|PRINCIPLES OF TAXATION.|
CORRESPONDANT DE L'INSTITUT DE FRANCE, ETC,
THE income-tax experiences of the United States are so little in accord with those of any other people or countries that their consideration with a view of obtaining a practical acquaintance and comprehension of the whole subject would seem to be best facilitated by grouping their most important characteristics under three heads—namely, their origin and history and undoubted influence on the political and fiscal policy of the nation.
Under the great financial necessities of the Federal Government by reason of the war the attention of Congress was directed to an income tax as a source of revenue as early as the summer of 1861; and in that and the following year laws establishing such a tax were enacted. Their provisions were, however, so complicated, and the methods authorized by them so inquisitorial, that the Commissioner of Internal Revenue reported in 1863 that they deprived the tax "f all claims to public favor." The revenue returns under such circumstances were very moderate: $2,741,858 in 1863, and $20,294,000 in 1864. In this latter year a more comprehensive and effective law was enacted, which was followed by better results, the collections to the credit of the income tax rising from $32,050,000 in 1865 to $72,982,000 in 1866, and $66,014,000 in 1867. But as the necessity for very large revenues on the part of the Government ceased with the termination of the war, and the spirit of patriotism engendered by the war on the part of the people abated, the collections fell off very rapidly. Thus, between 1866 and 1867 the total receipts on account of the income tax, without any change in the law, declined from $72,982,159 to $66,014,000; and in 1872, with an exemption of $2,000, only 72,949 persons in the United States, out of a population of over 39,000,000, admitted under oath that they were in receipt of any income liable to taxation in excess of the exemption. Those only who were officially and intimately connected at this time with the Internal Revenue Department of the United States Treasury can form any adequate idea of the amount of perjury and fraud that characterized and pervaded the country, during the years 1867 to 1872, as the outcome of the then existing system of internal revenue. And American ingenuity was never more strikingly illustrated—not even by the exhibits of the patent office—than it was at that time in devising and successfully carrying out methods for evading the taxes on incomes and distilled spirits.