average of the three years immediately preceding the assessment. The income tax and the supplementary tax are collected in the first half of the second month of each quarter by the communities (Gemeinden) who bear the whole cost.
In Saxony a graduated tax is in force on all incomes of £20 per annum and upwards. All corporate bodies and individuals who derive their income or any portion of it from Saxony are liable to the extent of that income, except those serving religious, charitable or public purposes. Incomes between £20 and £5000 are divided into 118 classes, in which the rate rises progressively. From £500 to £5000 the classes rise by £50, and above £5000 by £100. The rate of income tax begins at 14%, i.e. 1s. on an income of £20. An abatement is allowed to those whose incomes do not exceed £155 of £2, 10s. for each child between the ages of six and fourteen years, provided such abatements do not reduce the income by more than one class. In the case of persons with incomes not exceeding £290 abatement (not exceeding three classes) is allowed—(a) when the support of children or indigent relations involves a burden of such a nature as to affect the general standard of living; (b) on account of long-continued illness, involving heavy expense; and, on restoration to health, temporary decrease of wage-earning power; (c) in the case of accidents which have had the same effect.
In Bavaria the existing system of income tax came into force on the 1st of January 1900. The rate on earned income varies according to a scale laid down in article 5 of the law, beginning at .1% for incomes up to £37, 10s. (1s.), being .66% (£2, 5s.) for incomes between £230 and £250; 1.03% (£4) for incomes between £350 and £375; 1.30% (£6, 16s.) for incomes between £475 and £500 and 1.38% (£10) for incomes between £650 and £700. Incomes exceeding £700 and not exceeding £1100 pay £1 on every £50; those between £1100 and £1700, £1, 10s., on every £50, between £1700 and £2050, £2 on every £50; between £2050 and £2500, £2, 10s. on every £50 and beyond £2500, 3% on every £50. Exemptions from earned income tax are similar to those already mentioned in the case of Prussia. Special abatement in the case of incomes not exceeding £250 from all sources is given in consideration of education of children, protracted illness, maintenance of poor relations, serious accidents, &c. The tax on unearned income is at the rate of 112% on incomes from £3, 10s. to £5; from £6 to £20, 2%; from £21 to £35, 212%; from £36 to £59, 3%; from £51 to £150, 312%; from £151 to £5000, 334%, and over £5000, 4%. There is a differentiation in assessment on fluctuating and fixed incomes. Fluctuating incomes (e.g. those derived from literary, scientific or artistic work) are assessed at the average receipts of the two past years. Fixed income is returned at the actual amount at the time of assessment, and the assessment for earned income, both fixed and fluctuating, takes place every four years. Income tax is not levied at the source, but on a direct return by the taxpayer. In the case of unearned income, where a person’s yearly unearned income does not exceed £100 and he has no other or only an insignificant additional income, he is required to pay only half the assessed tax. Also in the case where a total income, earned and unearned, does not exceed £250 it may, by claiming abatement on such grounds as the education of children, maintenance of indigent relations, &c., be assessed at the lowest rate but one, or be entirely exempt.
In Württemberg the General Income Tax Act came into force on the 1st of April 1905. Article 18 provides a graduated scale of rates on incomes from £25 upwards. Abatements are allowed for the education and support of children, support of indigent relatives, active service in the army and navy, protracted illness and severe accidents or reverses. There is a supplementary tax of 2% on unearned income from certain kinds of property, such as interest or other income derived from invested capital, dividends, &c., from joint-stock companies and annuities of all kinds. The income tax is not levied at the source, but on a direct return by the ratepayers; assessments are made on the current year, except in the case of fluctuating incomes, when they are made on the income of the preceding year.
Hungary.—There is no income tax in Hungary at all corresponding to that of the United Kingdom, although proposals for such a tax have from time to time been made.
Italy.—Graduated income tax in Italy dates from 1864. Incomes are classified according to their characters, and the rate of the tax varies accordingly. In class A1 are placed incomes derived from interests on capital, and perpetual revenues owned by the state, interests and premiums on communal and provincial loans, dividends of shares issued by companies guaranteed or subsidized by the state lottery prizes. These incomes are assessed at their integral value and pay the full tax of 20%. In class A2 are placed incomes derived from capital alone and all perpetual revenues. The assessments on these are reduced to 30/40ths of the actual income and taxed at a rate of 15%. In class B are incomes derived from the co-operation of labour and capital, i.e. those produced by industries and commerce. The assessments of these are reduced to 20/40ths and taxed at 10%. In class C are placed incomes derived from labour alone (private employment) and those represented by temporary revenues or life annuities. Assessments on these are reduced to 18/40ths and taxed at a rate of 9%. In class D are placed incomes from salaries, pensions and all personal allowances made by the state, the provinces and communes. Assessments on these are reduced to 15/40ths and taxed at 712%. Certain abatements are allowed on small incomes in classes B, C and D. Incomes are assessed (1) on the average of the two preceding years in the case of private industries, professions or companies in which liability is unlimited; (b) on the income of the current year in the case of incomes from dividends, salaries, pensions and fixed allowances, as well as in the case of incomes of communes, provinces and corporations; (c) on the basis of the account closed before the previous July of the current year in the case of incomes of limited liability companies, banks and savings banks.
Netherlands.—In the Netherlands there is a property tax imposed upon income derived from capital, as well as a tax on income earned by labour.
Norway.—In Norway under the state income tax incomes under 1000 kroner are exempt, those between 1000 and 4000 kroner pay 2% on that part liable to taxation; those between 4000 and 7000 kroner pay 3%; those between 7000 and 10,000 kroner pay 4%, and those above 10,000 kroner 5%. Persons liable to taxation are divided into (a) those who have no one to support, as companies and the like; (b) those who have from one to three persons to support; (c) those who have from four to six persons to support; (d) those who have seven or more persons to support. Those who are counted as dependent upon the taxpayer are his children, own or adopted, his parents, brothers and sisters, and other relations and connexions by marriage who might have a reasonable claim to his support. A certain part of the income liable to taxation is abated by a graduated scale according to the class into which the ratepayer falls.
Spain.—In Spain the income tax is divided into (a) that derived from personal exertion and (b) that derived from property. Directors, managers and representatives of banks, companies and societies pay 10%; those employed in banks, &c., commercial houses, and those in private employment, as well as actors, bullfighters, professional pelota-players, acrobats, conjurers, &c., pay 5%. Those employed by the day or those whose salary is under £45 are exempt, as are also masters in primary schools. Income derived from property is taxed according to the source from which the income is derived, e.g. income from shares in public works is rated at 20%, income from shares in ordinary companies, railways, tramways or canals at 3%, from dividends on bank shares at 5%, from mining shares at only 2%. There is also an industry tax, i.e. on the exercise of industrial, commercial and professional enterprises, which tax is divided into five different tariffs, of which I. applies to commerce (vendors), II. also to commerce (middlemen), III. to industry (machinery), IV. to professions and V. to licences (retail and itinerant vendors). Tariff I. is differentiated according to the importance of the business and of the locality in which it is carried on, the rate being fixed by a consideration of the two combined. Tariff II. is differentiated according to the character of the enterprise, its importance and the importance of the locality. Tariff III. is differentiated according to either motive power, output, method, product or locality; Tariff IV. according to the character of the profession and the importance of the locality; Tariff V. is also differentiated according to the locality and the importance of the business.
Switzerland.—The system of income tax varies in the different cantons. Broadly speaking, these may be divided into four different kinds: (1) a graduated property tax, in which the rate applicable to each class of fortune is definitely fixed; (2) a proportional tax, under which property and income are chargeable, each at a fixed rate, while the total amount of the tax is liable to a proportionate increase according to scale if it exceeds certain specified amounts; (3) a system by which property and income are divided into three classes, the rate of the tax being increased by a graduated rise, according to the class to which the property or income belongs, and (4) a uniform rate of tax, with progression in the amount of income liable to taxation.
United States.—One of the means adopted by the Federal Government for meeting its expenses during the Civil War was the levying of an income tax. By the Act of Congress of the 5th of August 1861 a tax of 3% was imposed on all incomes, with an exemption of $800, and was made payable on or before the 30th of June 1862. No tax, however, was assessed under the law. In March 1862 a new income tax bill was introduced into the House of Representatives. This act, which was signed on the 1st of July 1862, imposed a tax of 3% on all incomes not over $10,000, and 5% on all incomes above that sum, with an exemption of $600. It was also provided that dividends of banks, insurance companies and railways should be assessed directly; but the bond-holder was allowed to deduct the dividend so assessed from his taxable income. In the case of government salaries, the tax was deducted before the salaries were paid. The income tax was first levied in 1863. The rate was changed by act of Congress in 1865, 1867 and 1870, and a joint resolution in 1864 imposed a special additional tax of 5% for that year. The tax was finally abolished in 1872. The total amount produced by the tax from the beginning was $376,150,209. The constitutionality of the act was subsequently brought into question, but was upheld by a unanimous decision of the Supreme Court in 1880, which held that the tax was not a direct tax but an excise tax, and that Congress had a right to impose it so long as it was made uniform throughout the United States. On the 27th of August 1894 an income tax act was passed as part of the Wilson Bill. By this act it was provided that a tax of
