(6) Critique of the Law.—The theory of the income tax as a part of our fiscal system may be accepted without further question. The ap plication of that principle of taxation in the present law has, however, been seriously criti cised. Without argument, the main points of criticism may be briefly summarized as follows: (a) The exemption of incomes below $3,000, and for families below $4,000, is undoubtedly high. If the exemption were lowered, many ad ditional persons would be added to those taxed, but it is doubtful if the amount received would be commensurate with the task of collection. (b) The stoppage-at-the-source provision throws much of the burden of collecting the govern ment's revenues upon banks, trust companies, and other agents. To meet this difficulty it was suggested that information-at the-source be substituted for stoppage at the source. The law, however, remains unchanged in this respect. (c) Certain discrimination against incomes received in the form of cor porate dividends. The phraseology of the law also requires double and even multiple taxing of holding companies. (d) There is double taxa tion of both resident aliens and non-resident citizens. (e) The principle of differentiation be tween funded and earned incomes, common in most other countries, is not introduced. '(f) The monetary conception of income is almost exclusive and no account is taken of income in the shape of farm produce or house rent, con sumed by the producer or owner.
(7) Practical Results of the Income Tax.— The success of any tax may be measured by the net amount of revenue collected, by the equality of assessment, and by the friction between the tax collecting authority and the tax payers. The federal income tax is as yet too new to warrant a final judgment. The amount of revenue col lected has been considerable. The cost of col lection has, however, been large. The friction between the tax collecting authority and the taxpayer has undoubtedly been greater than is warranted. It will undoubtedly decrease as the collectors gain experience and ability in levying the tax.
During the fiscal year 1915-16, 366,443 cor porations reported. Of these, 190,911 showed an aggregate income of $5,184,492; 389 upon which there was assessed income tax in the ag gregate sum of $51,844,423.89; 175,523 returns showed an operating deficit, or no taxable in come. During the fiscal year 1915-16, there was actually collected $56,972,720.88.
The following comparison shows the in creased efficiency of the tax and the administra tion of it during the past two years: 1915 1916 Returns received 299.445 366,443 Taxable returns 174.205 190,911 Total taxes assessed 138,986,952.18 $58,549,081.91 Per cent increase 66.5 The results of the personal income tax were larger than those from the corporate income tax, and are extremely interesting in their range and distribution. Income tax collections from individuals amounted to $67,943,594.63 for the fiscal year 1915-16, as against $41,046,162.09, in the fiscal year 1914-15, and $28,253,534.85 for the fiscal year 1913-14.
The following table gives the amount of and normal anadditional tax collected in the last two years, 1915 and 1916: come tax probably costs not less than $1,950,000 or 1.56 per cent of the amount taxed.
Bibliography.- Black, Henry C., 'A Trea tise on the Law of Income Taxation Under Federal and State Laws' (Kansas City, Mo., 1913; 2d ed., 1915) ; Blakey, R. G., 'Amending the Federal Income Tax' (Annals of the Amer ican Academy, Vol. 58, pp. 32-43, March 1915) ; Bomboy, Rene, (L'impot sur le revenue en Prusse' (Paris 1908) ; Bullock, C. J., 'Direct and Indirect Taxes in Economic Literature' (Political Science Quarterly, Vol. VIII, 1898) ; Bullock, Charles J., 'The Origin, Purpose and Effect of the Direct-tax Clause of the Federal Constitution' (Political Science Quarterly, Vol. XV, p. 217) ; Cohn, Gustav,
'Income and Property Taxes in Switzerland' (Political Science Quarterly, Vol. IV, 1889, No. 1, p. 37); Caillaux, J., 'L'impot sur le revenue' (Paris 1910) ; Dovell, 'Acts Re lating to the Income Tax) (6th ed., London 1908) ; Dunbar, C. F., 'The New Income Tax' _ Perhaps as interesting to the general student of economics and sociology, as to the expert in taxation, is the range of incomes from which the tax was collected. The following table gives the number of persons in each income group: Income group Number 13,000 to 14,000 69,045 4,000 to 5,000 58,949 5.000 to 10,000 120,402 10,000 to 15,000 34,102 15,000 to 20,000 16,475 20.000 to 25.000 9.707 25,000 to 30,000 6,196 30,000 to 40,000 7,005 40,000 to 50.000 4.100 50,000 to 75,000 4.791 75,000 to 100,000 2,056 100,000 to 150,000 1,793 150.000 to 200,000 724 200,000 to 250,000 386 250,000 to 300,000 216 300,000 to 400,000 254 400,000 to 500.000 122 500.000 to 1,000,000 209 1,000,000 and over 120 Married 266,153 Men 47,583
1 Women 22,916 Married women rendering separate return 4,819 Total 336,652 The function of collecting the federal in come tax is lodged in the office of the Commis sioner of Internal Revenue. This office also collects revenues on liquors, tobacco, documents,
medicines, playing cards, etc. It is, therefore, impossible to say exactly what is the cost of collecting the income tax. Allowing a reasonable overhead the collection of the in (Quarterly Journal of Economics, Vol. IX, 1895) ; Falkner, Roland Post, 'Income Tax Statistics) (Boston 191S; reprinted from Quar terly Publications of the American Statistical Association, June 1915) ; Foster, Roger, 'A Treatise on the Federal Income Tax under the Act of 1913' (Rochester, N. Y., 1913); Frost, Thomas Gold, 'A Treatise on the Federal In come Tax Law of 1913' (Albany, N. Y., 1913); Hill, Joseph A., 'The English Income
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