ance unnecessary.[1] And, pending its modification for the purpose of reduction, a desire to evade the payment of taxes everywhere manifested itself, until it seemed at one time as if the whole country and the Government itself were becoming corrupted and demoralized. For example, the revenue receipts from the income tax, without any change in the law, declined from $72,982,000 in 1866 to $66,014,000 in 1867; and those from a uniform tax on distilled spirits, from about $29,000,000 in 1867 to a little in excess of $14,000,000 in 1868.
It was under such circumstances that the Revenue Commission entered upon its prescribed duties. The work of investigation devolved mainly on its chairman, the second member being debarred by age and feeble health from any active exertion; while the third assumed from the outset that the best and most feasible way of meeting the financial difficulties of the situation was to abandon the "whole system" (of existing taxation) "in the shortest time consistent with the general interests of the country," and, by an amendment to the Federal Constitution, authorize and require the Federal Government to levy "a duty, payable in lawful money, of one per centum per annum" on the income of all interest-bearing indebtedness issued by the United States and payable in lawful money; and "a duty, payable in specie, of seven tenths of one per centum on the principal of all indebtedness of the United States, which shall belong to any person or corporation, and the interest on which may be payable in specie." He was also of the opinion that such taxes on the income or principal of the indebtedness of the United States, should be "in addition to any ordinary duty or tax equally imposed upon all incomes, or directly upon all personal and real property within the United States subject to taxation."
A subsequent report to this effect was not received with any marked disfavor by the general public, and had the indorsement of not a few leading American bankers and capitalists. As the average annual rate of interest accruing on the market price of the gold bonds issued by the United States from January, 1862, to January, 1866, was 8·82 per cent, and on investments in the debt of the United States payable in lawful money, from 1863 to 1866, was 10·68 per cent, the proposition to levy a tax of one per cent on the
- ↑ The imperative necessity of a speedy abatement of the internal revenue taxes after the termination of the war finds striking illustration in the following examples of actual experience. Thus the tax of six per cent, levied and collected during the fiscal year 1864–'65, on the value of the products of the woolen industry in Massachusetts alone ($48,430,671) was equivalent to nearly twenty per cent on the whole capital ($14,735,671) invested in this business; while the tax on the value of boots and shoes manufactured in the same State during the same year ($52,915,243) was equal to thirty per cent on the whole capital employed ($10,067,474).
