DISCUSSION OF INCOME TAX

The Pasteur Medal, offered annually for the best ten-minute speech on contemporary French politics, was awarded last evening in the Fogg Lecture Room. The question discussed was as follows: "Resolved, That the French government should pass an income tax in order to distribute the burden of taxation more equitably."

The judges awarded the medal to C. S. Collier '11, but stated that H. B. Ehrmann '12 was a very close second; and awarded to him honorable mention. Collier won the debate on the substance of his speech, everything that he said having a close relation to the question at hand. His speech was well-presented, but he was surpassed in this by Ehrmann, who earned his position not so much on the subject-matter as on the way in which it was presented. Although the other speakers showed care in preparation, the work of Collier and Ehrmann easily excelled. All phases of the question were discussed and there was a general division on the most advantageous solution. All the speeches, summaries of which are given below, were exceedingly interesting.

Summary of the Speeches.

The first speaker was E. J. Arnstine '13. The question is purely one of the practicality of the tax. If adopted, would the income tax work equitably? Both methods of imposing this tax are disastrous. The income declared would not be one-quarter of the usual amount. It would corrupt and demobilize the people as was done in England. The second method of obtaining the tax by assessors is obviously difficult. Would the freedom-loving Frenchmen submit to having their pockets searched? This was the cause of the French Revolution.

Arnstine was followed by E. L. Viets '11, who argued the negative side. In theory the tax is perfectly fair, but in practice it is most unjust. It would be difficult to ascertain the exact amount of a man's income, his debts and his salary. The fluctuations in a business man's salary would make it almost impossible to determine his income. In Germany, England and Switzerland it has been found to be most harmful, and would it be much better in France? The income tax has made a most conspicuous failure in America; would that same tax succeed in France, a country most like the United States?

A. A. Berle, Jr., '13 was the third speaker and chose the affirmative for his argument. The present infairness to the French peasant could best be corrected by the income tax, yet this tax is felt much less by the rich man than by the poor man. There is an inequality of sacrifice. But the solution is that the rich man should be taxed more in proportion to his income. In this way the income tax would force the people to be perfectly honest. France's income would be increased and the national debt would be diminished. An income tax more nearly approaches ideal justice than any other tax France can impose.

Following A. A. Berle. Jr., '13, T. M. Gregory '10 argued as follows on the negative side of the question: John Stuart Mill states that "the income tax, on whatever principles of equality it may be imposed, is in practice unequal in one of the worst ways, falling heaviest on the most conscientious." The truth of this statement of Mill is illustrated in the experience of both the United States and England. In the United States at least 40 per cent. of the persons assessed, fail to pay any taxes on their revenue. The Parliamentary Commission of 1904 reported that an enormous amount of property escaped the tax. Thus Mill's statement that the income tax is unjust since it falls heaviest on the honest members of the state is proved by the experience of both the United States and England. Therefore, it cannot be supposed that it will distribute the burden of taxation any more equitably in France.

The fifth speaker was C. S. Collier '11, who upheld the affirmative side of the question. The equitable principle in taxation is the principle of equal sacrifice. With this in mind we may divide the question into three phases: (1) The intrinsic justice or injustice of the present system, (2) the intrinsic justice or injustice of the proposed system, and (3) the comparative efficiency of the proposed tax. The present system relies chiefly on the tariff, and is very heavy on the poor; the proposed tax is superior, as it falls on accumulated wealth. The income tax is especially adapted to France on account of the unique degree of equality in the distribution of wealth, the French method of investment through the banks and in foreign securities.

H. B. Ehrmann '12 followed Collier. He upheld the affirmative side. The rent tax has degenerated into a marriage and children tax. Thus, in other ways, such as the door and window tax, the present system is inadequate and unjust. The new system has been tried out in England and has succeeded, and in almost all other European countries except France. This is the greatest argument in its favor. The income tax did not bring about the French Revolution. The French deputies, who are nearest the will of the people, voted for it at their last session. This seems abundant proof that the French people want the tax.

The next speaker was A. D. Brigham '12 who chose the negative side. Theoretically the burden of taxation is distributed as equally by the present system of taxation as it would be by the Income Tax of 1903, but in practice the former is far the more equitable. If the tax-payer wishes to avoid taxation, he could easily do so by the income tax. This tax fines a man's income directly whereas the present tax (the "mobilier") taxes a man on the rental value of his dwellings; and it is easy for a collector to ascertain the number of doors and windows in a house.

G. E. Judd '11 was the last speaker. He chose the negative side and delivered a logical and well-considered speech. We are indebted in proportion for the amount we receive. That tax is the most equitable which most closely shows the proportion of our indebtedness to the state. Now, property is protected by the state and therefore the most equitable tax is based on property. Such are the taxes now in force in France but the executive is not strong enough to enforce these taxes. The income tax, therefore, does not fulfill the question because it could not be carried out any more successfully than the present system