45.13 por
cent to 25 per cent, common wrapping paper
from 35 per cent to 25 per cent, and books
from 25 per cent to 15 per cent.
"Trimmed hats are given only a moderate
reduction, being cut from 50 per cent to 40 por
cent, while brooms aro substantially reduced,
being cut from 40 por cent to 15 per cent,
jewelry has been but slightly reduced, falling
from 75.74 per cent to 60 per cent.
TARIFF COMPETITIVE
"Where the tariff rates balance the differenco
in cost of' production at home and abroad, in
cluding an allowance for the difference in freight
rates, tho tariff must be competitive, and from
that point .downward to tho lowest tariff that
can bo levied will continue to be competitive to
a greater or less extent. Where competition Is
not Interfered with by levying the tax above tho
highest competitive point, tho profits of tho
manufacturer are not protected.
"On the other hand, when the duties levied at
the custom house are high enough to allow
tho American manufacturer to mako a profit
before his competitor can enter the field, we
have invaded the domain of the protection of
profits. In tho committee's judgment the pro
tection of any profit must of necessity have a
tendency to destroy competition and creato
monopoly, whether tho profit protected is
reasonable or unreasonable.
WHICH COURSE IS WISEST?
"Which course is tho wiser ono for our gov
ernment to take? The one that demands tho
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