say: "I ask of any reasonable person whether it is unjust to expect that a small per cent of this enormous revenue shall be placed upon the accumulated wealth of the country instead of placing all upon the consumption of the people. . . . The people of the United States do not ask that all of the revenue shall be placed on accumulated wealth. They do not demand that even one fourth of it shall be placed there. But they do insist that it is not unreasonable or unjust to require that a very small proportion of it shall be. . . . We do not come here in any spirit of antagonism to wealth. . . . It is not a proposition to put an undue embargo upon wealth, but it is to make the wealth that is accumulated in this country pay some share of the expenses of Government. . . . My friends, are we going to put all of this burden on the things men eat and wear and leave out those vast accumulations of wealth? And yet, when it is proposed to shift this burden from those who can not bear it to those who can; to divide it between consumption and wealth; to shift it from the laborer who has nothing but his power to toil and sweat, to the man who has a fortune made or inherited, we hear a hue and cry raised. . . . I would be most reluctant to use the power of government to tax wealth unjustly. But I am also unwilling to let wealth escape all governmental taxation. ... Referring to the "colossal fortunes amassed as were never concentrated at any other age or in any other country of the world," and calling attention to the fact that "in a single lifetime fortunes are gathered together here by protection, and the tribute that it levies on the many for the enrichment of the few," he asked: "Are we to be told, with all this staring us in the face, with all the blessings that have been showered on those who have been able to thus accumulate what would have made Crœsus envy us, that it is a sacred thing that we shall not invade, and that these fortunes shall go untouched for governmental purposes, forever and aye? I do not believe it." This was the fundamental reason for the tax. And the 1 Congressional Record, op. cit., p. 415. result, in his opinion, would be "to diminish the antipathies that now exist between the classes. When each citizen sees that every other citizen is paying to perpetuate the blessings of freedom in proportion to the wealth he possesses, there will be no heed given to iconoclastic complaint, which finds expression in violence, and threatens the very foundations upon which our whole institutions rest." tax. The minor reason that McMillin gave was what he called the flexibility of the tax, or what is more commonly termed the elasticity of the revenue system. Pointing out that this was the great result achieved by the English tax, he stated that in the United States we must look forward to steady expenditures and fluctuating revenues. "Make the tariff what it should be, and regulate revenues by changing internal revenue taxes. This tax can be raised and lowered without affecting business. Tariff rates can not be." McMillin thereupon proceeded to take up some of the objections to the With reference to the charge of inquisition, he stated that the income tax was not more inquisitorial than certain parts of the tariff, and surely not more so than the entire system by which the state, country, and municipal revenues were collected. "The American people will not accept this as a special reason why we should for a long period put all the federal taxes upon consumption and none upon accumulations." Finally, in answer to the argument that the income tax is a tax upon thrift, he pointed out that, on the contrary, Every citizen is placed on an equality by this proposition. This law says: 'As you have been prospered, so pay. As you have received the blessings of the government, contribute to its support. As you have been enabled to accumulate this wealth by the blessings of free institutions, contribute something to perpetuate them.' How can that be called a penalty on thrift?" § 2. The Discussion in Congress The introduction of the amendment led, as was natural, to a fierce discussion. The opponents of the tax presented vigorous arguments, many of which were well put by Bourke Cockran of New York. Ray quoted with some effect from the Democratic criticism of the tax during the Civil War: "It is not a proposition to tax property, accumulations of wealth, but mind and energy. It is a measure that will encourage shiftlessness and idleness." Ray thought that the weakness of the income tax was sufficiently exposed by characterizing it as "a twin sister of free trade." Walker, of Massachusetts, complained that "the income tax takes from the wealth of the thrifty and enterprising, and gives to the shiftless and the sluggard."2 Several speakers, like English and Dunn, took refuge in Senator Thurman's objection to the Civil War income tax, that it would ultimately be shifted to the poor, and that they, therefore, would bear the burden. Somewhat inconsistently, however, Dunn contended that "the mad policy of the Democrats would create such a financial revolution in this country as would shake the government to its very foundations."4 English, in addition, prophesied that "before three years have passed, if this measure shall have become law, you will repeal it amid the jeers and execrations of the people." 5 Perhaps the strongest language that was used in opposition may be found in the speech of Adams, of Pennsylvania. "An income tax! A tax so odious that no administration ever dared to impose it except in time of war; and you will find that the people will not tolerate it in time of peace. It is unutterably distasteful both in its moral and material aspects. It does not belong to a free country. It is class legislation. Do you wish to put a tax upon thrift and impose a penalty upon success? Do you desire to offer a reward to dishonesty and to encourage perjury? The imposition of the tax will corrupt the people. It will bring in its train the spy 1 Congressional Record, op. cit., p. 1600. 2 Op. cit., 1650. Walker's speech was separately published under the title, The Income Tax. Remarks of Hon. J. H. Walker. Washington, 1894. 3 Cf. supra, p. 461. Op. cit., appendix, p. 188. 4 Op. cit., appendix, p. 208. and the informer. It will necessitate a swarm of officials with inquisitorial powers. It is a direct step toward centralization, of which our Democratic friends profess such horror. It is expensive in its collection and cannot be fairly gathered; and finally, it is contrary to the traditions and principles of republican government. Mr. Chairman, pass this bill, and the Democratic party signs its death warrant.' "1 All this opposition, however, was hopeless. Wilson, the author of the tariff bill, and who originally suggested a corporation tax as preferable to an income tax,2 stated his views as follows: "I did not concur in the policy of attaching an income-tax bill to the tariff bill. I have had some doubt as to the expediency of a personal income tax at the present time, but when the Committee decided otherwise, I threw in my fortunes earnestly and loyally with them because I had never been hostile to the idea of an income tax." He denied that the bill involved either class or sectional legislation. "Why, sir, when for a generation New England has been sending out from her colleges men imbued with the doctrine that an income tax is a wise and equal system of taxation, when through the text books of her great economists, her Sumner, and Walker and Perry, she has taught that doctrine in the colleges of the South and West, she cannot justly complain that her own teachings are used as a sectional weapon against her. But," he added, "I am in close touch with the men of New York, I am in close touch with the men of the West, I am bone of the bone of the men of the South. And I can affirm that in all my conferences with them I have heard no man suggest as the motive for this scheme of taxation that he supported it in any sectional spirit, or with any feeling of resentment or hostility to any part of the country.' "3 The other speakers added but little to the points that had been made by McMillin. Hall, of Missouri, however, who, 1 Op. cit., appendix, p. 207. 2 Cf. his article, "An Income Tax on Corporations," in the North American Review, vol. 158 (January, 1894), pp. 1 et seq. 3 Congressional Record, op. cit., appendix, p. 204. like many others, made much of the "flexibility" argument advanced by McMillin, emphasized the popular sentiment in its favor. "What the opponents of an income tax have most to dread is the education of the people. If we had been able to put an income tax plank in the Chicago platform, and had had the time to educate the people on this question, there is no question that we would have carried this country, and carried it like a cyclone." The Populists, through Pence and Kem, attempted to introduce a graduated scheme. Kem desired the exemption to be considerably reduced, and the tax to be graduated so that instead of raising the thirty millions estimated by the commissioner of Internal Revenue, it would raise at least one hundred millions.2 But the time for discussion was limited. After a short debate in committee of the whole, the bill was reported to the house on January 30, and only three hours' debate was permitted. The general temper of the house is well illustrated by the grandiloquent peroration of De Armond, of Missouri. "The passage of the bill will mark the dawn of a brighter day, with more of sunshine, more of the songs of birds, more of that sweetest music, the laughter of children well fed, well clothed, well housed. Can we doubt that in the brighter, happier days to come, good, even-handed, wholesome Democracy shall be triumphant. God hasten the era of equality in taxation and in opportunity. And God prosper the Wilson bill, the first leaf in the glorious book of reform in taxation, the promise of a brightening future for those whose genius and labor create the wealth of the land, and whose courage and patriotism are the only sure bulwark in the defense of the Republic." The bill passed by a majority of 204 against 140. On February 2 the bill was sent to the Senate and referred to the committee on finance. On March 20 the chairman, Senator Voorhees, reported it to the Senate with amendments, and shortly thereafter the consideration of its provisions was 1 Congressional Record, op. cit., 8 Op. cit., appendix, p. 406. |