The Nonpartisan Leader Newspaper, February 17, 1919, Page 5

« ters. Falr Tax Principles for North Dakota First State to Make Distinction Between Earned and Unearned Incomes— ' Levy on Pr1v1lege First=—Relief for Producers and Consumers BY WALTER W. LIGGETT ECOND in importance only to the measures which comprise the - industrial program of the Non- partisan league are the new taxation acts indorsed by the League caucus, introduced in the senate, and which are’ ex- pected to pass both houses by large majorities. No measures proposed by the Nonpartisan league have been more carefully considered. These reverfue bills were. drafted by Professor W. G. Roylance, formerly chief of the economics department of the University of Utah and known all over the West as an authority on political economy. Professor Roylance now is the head of the research -de- partment of the Nonpartisan league and is frequently con- sulted on -all legislative mat- He has been working on the taxation bills for more , than a year and during that time has consulted many au- thorities and studied the re- sults of similar excise acts in many- parts of the world. Probably no state in the Union will have such’ soundly con- structive taxation laws as North Dakota when the new bills go into effect. The principal bill of the . eight taxation measures so far indorsed by the Nonpartisan league caucus is the income and gross earnings tax meas- uré. The bill classifies incomes in two divisions, “earned” and “unearned.” : Income is defined to mean “any earnings, wages, profits or increases from whatever source de- rived” and is classified as “earned income” and “un- earned income,” i “Barned income” is held to mean any income re- ceived as wages, salary or fees for personal services, the profits from any busi- ness personally managed, or rents derived from any property owned by a resi- dent taxpayer. - “Unearned income” is held to mean any income derived from rents of land or other property; interest on -mortgages, notes or bonds; dividends on shares of stock in any business not ‘personally conducted by the taxpayers; from an- nuities; and from any sougce. whatsoever other than the labor, skill or personally conducted’ busi- ness of the person receiv- ‘ing the income. RATES OF TAXATION - The act provides a tax of one-half of 1 per cent on the first $1,000 of unearned income and an additional one-half of 1: " per cent on each additional $1,000 or fraction there- of up to $10,000, which would pay ‘a tax of 5 per cent. points. democracy. soldiers, Incomes in excess of $10,000 and not in excess of $20,000 will pay a tax of 6 per cent. All net incomes in excess of $20,000 and not in excess og $30 000 pay a tax of 8 per cent, and on all netincomes im exeess of $30,000 a- 1&per cent*tax' is levied. On earned incomes a tax of one-fourth of 1 per cent’is levied on the first $1,000, and an additional one-fourth of 1 per cent is levied on each additional . thousand or fraetion thereof up to $20 000, whlch would pay.a tax of 5 per cent. All net earned incomes m excess of $20 000 and : below $30 000 are taxed 6 per cent. All net earned ® incomes in excess of $30,000 are taxed 10 per cent. The-unmarried head of a family is allowed $1,000 exemption. Married men and women are allowed $2,000 ex- emptlons. All persons must make a true return of their income to the tax commissioner not later than March 1. . CORPORATIONS MUST PAY The bill also provxdes a tax of 3 per cent upon the total net incomes of ‘all corporations, joint stock companies or associations. A further tax of 5 per cent is provided on the amount of income of such corporation undistributed six months after the end : e | . FIRST BEHIND THE PRESIDENT . | Sz T The North Dakota leglslatwre was the first in the Union to indorse President Wilson’s 14 In fact the race in that direction fell to the League state easily because now that - ‘the war is over, the self-styled 100 per cent Americans have lost that superfine interest in The Idaho senate, for instance, has repudiated the 14 points by a vote of 30 to 10. North Daketa, too, is the only state so far to plan anything decent for its returned Its new 1egislation, including. the state bank,.the state-owned elevators and mills, state hail insurance, and the taxation measures described on this page, likewise constitutes the only serious attempt to prepare for the new” conditions facing us. North Dakota from the other states is that rare thing Xknown as constructlve patriotism. of every calendar year, provided ’chat this tax shall not apply to undistributed: income actually im;ested or employed in the business. ‘The bill provides methods of ascertaining taxable incomes, exempts agricultural and labor associa- tions, fraternal orgamzatxons,‘ domestic building -and loan socxetxes, mutual insurance concerns and -other of the actyspecifies stiff penalties for refusal of in- formation, and adds mcreased tax for delays or at- - tempted evasion. The fundamental pnnclple upon whlch this, plan rests 'is that taxes should he imposed, - first, according to ‘the pnvnleges enjoyed; and, '.»seeond, according to the ability- of the several b PAGE FIVE . What distinguishes “institutions from the provrsmns—' classes, interests or industries to pay. So far as’/practicable the burden should be distributed also according to the benefit each taxpayer or class of taxpayers receives from the expendi- ture of revenue. -Taxes can and should be lev1ed directly upon land values, upon other highly profitable natural re- sources, such as power sites and mines, and upon franchises and. other socially developed advantages. The amount of the tax as nearly as possible should be proportionate to the relative value of such re- sources Yr advantages. Taxes upon industry, no matter who pays them in the first instance, are ‘finally shifted forward to the consumer or back- ward to the producer. The result of this shifting of tax burdens is not only unjust and oppressive to individuals of low average earning power, but destructive of the industrial production of the community as a whole, be- cause it reduces the standards of living of-the majority below the level of minimum efficiency. The prosperity of the many de- mands a reversal of this meth- od of taxation. The North Dakota reve- nue plan, therefore, aims first to tax privilege and then to levy the remainder of the tax burden upon those most able to pay. The taxes on land values and franchises reach privi- lege directly; the proposed income tax will rcach abil- ity to pay directly and privilege indirectly because in most cases extraordi- nary profits. come only from the control and use of extraordinary privileges. SETS PACE FOR OTHER STATES The ploposed income tax law is second in importance only to the measures for shift- ing the tax burden from indus- try and enterprise to privilege. It is an essential “part of the Nonpartisan league program that will provide for North Dakota mcomparably the best revenue law in the United States, and probably the only . .one, with the possible excep- tion of the Wisconsin law, de- signed solely for the purpose of raising the necessary reve- nue from those who Dbenefit most from and are best able to pay the cost of state pro- tection. In its taxation measures, as in the rest of its program, " North Dakota is proposing and passing legislation which is certain to be patterned after by ather states when. the suc- cess of its program of indus- trial democracy creates the ~ pressure of public opinion in neighboring commonwealths that will force them to follow _that state’s example. DISPATCH SPANKED AGAIN Berg, N. D. Farmers’ Dispatch: I have received some letters from you regarding subscription to the Farmers’ Dispatch. 1 did subscribe*for one year and by reading your sheet that year came to the conclusion that it should - "not be read by any man who belongs to the No: partisan league. I am a member of the League an I can not and w111 not. shipport a paper that m hostile to it. 7. It will be very pleasmg to me to have my name : scratched from your mailing list and not be pestered thh your circulars any ‘more. 7 ; ALFRED ELTON