Friday, March 21, 1913. The year 2013 marks the 100th anniversary of the constitutionally authorized federal income tax. As The Record shows, it also marks the 100th anniversary of political debates over how to tax the public.
The 16th Amendment to the U.S. Constitution was ratified on Feb. 13, 1913. It remains for Congress to enact a law to impose the tax. There's already some disagreement over when or for what purpose Congress should use its new power.
On our editorial page, a writer claims that the amendment was ratified on the understanding that income taxes would be levied "for emergencies." Now, however, a Democratic majority in Congress is expected to make "an attempt to make this kind of tax an integral part of our financial system."
Some Democrats have envisioned a federal income tax as a more fair alternative to the current system of raising revenue mainly through tariffs on imports. Following up on this line of thinking, Congressional Democrats propose a "graded" income tax, requiring the wealthy to pay at a higher rate. Incomes above $1,000 a year are most likely to be taxed when legislation is finalized.
Opponents of a graded tax claim that it punishes thrift. It "seeks to discriminate against those whose energy has caused an accumulation of wealth or whose ability makes them capable of greater earning power," our editorial writer explains, "These classes are the backbone of progress and against them there should not be discrimination. Moreover, to take a larger proportion from the rich would be class legislation, based upon jealousy and certain to accentuate the unfriendliness now existing between capital and labor."
Our editorial goes on to present the other side of the argument. "Gradation may not be theoretically advisable, say its advocates, but practically it is an equalization which is just and proper. The small income, having little beyond actual necessity for living expenses, feels grievously the added burden of even a small tax, whereas the larger income can afford to contribute more to government without suffering.
"The rich man receives more from government and therefore should give ore to it. He gains the international features of commercial protection for his business is of a wider scope; he has the protection of his hoarded money through law and order which the poor man does not ask nor need, for he has nothing but his muscles and his skill, and these would make his small living with much less of law and order."
The Record's opinion is that taxes may as well be graded "if the gradation is not so great as to drive capital into other countries."