Princeton University - Nassau Herald Yearbook (Princeton, NJ)

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The Nassau H erald the tax payers in England, where stoppage at the source is used, and thus the full income taxed, pay three times as many taxes as the other half who can only be reached by self-assessment. Is it any Wonder that many economists call this the most unjust of all taxes? In our own country With our great area, our vast farming interests, and diversity of industries, these evils would be greatly increased. To sum up: I maintain that an income tax is not expedient in our country in the the irst place because it is impracticable as proved QU by the experience of England, Qzj by the experience of the United States and fgj by the experiences of the several States, in the second place because it is unjust as is provided by the fact QU that it does not distinguish be- tween income from salaries and income from investment, and Qzj that it must depend in a large degree upon self- as- sessment, which always means evasion and injustice. 22

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Class of I8'f6 Debate tax with all its bad features is because her policy of free trade makes such a tax a necessity. Our first conclusio-n then is this: The income tax fails when it is tested by the practical experience of England, by the practical experience of the United States and by the practical experiences of the several States. Our second objection to the income tax is that it is unjust: CID because it can not distinguish between income from sala- ries and income from investment. The Hon. David McGreger Means in his recent book The Methods of Taxation points out that Parliament has struggled, in vain, for two generations to adjust their tax to these two kinds of incomes, and because England has failed, he maintains that the income tax in England is fundamentally unjust in practice. The professor and laborer have a salary incomeg both must lay aside money as an assurance against the future when their earning power will cease. But the holder of stocks and bonds has an invested income as long as he lives. He has no need to save 5 no need to protect himself against future loss, But the income tax demands the same revenue from both parties. This is only one of many examples which goes to prove that income, per se, is not a fair criterion of men's ability to pay taxes and thus when it is made the basis of taxation it inevitably works injustice. My second reason for maintaining that an income tax is unjust is because it must depend in a large degree upon self- assessment. There are two possible ways of collecting an income tax. The first method is Stoppage at the source . Wherever the source of incomes can be definitely located, as in the case of bonds and mortgages, the Government collects the tax before the income is received. About one half of the English income tax it thus collected. By this method the full income is always taxed. But the other half must be collected by self-assessment which spells evasion. The Board of Internal revenue reports that where self-assessment is in vogue only one third of the actual income is returned for taxation. The significance of these facts is this: one half of 21

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Class Oration MALCOLM MALLETTE MCDERMOTT. Relations of The University and State. In these practical times one does not care to theorize con- cerning the origin and evolution of the modern State. We are content to accept the situation as We find it, thankful for the heritage left us by' our forefathers, and appreciating the high stage of civilization in which it is our good fortune to live. The average individual Worries his head little in specu- lation as to the ultimate ends and destinies of the State. He regards the State simply as a means toward an end, as the best insurer of his peace and happiness. There is nothing particularly to be deplored in this purely utilitarian view-point. Society is organized for the mutual Welfare of its members. It is true that sentiment and race pride play an important part in national life, but no government Was ever set up merely to satisfy these feelings. When a State fails to meet the concrete needs of the citizen then it must of necessity give Way to a more powerful one. I am not so much interested in the attitude we take toward this institution, Whether it be sentimental or selfish, but the pertinent part for us to be alive to is that this thing we call the State is not an automatic, self-running affair. It is an organization which must be sustained. A man to live must have food, an organism to exist must have sustenance, and a State to stand must have men. The so-called Ship of State will never sail Without mariners and pilots, except to destruc- tion. Cf all the activities engaged in by man there is none to compare in majesty or importance with that of the up- building and guidance of the State. These are of vital concern to every citizen, and yet the singular fact remains that while we train men for every other profession, that of the Statesman 23