Inroads of taxation;

              Bulletin HASKINS & SELLS 7
The Inroads of Taxation
THE last instalment of taxes covering
income for the year 1921 now having
been paid, the business man, as well as the
individual taxpayer, may look forward to
the interesting occupation of determining
how much he must pay the government on
account of income received or earned dur­ing
the year 1922.
With the imposition of a tax on income
in many states supplementing that of the
federal government, and the possibility
that municipalities may in the near future
resort to the taxation of income, the out­look
for taxpayers is anything but inter­esting
and inviting. As a matter of fact,
taxpayers may view with some alarm the
general march of taxation.
In prior years this country, compared
with Europe, enjoyed relative freedom
from the imposition of taxes. England,
France, and Germany sustained annually
a tax burden which was comparatively un­known
in the United States. According
to statistics resulting from a study by the
National Industrial Conference Board,
this country now ranks second only to the
United Kingdom of Great Britain in the
matter of tax burdens, with Germany,
France, Italy, and Japan following in the
order named.
Taxes paid to national, state, and local
governments in the United States in rela­tion
to national income have more than
doubled since the fiscal year 1913-14. In
that year national, state, and local taxes
represented 6.4 per cent. of the national
income. In the fiscal year 1920-21 taxes
were 14.3 per cent. of the national income.
While the various political divisions are
collecting and spending more money, popu­lation
is also increasing, and it might be
expected that the per capita cost of gov­ernment,
subject to various fluctuations
in their effect on the national government
brought about by such extraordinary oc­casions
as the Great War, would not neces­sarily
show any marked increase. This,
however, appears to be contradicted by
statistics which show that per capita taxa­tion
at the end of the war, reduced to a
pre-war internal purchasing power basis,
was $32 in the United States, but had
increased in 1920-21 to $41 per capita.
The increase of $9 stands out with
alarming significance when compared with
the increase in the United Kingdom during
the same period of only $4 per capita.
It may be that this country is becoming
not only bigger but better; that tax-payers
are receiving something more in return for
increased taxation. On the other hand,
it may be that some of the governmental
activities are unnecessary and might be
eliminated without any real loss to the
country. At any rate, as has been pointed
out, in the report to which reference has
been made above:
"Under present conditions the tax bill
of the United States is fast making inroads
on the surplus necessary for economic
progress and threatens materially to ham­per
our growth, especially in view of the
uninterrupted rise in local government
taxes."