officials exist only to see that the assessments so made are in accordance with the law. That the process is now practically reversed does not result in failure of the achievement of the object in view.

In the United States, on the other hand, there is no one to stand between the permanent revenue officials and the taxpayer. No officials with any great amount of knowledge are nearer to the taxpayer than Washington. There is made available for him ample information regarding the income tax, but there is no one with whom he can talk over his difficulties. This aloofness of the administration has naturally resulted in a different attitude from that found in Great Britain. The revenue officials of the United States hold the view that their first duty is the collection of revenue. If differences of opinion exist between them and the taxpayers, they are decided in favour of the Government, and the taxpayer may take an appeal to the proper authorities. But there is no one invested with authority to whom he may resort before his liability is settled subject to formal appeal.

The above must not be taken to mean that the income tax officials in the United States are all stern and unfeeling guardians of the revenue, with no ability or desire to see the taxpayer's point of view. There is no tendency toward unfairness, but neither is there any opportunity of settling differences except with officials who have no knowledge of local conditions and no personal feeling about the taxpayer. We shall have more to say of this when we come to deal with the subjects of assessments and appeals. We shall then see that there is a growing tendency in the direction of giving to taxpayers adequate opportunities for appeals and settlement of disputed points before assessments are actually made and payment of the tax required.

It is highly improbable that the centralized system of administration in the United States is a matter of determined policy. The difficulty is that a decentralized system cannot be employed without highly trained and capable officials. Great Britain has had almost a century in which to build up an administrative system-the United States has had

only a few years. Indeed, in Great Britain the original system of having liability determined, and assessments made, by the Local Commissioners has given way to a system under which the actual work of the Commissioners has become largely formal. It may be that the time will come in the United States when there will have been developed a sufficient number of officials capable of being given more authority and discretion, and that as these men are developed the system will be decentralized.

A number of considerations make it improbable that this will happen soon. Employees of the Bureau of Internal Revenue are probably as well, if not better, paid, on the whole, than income tax officials in Great Britain. But salaries generally are higher in the United States, and opportunities for gain outside the Bureau are great. The centralized system of administration in the United States has brought into existence a great number of accountants and lawyers who are "tax experts," and whose work is the adjustment of tax disputes. Young men spend a few years in the Bureau of Internal Revenue, gain an excellent training in income tax law and accountancy, and then go out and commence business as tax experts" themselves. The rewards, especially during the post-war years of high tax rates, have often been very large. The law forbids anyone who has been in the employ of the Bureau from practising before it within two years of leaving its employ, but, unfortunately, this rule has not always been strictly enforced. It has also been unfortunate that former employees have sometimes used their knowledge of particular taxpayers' affairs gained while in the Bureau to secure these taxpayers as clients. Even where a former employee of the Bureau is perfectly scrupulous in every respect (and this, of course, is the general rule) he can, if he is a competent man, usually earn far more in private practice. So that it is the best men who are most apt to leave the Government service.

The British Inspector of Taxes takes a keen pride in doing his work well and in maintaining the standard which has been reached. If his work is good, he is assured of his position until old age, and he then receives a pension.

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Moreover, specially good work is rewarded by quick promotion, and exceptional ability may bring a decoration, or even a knighthood. Last, but not least, a member of the British civil service has a certain amount of social prestige, whereas decorations and social prestige are beyond the gift of the American Government.

The centralized system in operation in the United States makes it necessary to train specialists. The Bureau of Internal Revenue is highly organized into divisions, sections, etc., each section having charge of questions arising under one phase of the law. This does not develop men with the all-round knowledge necessary in a decentralized administration.

While the British system of administration seems greatly superior in so far as we have examined it, it is not entirely above criticism. There are in Great Britain many lawyers and accountants engaged almost entirely in income tax practice. But this is probably due far more to the complicated state of the law than to any fault in the administration. The administration would function more efficiently if the law were codified and some of its antiquities removed.

The use in Great Britain of unpaid, local Boards is not an unmixed good. It is inevitable that in many cases these Boards will do very little work if they are to be unremunerated. That is only human nature. Indeed, the Inspectors frequently prefer that this should be so. Some Inspectors prefer inactive Local Commissioners, and claim that when the Local Commissioners do take an active part in the work they only hamper the work of the Inspectors. This objection would probably be overcome if the Local Commissioners were more frequently selected from lawyers and accountants, as was suggested by the 1920 Royal Commission. The powers of the General and Additional Commissioners are too great to be entrusted to men with no special aptitude or training along income tax lines.

The decentralization of the United States system must, as we have seen, be a slow process. But one gradual change that could be made in that direction suggests itself. At present there are only 64 collection districts in the United

States. The number of these must be increased if there is to be any personal touch between taxpayers and the administration. But merely to increase the number of collection districts, without changing the method of appointing collectors, will be of no avail. If collectors were appointed from men with training and experience in the Bureau of Internal Revenue, it would provide an incentive for employees of the Bureau and would permit of collectors being given more authority and of more of the work of administration being transferred to the local collectors' offices. This change could not come about without a great deal of opposition, since collectorships are at present important political "plums" in the gift of Congressmen. But such a step is obviously in the right direction and should not be blocked by political obstruction, for the administration of the income tax is far too important to be in any way a matter of patronage.

CHAPTER XVIII

ADMINISTRATION-THE COLLECTION OF

THE TAX

Returns.

GREAT BRITAIN.

SHORTLY after April 5th in each year (the opening date of the year of assessment), the Assessor sends to all persons whom he knows to be liable to the income tax under Schedule Da form of return-Form No. II for individuals, Form No. 10 for companies. The form constitutes a "particular notice" under the law. There are also posted on the doors of churches, chapels, market houses, etc., notices known as general notices," calling the attention of taxpayers to the necessity for making returns. Failure to receive a particular notice does not relieve one from liability to make a return.1

Form No. II serves a purpose additional to the primary one of disclosing the taxpayer's income under Schedule D. It also calls for a statement of income from all other sources to be used in determining the proper exemptions and allowances based on total income. It is a formidablelooking paper consisting of eight large pages (8′′ × 13′′). In addition, there accompany it eight pages of the same size containing instructions and explanations. This form must be filled up and returned within twenty-one days of its receipt. It must be signed, but need not be verified under oath.

There is no necessity for making a return if the taxpayer's tax is all collected at the source, and if the amount so collected represents his exact tax liability. In view of the fact that tax is deducted at the standard rate, and that taxpayers are entitled to varying allowances and reliefs, returns are necessary in nearly every case.