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The Clerk read as follows:

That section one hundred and fourteen be amended by inserting after the word "periodically" in the first sentence of the said section the words "or otherwise, or publishing any guide, almanac, catalogue, directory, or any other paper or book.'

each, thus recognizing the principle that the man of larger means should pay an increased tax in proportion to his means. That is a principle recognized by the bill of the Committee of Ways and Means when they exempt men of Mr. ANCONA moved to add the following: altogether. And it is carrying out the same moderate income, up to $1,000, from taxation idea when you have apportioned this from five to ten per cent. The principle is also recognized in the taxation of gas companies, where the tax ranges from five cents on a thousand feet to ten, fifteen, and twenty-five per cent., in proportion to the amount produced. It is a fair principle of taxation and one that sound political economy should recognize, because the aim always should be to lay taxes on that portion of the community that can most easily

And that section one hundred and fourteen be further amended in the last clause so as to exempt all newspapers whose average circulation does not exceed three thousand copies from all taxes for advertising.

The committee divided; and there wereayes 26, noes 40; no quorum voting.

The CHAIRMAN ordered tellers under the rule; and appointed Messrs. ANCONA and

MORRILL.

The committee was again divided; and the tellers reported-ayes 28, noes 70.

So the amendment was disagreed to.
The Clerk read as follows:

INCOME.

That section one hundred and sixteen be amended

by striking out all after the enacting clause and inserting in lieu thereof as follows: that there shall be

levied, collected, and paid annually upon the gains, profits, and income of every person residing in the United States, a duty of five per cent. on the excess over $1,000, and a like duty shall be levied, collected, and paid annually upon the gains, profits, and income of every business, trade, or profession carried on in the United States by persons residing without the United States, and a like duty shall be levied, collected, and paid annually upon the interest or dividends accruing upon investments within the United States, or upon bonds or other securities of the United States, or of corporations, or citizens thereof. And the duty herein provided for shall be assessed, collected, and paid upon the gains, profits, and income for the year ending the 31st day of December next preceding the time for levying, collecting, and paying said duty.

Mr. PIKE. I move to amend by striking out all after the words "United States" in line twenty-four hundred and sixty-six down to the end of line twenty-four hundred and seventyfive, and to insert in lieu thereof the following:

Or of any citizen of the United States residing abroad whether derived from any kind of property, rents, interest, dividends, or salaries, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever, a duty of five per cent on the amount so derived over $1,000 and not exceeding $5,000, and a duty of ten per cent, on the amount exceeding $5,000. And a like duty shall be levied, collected, and paid annually upon the gains, profits. and income of every business, trade, or profession carried on in the United States by persons residing without the United States and not citizens thereof.

bear them.

I do not know that I am personally interested in the matter, but the great mass of those who are particularly interested I know would very cheerfully pay this additional sum, for I have not yet heard of any remonstrance from any gentleman whose tax is more than five per cent. according to the existing law. No one of this class has ever sent a request to this Congress to be relieved from taxation, and if we wait until that patriotic class of men shall ask to be relieved from their burden, I apprehend we will have to wait a great while. On the other hand, we do have petitions from struggling manufacturers coming to us from all quarters of the land, asking for relief. Now, we all desire to relieve all the processes by which wealth is created. We all desire to relieve, as much as possible, the labor of the country from taxation, because by doing so we produce the best general result. It is for this reason that I hope the House will follow the English example, and for a few years to come retain

this tax of ten per cent.

[Here the hammer fell.]

Mr. ROSS. I move to amend the amendment by inserting after the words "one thousand dollars" in line twenty-four hundred and sixty-eight, the following:

And not exceeding $10,000; and a duty of ten per cent. per annum on the excess over ten thousand and not exceeding twenty thousand dollars; and a duty of fifteen per cent. per annum on the excess over $20,000, and not exceeding $40,000; and a duty of twenty percent, per annum on the excess over $40,000 and not exceeding $60,000; and a duty of twentyfive per cent. per annum on the excess over $60,000. I concur in the views expressed so ably by the gentleman from Maine [Mr. PIKE] upon this subject. But his amendment does not go far enough. The highest rate it proposes to put upon income is ten per cent. Now, it was very properly said by him that we must get this tax out of men who have large incomes. We cannot get it out of those who have none. And there is no reason, in my judgment, when a man's income reaches twenty, forty, or sixty thousand dollars why he cannot afford to pay fifteen, twenty, or twenty-five per cent. upon it.

This is a matter of considerable importance. The chairman of the committee states that the change proposed in this bill lessens the revenue $17,000,000. The amendment proposes an exemption of incomes up to $1,000; otherwise it is a reenactment of the old law. The question arises as to the propriety of assessing an income tax of five per cent. on one amount, and a tax of ten per cent. on a larger income. Of course it is only upon the net income, and a tax of ten per cent. upon net income is not higher than many other rates imposed in this bill. Now, if we give away by this provision in the bill as it stands seventeen millions of revenue, we must look elsewhere to supply the deficiency. If we retain the seventeen millions of tax we may relieve many small and weak manufacturers of the country. Every laboring man in the country pays a tax upon what he eats, drinks, and wears. And until we come to the point of relieving the great body of people in the country from onerous taxes uponing to the relief of the poor men from the burevery day's consumption it is a question whether or not the men who are able to pay should not pay this increased proportion of their income to the General Government.

I have examined the English law from which this income tax is derived, and I find that for several years the system in that country was ten per cent. on large incomes, seven and a half on more moderate income, and five per cent. on the smaller, not divided precisely as we divide them, but by different kinds of property. They have always pursued the system of apportioning taxes upon property and income. In one instance a specific tax was laid on those who kept servants, commencing with one pound on one servant and inereasing until the men who had eleven servants paid six pounds on

It will be recollected that the country was electrified a year or two ago by the announcement that the capitalists of this country were going to make an effort to pay off the entire debt of the country. An effort was made in that direction, and we were highly gratified at the patriotism and liberality of some of the distinguished capitalists of the country in com

den of debt heaped upon them. The only reason they did not succeed was that a few stingy, miserly millionaires refused to coöperate with them. Now, the patriotic capitalists of the country will be gratified at this effort on the part of Congress to enable them to come to the rescue of our country and make those who are unwilling to contribute their proportion come to the scratch and relieve the Government from its indebtedness. I ask the House to give this matter a fair consideration. Patriotic capitalists will not object. Those who have incomes of two and three hundred thousand dollars can afford to pay twenty or twenty-five per cent. on their incomes for the purpose of relieving the poor people of the country from the enormous burden which is

weighing them down and crippling their ener gies. I trust that this amendment will receive the favorable consideration of this House and that we will show that we are in earnest in endeavoring to relieve the poor people and placing the tax upon those who are able to bear it.

[Here the hammer fell.]

Mr. MORRILL. I oppose the amendment of the gentleman from Illinois, [Mr. Ross.] The only question which is really before the committee is whether we had better forego this tax or some other. I am as ready as the gentleman from Illinois to admit that the men who receive two or three hundred thousand dollars income can afford to pay an increased tax, but that is not the question here. The question is,

can we afford to take it in this manner? The principle that we apply must be a just one, and living in a republican form of government as we do, I cannot see on what principle the tax proposed by the gentleman from Illinois [Mr. Ross] or the gentleman from Maine [Mr. PIKE] can be justified.

The example cited by my friend from Maine of England, which levies a tax of this kind, is no argument for us. There they have different classes. They have a titled class and distinctions of rank, and those classes ought to be made to pay for their titles. In this country we neither create nor tolerate any distinction of rank, race, or color, and should not tolerate anything else than entire equality in our taxation. So, then, I think the proposition cannot be justified upon any sound principle of morals. It can only be defended on the same ground that the highwayman defends his acts. It is saying to the man of wealth, "You have got the money and we will take it because we can make a better use of it than you will." And then it tends to create a great amount of fraud and false swearing. A man who is taxed only as high as his neighbor upon the amount he possesses is willing to pay his tax. Go beyond that and he believes himself to have been wronged and he will retaliate. But do you come to a man who owns five hundred sheep and say to him that he shall pay more than twice as much on his sheep as the man who has but two hundred and fifty? No. Do you go to the man who owns two hundred acres of land and say that he shall pay twice as much, tax per acre as the man who has only one hundred acres? No. I say, then, that in a republican form of government we cannot justify this inequality of taxation.

Mr. SPALDING. May I ask to what tax the gentleman is now referring?

Mr. MORRILL. I am discussing the proposition that when the amount of income exceeds $5,000, a tax of ten per cent., instead of five, shall be imposed.

Mr. SPALDING. May I ask the gentleman what the law is now?

Mr. MORRILL. The gentleman will have an opportunity to argue the question. I do not desire to discuss the matter in the form of a colloquy. The question arises here to-day, as I believe, whether this tax can be fairly justified on principle. If other gentlemen are persuaded, as I believe a majority of the House are persuaded, that it is just, I am not. But if gentlemen should reach the conclusion that it is justifiable upon principle, then the question arises whether this tax is one we ought to surrender or some other. I think, Mr. Chairman, that if gentlemen will look at the matter fairly, they will see that this is not such a tax as can be justified here and now with us, nor such as we can afford to incorporate permanently into our statutes.

Mr. SPALDING. Mr. ChairmanThe CHAIRMAN. No debate is in order, there being an amendment to an amendment pending. The gentleman, however, can move to amend the text of the bill.

Mr. SPALDING. I will do so. I move to amend by inserting after the word "dollars," in line twenty-four hundred and sixty-eight, the following:

And not more than $6,000; and on the excess over

and above $6,000, a duty of three per cent. per annum additional.

I must confess, sir, that I do not understand the chairman of the Committee of Ways and Means when he says that a tax of this character is not in accordance with the principles of justice, and further, that it is "highway robbery." According to my logic, a proposition of this sort does not come within either of those categories. When we lay a general tax of five per cent. upon every man's income over the sum of $1,000, does not that take within its purview every man in the community subject to taxation? Then upon that annual revenue up to $6,000, as my amendment proposes, a tax of five per cent. is to be paid-not by one man, but by every man in the community having that amount of income. The assessment is equal. The amendment further provides for an additional assessment of three per cent. upon the amount of income over $6,000. Is not this just? Is it robbery? Why, sir, we adopted the other day a provision imposing a tax upon wooden bowls and upon corn brooms. We are prepared, too, it seems, to tax the brave soldiers who fought our battles during the last five years in every case where the amount of income is over $1,000; but we are not prepared to say that gentlemen who have incomes of $100,000 a year shall be taxed over and above the rate which we assess upon the income of the man of very moderate means. Now, as I have said time and again upon this floor, the tax is equal while the means of payment are unequal. The man who has the higher income has the greater means of payment and feels the tax less. The difference is in his favor. The poor man, to the extent of his modicum, pays his full tax. If he had a larger income he would of course be happy to pay the increased tax. Not so with the millionaires. They fix upon a moderate income of $5,000, and say, "Here we take our stand and set the tax-gatherer at defiance, because it would be inequality, it would be injustice, it would be highway robbery to make us pay from our overflowing coffers a trifle upon the excess above what is required to meet the necessary demands of life." Why, sir, I cannot see upon what ground, in morals or in ethics or in logic, the argument of my learned friend from Vermont has a restingplace. There is nothing in it in reason, nothing in it in justice. And I trust that the reflecting men upon this floor will ponder well before they can be induced to change the very equitable mode of assessment which we adopted here two years ago, and which did make some difference between the rich man and the man of moderate means.

Mr. PRICE. I rise to oppose the amendment of the gentleman from Ohio, [Mr. SPALDING,] and I do so because I do not think it at all equitable. I do not think the amendment would make the tax bear equally upon all men, without regard to race or color. Now, sir, the matter is just this; and I want the attention of the gentleman from Ohio [Mr. SPALDING] to this proposition: we will suppose there are two men living neighbors to each other; the income of one is $5,900, of the other it is $6,100, a difference of just $200 between their incomes. They are neighbors, engaged in the same business, and occupying the same position and standing in the community. But you tax the one at the rate of five per cent., while you tax the other, with only $200 more income, at the rate of ten per cent. That is the way it works; you tax the man because he has the

money.

Now, I want to defend the gentleman from Vermont [Mr. MORRILL] from the "highway robbery" charge. He did not say that it was highway robbery to take this tax; but he said that it was upon the same principle that the highway robber practices. And it is precisely as he stated. The highway robber goes out upon the highway, seizes a man by the throat, and says to him, "Your money or your life." The man looks at him and says, Well, you cannot get any money from me, for I have none." The robber lets him go. But the

next man he meets, and to whom says, "Your money or your life," must disgorge because he happens to have some money. Now, the highway robber never robs the man who has no money. He treats them all alike; he takes money where it is, and where it is not he does not take it. Now, in my opinion we better treat all men alike in this matter of taxation. If one man is more economical than another, and saves more money, and so at the end of some years is in possession of more income in consequence of such economy, I do not think he should be punished for that which should be considered a virtue. They should all be treated alike, without reference to the incomes they may have.

Mr. SLOAN. I move pro forma to amend the amendment of the gentleman from Ohio [Mr. SPALDING] by striking out the word "four" and inserting the word "three."

Mr. SPALDING. Will the gentleman from Wisconsin [Mr. SLOAN] yield to me a moment for the purpose of modifying my amendment?

Mr. SLOAN. I prefer not to yield now, as I have but five minutes. I was surprised to hear the chairman of the Committee of Ways and Means [Mr. MORRILL] indulge in such strong expressions as he used. He says that the proposed change in this tax could not be defended upon principle, and that it amounted to a robbery of a certain designated class of people. Now, I suppose if a perfectly just system of taxation could be devised and put in force, every man would be taxed just in proportion to his ability to pay the tax; not perhaps in proportion to the amount of property he may have, or what he may produce, but in proportion to his ability to pay his tax; in proportion to the excess which he has left after meeting all the legitimate demands upon him. Now, throughout the consideration of this bill the chairman of the Committee of

Ways and Means has resisted strenuously all propositions to relieve from taxation many articles the tax upon which is oppressive and burdensome to the industry of the country. The tax upon those articles tends to depress and check the business and enterprise of the country. Here is a tax where we allow a liberal income of $5,000 to be taxed at the common rate to which all are liable. On the excess beyond that amount a higher rate of tax is imposed.

Mr. HALE. I rise to a point of order. My point of order is that debate is exhausted upon the amendment moved by the gentleman from Illinois [Mr. Ross] to the amendment moved by the gentleman from Maine, [Mr. PIKE,] and that the subsequent amendment of the gentleman from Ohio [Mr. SPALDING] is therefore out of order.

The CHAIRMAN. The amendment of the gentleman from Ohio [Mr. SPALDING] is an amendment to the text proposed to be stricken out by the amendment of the gentleman from Maine, [Mr. PIKE,] and therefore it takes precedence of the amendment proposed by the gentleman from Illinois, [Mr. Ross.]

Mr. HALE. I would ask the Chairman how many amendments are now pending before the committee.

The CHAIRMAN. The Chair understands the amendment of the gentleman from Maine [Mr. PIKE] to be to strike out a portion of the original text. The gentleman from Illinois [Mr. Ross] moves an amendment to the amendment of the gentleman from Maine. Pending those amendments, the gentleman from Ohio [Mr. SPALDING] proposes to amend the matter proposed to be stricken out by the amendment of the gentleman from Maine. That amendment takes precedence of the other amendments, as being for the purpose of perfecting the text proposed to be stricken out. amendment of the gentleman from Ohio is itself open to an amendment which has been proposed by the gentleman from Wisconsin, [Mr. SLOAN.] Thus four amendments can be pending at the same time: an amendment to strike out and insert, and an amendment to that amendment; an amendment to amend the matter proposed

And the

to be stricken out, and an amendment to that amendment.

Mr. SLOAN. The main objection urged to the exemption of articles from taxation, or to the reduction of the tax heretofore laid upon those articles, has been that it would reduce the revenue to a point lower than it would be wise or proper to reduce it. Now I find that in this article of income alone there are involved $17,000,000 of revenue, an amount which I suppose will cover three or four times over all the taxes which have been lost by the amend ments which the committee have made in exempting from taxation or reducing the tax upon those articles of prime necessity in common use in the industry of the country. And in a year or two all of them can be relieved from that tax. There are many items in this bill where relief can be afforded more justly and more equitably and more in accordance with the interests of the whole country, than by the change proposed by the committee.

Mr. MORRILL. I desire to say that I feel no particular interest in this question, or as to how it shall be disposed of. Perhaps I may have expressed myself a little too strongly. I did not intend to take any part in debating this question, but to let the House take its own course. I only wish to keep myself right on the record. I have been from the first opposed to the principle of the tax. Our urgent necessities during the war having ceased, I think we ought to relieve ourselves at the earliest moment from such a tax. The particular effect of it is to harass men of great enterprise in the coun try. I do not see how gentlemen, after they have accumulated a certain amount of property, will be willing to continue their adventures thereafter for fear of becoming subject to the tax. It will have the effect, too, of creating absenteeism. When men have acquired a large fortune they will be very apt to go elsewhere to expend it. That is all I have to say on that

point.

Mr. SLOAN, by unanimous consent, withdrew his amendment.

Mr. PAINE. I renew the amendment. The chairman of the Committee of Ways and Means has pronounced the proposed amendment before the House discriminating in favor of incomes below $1,000 and against those_above that amount to be unjust and wrong. I am sorry. If that be robbery, he has come into this House with his garments stained all over with robbery. I take it he does not disapprove the bill he himself introduced. I take it he approves that provision which requires a man worth $1,001 a year to pay a tax of five per cent. per annum, and yet exempts his neighbor who may only be worth $999 from the payment of it ten per cent. above a certain amount, what any tax whatever. If this be robbery to make

will be said of that discrimination which compels a man to pay a tax when his income is over $1,000 and relieves him from taxation entirely when below that amount? But there is no robbery in either case. If the gentleman desires to put himself right on the record, let him wipe out what he has already written in this bill.

Now, Mr. Chairman, I want to read to the committee a few paragraphs from a little workReport of the United States Revenue Commission-which I presume is the vade mecum of the Committee of Ways and Means. Let me read from page 17:

"The remedy, therefore, for the difficulties above pointed out and illustrated, save in a few striking instances, which have probably resulted from oversight in the framing of the law, must, in the opinion of the commission, be sought for in such a revision of the internal revenue system as will look to an entire exemption of the manufacturing industry of the United States from all direct taxation. (distilled and fermented liquors, tobacco, and possibly a few other articles excepted.) This the commission are unhesitatingly prepared to recommend."

Then let me read from the bottom of the same page:

"Assuming, then, that the policy indicated-which we may here restate in brief to be the abolition or speedy reduction of all taxes which tend to check development, and the retention of all those which. like the income tax, fall chiefly upon realized wealth

is accepted as the desirable future revenue policy of the country, the question next arises, in what manner and to what extent can it be carried out, and at the same time insure to the Government a revenue adequate to its necessities?"

Now turn to page 27 of the same report: "Incomes. In respect to the income tax the commission have not, from want of time, been able to give this subject the attention which its importance demands. Although in many respects an obnoxious tax, yet, falling as it does mainly on accumulation, it will probably be sustained with less detriment to the country than any other form of taxation, the excise on spirituous and fermented liquors and tobacco excepted. The discrimination at present in the rate levied on incomes under and in excess of $5,000 is, however, unjust, being in fact a tax on the results of successful industry and business enterprise: and the commission recommend that this discrimination bo abrogated, and the rate be equalized at five per cent."

You must not tax industry, but must tax the results of industry; and then further on they say you must not tax realized wealth. It is impossible to frame a tax bill from such contradictory recommendations as these.

[Here the hammer fell.]

Mr. DAVIS. I oppose the amendment, and I do it for the purpose of saying that I believe the action of this House would be very unwise if we discriminate on the subject of tax on incomes. If there is any principle settled in our Government it is that of uniform privileges. It runs through the Federal Constitution and it runs through every State constitution. And, sir, but for the exigencies the war imposed upon us I do not think we would at the last Congress have departed from that system. The capital of this country should be protected. It should be invited to investments of enterprise and industry. If we discriminate against capital we interpose obstacles to business, because if men are successful we tax them unfairly and unjustly. Why should a man, on the principle which is advocated here, who owns a farm of five hundred acres, not be taxed five times as much || per acre as the man who owns a farm of fifty acres? That is the principle that is involved here. You discriminate in consequence of the amount of property which a man holds. You take away from the accumulation of industry that which would go into capital except for the interference of the Government. You turn that portion of the capital over to the coffers of the Government. You thus derange and decrease the business of the country. I hope the amendment will not be adopted.

Mr. PAINE. I withdraw the amendment to the amendment.

Mr. PIKE. I renew it. When I was interrupted before I was about to make a proposition which I think the Committee of Ways and Means will accept, and that is to strike out this section and the next three succeeding sections, and allow this whole matter to go over until next year. The tax for this year is already assessed. The instructions have already gone out. The change of law will not affect it in any particular, either in the assessment or collection. This Congress adjourns, finally, on the 4th of March next. There will be abundant time to regulate this matter between the 4th of March, when Congress adjourns, and the 1st of May, when the tax is assessed. In the mean time we shall have the benefit of the experience during the vacation. The revenue commission has come to the conclusion, and it is the same conclusion to which we have all come, that the amounts to be realized from the assessments made in this bill are exceedingly uncertain. They depend upon business to be done hereafter, and whether or not the expectations of the Committee of Ways and Means will be realized, or the revenue fall very far short of the calculations made by the Committee of Ways and Means, nobody knows. Perhaps one intelligent gentleman here can guess as well as another, but the experience which we shall have between now and the next 4th of March will determine this problem. It would be wise, then, to postpone the whole matter until next session. If the House does not assent to this proposition, I hope that they will assent to my amendment, which will continue the present law except to exempt incomes up to $1,000.

39TH CONG. 1ST SESS.-No. 175.

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I have one word to say in reply to the gentleman from Vermont, [Mr. MORRILL.] Icited the example of England in this matter of income tax. I did it because British legislation has always been of a conservative character with regard to property, and no man can be accused of demagoguism or of pandering unduly to the popular taste who follows the conservative example of British legislation. The chairman of the Committee of Ways and Means replies to me that they have rank there, that they have lords and commons, a queen and dukes, barons and knights. Now, if the income tax under British legislation was assessed in proportion to rank, the argument would be a good one, but, as he well knows, some of these lords and barons are as poor as church mice; they are entirely barren of income, as the gentleman from Iowa [Mr. WILSON] suggests, [laughter;] and consequently the reply made by the distinguished chairman of the Committee of Ways and Means is entirely mal à propos. Now, I have to say one word further. When the gentleman says that the Committee of Ways and Means in reporting this bill make no distinctions in rank, I reply that they have made two ranks-one is the great mass of the people who have less than $1,000 income, and the other rank is that smaller class of people who have an income of more than $1,000. I propose simply to add to the number of ranks, and make another over $5,000. Will the chairman of the Committee of Ways and Means tell me the difference in principle?

[Here the hammer fell.]

me that he has failed to give the true reason for it, and the one which removes it entirely from the line of argument which these gentlemen have adopted. I apprehend that the reason why incomes up to the amount of $600 under the present law, and $1,000 under the proposed law, are exempt from tax is not that the possessors of small incomes are unable to pay a tax, but that the law intended that the average amount understood to be necessary for the support of a family should not be taxed. It was understood, two or three years ago, that $600 was probably the average of the expense for the support of a family; now it is considered that $1,000 is probably that average; and it is proposed to exempt that amount, not as a discrimination in favor of the poor man as against the rich man, but as the average expense of the support of a family to every man throughout the country; in other words, it is not a discrimination; it applies equally to every man; it is only incomes above that amount of average expenses that are subject to taxation.

Now, I put it to this committee whether there is on principle any sound reason whatever why a man possessing an income of $100,000, if you please, should pay more than his ratio, his percentage on that income, more than the man with an income of $5,000 pays? Sir, I do not believe it is equal or just. We have the power to do it, as we have the power to go further and say that if a man has an income of over $5,000 the country shall take the whole. I do not know why it might not as well be done in that form as in the form proposed by the gentleman from Illinois, who runs the tax up by hundreds and thousands, increasing the grade until you get up to twenty-five per cent. I ask the gentleman, why does he not say that when a man's income exceeds $80,000 he shall pay fifty per cent., when it exceeds $100,000 he shall pay one hundred per cent., and when it exceeds $200,000 he shall pay two hundred per cent.? It does seem to me that the principle upon which these taxes have always been assessed has been upon a principle of equality." In our local taxation, our State taxation, we do not say that a man who holds real estate or personal property beyond a certain amount shall pay a greater percentage upon his property than the man who holds a less amount. I submit that however gentlemen may treat this argument it simply results in the proposition that the rich men being in the minority shall

Mr. MORRILL. I will answer the gentle man, although if he had noticed what I have said heretofore he would have already known what the answer is. As I said to the gentleman from Wisconsin, [Mr. PAINE,] we conceived that there was an inability on the part of a person with a small income, and who has a family to support, to pay any income tax. He must first support his family, and therefore we exempt $1,000 for every man or family. That, I think, is a sufficient reason. The other point which the gentleman from Wisconsin alluded to, I think is "point no point”—that in reference to the exemption among manufacturers to the amount of $1,000. The party, it will be remembered, has to sell his goods in the same market with all the rest of the country; and he gets the same price for those goods; and whatever is exempted is really a bonus given to the parties, on the same prin-have injustice done to them. I withdraw my ciple that we except $1,000 of income because of the inability of those small manufacturers to pay the tax. The gentleman from Maine [Mr. PIKE] alluded to the fact that the income tax in England is not assessed in proportion to rank or title. Does not the gentleman know that the titled aristocracy of England own nearly all the land of England? I do not remember the precise number of land-owners there, but I think it is not beyond thirty thousand in the entire kingdom; and it is from this source, from rents, that the largest incomes are there derived. If the gentleman had investigated the subject he would have ascertained, also, that while formerly they had different rates of income tax in England, the present law is a uniform law, imposing the same tax upon all incomes.

Mr. PIKE. I withdraw my amendment to the amendment.

Mr. HALE. I renew it. A point has been made in favor of a discrimination between incomes up to $5,000 or $10,000, and incomes in excess of one or the other of those sums by a reference to the exemptions of incomes under $1,000; and it has been strenuously contended by the gentleman from Wisconsin, [Mr. PAINE,] by the gentleman from Maine, [Mr. PIKE,] and by other gentlemen, that the fact that incomes up to $1,000 are exempt from all tax is of itself a recognition of the principle that discriminations may be made according to the amount of the income of the party. With all deference to the chairman of the Committee of Ways and Means, who has given his reason for that exemption up to the amount of $1,000, it strikes

amendment to the amendment.

The pending question was upon the amendment of Mr. SPALDING.

Mr. MORRILL. I move that the committee rise for the purpose of closing debate.

The motion was agreed to.

So the committee rose; and the Speaker having resumed the chair, Mr. DAWES reported that the Committee of the Whole on the state of the Union had had under consideration the Union generally, and particularly the special order, being bill of the House No. 513, to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes,' approved June 30, 1864, and acts amendatory thereof, and had come to no resolution thereon.

ENROLLED BILL SIGNED.

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in the amended constitutions of the southern States, and in the laws of those States passed since the suppression of the rebellion, I transmit a report from the Secretary of State, to whom the resolution was referred.

ANDREW JOHNSON. WASHINGTON, D. C., May 22, 1866. The message, with the accompanying documents, was referred to the joint committee on reconstruction, and ordered to be printed.

CLERKS IN TREASURY DEPARTMENT. The SPEAKER also laid before the House the following message from the President of the United States:

To the House of Representatives:

I transmit herewith a report from the Secretary of the Treasury, made in compliance with a resolution of the House of Representatives, of the 7th instant, asking for information in respect to clerks employed in the several Executive Departments of the Government. ANDREW JOHNSON.

WASHINGTON, D. C., May 22, 1866.

The message and accompanying document were referred to the select committee on the civil service of the United States, and ordered to be printed.

CLOSE OF DEBATE.

Mr. MORRILL. I move that all debate in Committee of the Whole on the state of the Union on the pending paragraph of the special order terminate in one half minute after the committee shall resume the consideration of the subject.

The motion was agreed to.

TAX BILL-AGAIN.

Mr. MORRILL. I move that the rules be suspended, and that the House resolve itself into the Committee of the Whole on the state of the Union on the special order.

The motion was agreed to.

So the rules were suspended; and the House accordingly resolved itself into the Committee of the Whole on the state of the Union, (Mr. DAWES in the chair,) and resumed the consideration of the special order, being a bill of the House (No. 513) to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes," approved June 30, 1864, and acts amendatory thereof.

The pending question was upon the amendment of Mr. SPALDING.

Mr. SPALDING. I will withdraw my amendment, as I mistook the scope of the amendment proposed by the gentleman from Maine, [Mr. PIKE.] I greatly prefer his amendment to my own, as he proposes to leave the law as it now stands, with the single change of exempting $1,000 instead of $600. The question recurred upon the amendment of Mr. Ross to the amendment of Mr. PIKE.

The amendment of Mr. Ross was as follows:

Insert after the words "a duty of five per cent. on the excess over $1.000" the following:

And not exceeding $10,000; and a duty of ten per cent. per annum on the excess over $10,000 and not exceeding $20,000; and a duty of fifteen per cent. per annum on the excess over $20,000 and not exceeding $10,000; and a duty of twenty per cent. per annum on the excess over $40,000 and not exceeding $60,000; and a duty of twenty-five per cent. per annum on the excess over $60,000.

The amendment was not agreed to.

The question recurred upon the amendment of Mr. PIKE, which was as follows:

Strike out all after the words "United States," where they first occur in the paragraph, and insert in lieu thereof the following:

Or of any citizen of the United States residing abroad, whether derived from any kind of property, rents, interests, dividends, or salaries, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever, a duty of five per cent. on the amount so derived over $1,000 and not exceeding $5.000; and a duty of ten per cent. on the amount exceeding $5,000; and a like duty shall be levied, collected, and paid upon the gains, profits, and income of every business, trade, or profession carried on in the United States by persons residing without the United States and not citizens thereof.

Mr. JENCKES. I move to amend the

amendment by striking out the last clause, as follows:

And a like duty shall be levied, collected, and paid annually upon the gains, profits, and income of every business, trade, or profession carried on in the United States by persons residing without the United States and not citizens thereof.

The amendment to the amendment was not agreed to.

On agreeing to the amendment of Mr. PIKE, there were-ayes 61, noes 34.

Mr. HALE called for tellers.

Tellers were ordered; and Messrs. HALE and PIKE were appointed.

The committee divided; and the tellers reported-ayes 57, noes 42.

So the amendment was agreed to.

Mr. ANCONA. I move to amend by adding at the end of the paragraph the following:

Provided, That the amount, $1,000, exempt from the duty of five per cent. by this section, shall be held to take effect upon the assessments now being made, and to be collected upon incomes for the year ending December 31, 1865.

Mr. MORRILL. This cannot be carried out. The assessment has already been made.

On agreeing to the amendment, there were -ayes 12, noes 55; no quorum voting.

The CHAIRMAN, under the rule, ordered tellers; and appointed Messrs. ANCONA and MORRILL.

The committee divided; and the tellers reported-ayes 14, noes 79.

So the amendment was not agreed to.

Mr. BERGEN. I move to amend by adding at the end of the paragraph the following: No passport shall be issued from the State Department or by any minister, chargé, or consul, to any person unless he produces the receipt for all income taxes imposed on him from 1862 to the date of his application, nor shall any passport be renewed or viséed by any minister, chargé, or consul abroad, unless the same conditions be complied with.

The amendment was not agreed to; there being-ayes fourteen, noes not counted.

Mr. ROSS. I move to amend by inserting at the end of the amendment last adopted the following:

And a duty of fifteen per cent. per annum on the excess over $50,000.

The amendment was not agreed to.

Mr. HUBBARD, of New York. I move to amend by inserting after the word "thereof" in line twenty-four hundred and seventy-five the following:

Provided, That every person, not being a householder, nor having a family residing in the United States, shall pay the aforesaid duty or tax upon the excess over $500.

The amendment was not agreed to.

Mr. ANCONA. I move to amend by adding at the end of the paragraph the following: Provided, That on all incomes derived from labor and fixed salaries the amount so levied and collected shall not exceed three per cent.

The amendment was not agreed to.
The Clerk read as follows:

That section one hundred and seventeen be amended by striking out all after the enacting clause and inserting in lieu thereof the following: that in estimating the gains, profits, and income of any person, there shall be included all income derived from interest upon notes, bonds, and other securities of the United States; profits realized within the year from sales of real estate purchased within two years previous to the year for which income is estimated; interest received or accrued upon all notes, bonds, and mortgages, or other forms of indebtedness bearing interest, whether paid or not, if good and collectable, less the interest which has become due from said person during the year; the amount of all premium on gold and coupons; the amount of sales of live stock, sugar, wool, butter, cheese, pork, beef, mutton, or other meats, hay and grain, or other vegetable or other productions, being the growth or produce of the estate of such person, not including any part thereof consumed directly by the family; all other gains, profits, and income derived from any source whatever; and the share of any person of the gains and profits of all companies, whether incorporated or partnership, who would be entitled to the same, if divided, whether divided or otherwise, except the amount of income received from institutions or corporations whose officers, as required by law, withhold a per cent. of the dividends made by such institutions, and pay the same to the Commissioner of Internal Revenue or other officer authorized to receive the same; and except the salary or pay received for services in the civil, military, naval, or other service of the United States, including Senators, Representatives, and Delegates in Congress from which the tax has been deducted. And in estimating the gains, profits, and

income of any person in addition to $1,000 exempt from income tax, all national, State, county, and municipal taxes paid within the year shall be deducted from the gains, profits, or income of the person who has actually paid the same, whether such person be owner, tenant, or mortgagor; losses on sales of real estate within the year purchased within two years previous to the year for which income is estimated; the amount actually paid for labor or interest by any person who rents lands, or hires labor to cultivate land, or who conducts any other business from which income is actually derived; the amount paid out for usual or ordinary repairs: Provided, That no deduction shall be made for any amount paid out for new buildings, permanent improvements, or betterments, made to increase the value of any property or estate: And provided further, That only one deduction of $1,000 shall be made from the aggregate income of all the members of any family, composed of one or both parents, and one or more minor children, or husband and wife; that guardians shall be allowed to make such deduction in favor of each and every ward, except that in case where two or more wards are comprised in one family, only one deduetion shall be made in their favor; and that no deduction shall be allowed in favor of persons described trustees" under existing laws.

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Mr. NICHOLSON. I move to amend by adding at the end of the paragraph the following:

And provided further, That when any person or persons, whose annual income from all sources does not exceed $1,000, shall be possessed of any shares of stock or interest in any institution or corporation whose officers have withheld, as required by law, a per cent. of the dividends made by such institutions, and paid the same to the Commissioner of Internal Revenue or other officer authorized to receive the same, such person or persons shall be permitted to prove and declare, under oath or affirmation, the amount of their said annual income, and to show by certificate of the officers of said institution or corporation, the amount so withheld and paid over to them, whereupon the assistant assessor, if he shall be satisfied with the proof, shall certify the same to the collector of the district, who shall repay to the person or persons entitled the amount so withheld and paid.

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Mr. Chairman, the object and necessity of this amendment will be apparent at a glance. The present law has in its practical operation borne most unjustly and partially upon a class of persons who are least able to suffer such injustice. If it is the purpose of this House to exempt incomes less than $1,000, that object should be carried into practical effect. But it is well known that there is a large class of persons of small incomes who have not, under the present law received the benefit of the $600 exemption, and who will not under this bill enjoy the exemption of $1,000, unless some such amendment as that which I offer be adopted. They have been obliged to pay a tax of five per cent. upon whole of their income. I refer especially to those whose income is derived from stocks, &c., in any corporation or institution the officers of which are required by law to withhold from the dividends, &c., of the stockholders a certain amount of tax to be paid over to the Commissioner of Internal Revenue. If the amount of income from this source exceeds $1,000, the parties are afforded an opportunity of being credited with the amount; but if the income does not exceed $1,000, no such opportunity is afforded. The tax is withheld by the bank or other institution; and under the present law it is impossible for the party to recover the tax thus unjustly deducted. This system operates injuriously upon a class of persons composed almost entirely of widows and orphans, whose investments are made under the order of a court, so that they have no control over the investment. The law in its operation heretofore has presented this anomaly: that while a certain amount of income has been exempt by law these parties have been unable to get the benefit of that exemption.

Mr. MORRILL. Mr. Chairman, on the face of the gentleman's proposition it seems to be somewhat fair, but the difficulties of carrying it into effect, if passed, are almost insuperable. In the first place, there are few people who own bank stock to the amount of $1,000 who do not own something else. If any injustice be done by the provision in the bill, it will then only be in a very small number of cases. If we inserted the amendment into the law, it would give an opportunity to a great many readjustments, and it would lead to so many difficulties that I hope it will not be adopted. The amendment was rejected.

Mr. THAYER. I move after the word "favor" in line twenty-five hundred and thirty-four to strike out to the end of the sentence, as follows:

And that no deduction shall be allowed in favor of persons described as "trustees" under existing laws.

Mr. Chairman, I move this amendment for the purpose of enabling me to ask some gentleman on the Committee of Ways and Means to explain what this means. I want the gentlemen of the committee to explain what this provision means which excludes trustees from the privilege of making in favor of the cestui que trust the deductions others are entitled to make by law. I will yield to the gentleman from Massachusetts to explain it.

Mr. MORRILL. I will say to the gentleman from Pennsylvania that that was introduced at the request of the Commissioner of Internal Revenue, who assigned a very good reason for it, but which has escaped my attention at the present time.

Mr. THAYER. I must insist on my amendment, as I have no idea of "going it blind" on the statement of any person.

Mr. HALE. What does the gentleman mean by "going it blind?" It is a thing

strange to me.

Mr. THAYER. It is one of the expressions of the day, and means voting for a thing on the say-so of some other person when you do not know who the person is or what he says. [Laughter.]

Mr. HOOPER, of Massachusetts. I have no recollection of the provision or that it was adopted in committee.

Mr. MORRILL. It may be a proper provision as I understand it, without remembering the explanation furnished by the Commissioner of Internal Revenue. The guardian of the estate should pay the amount due without any deduction. A trustee should not get a deduction on his own account and on account of his trust also.

Mr. THAYER. Of course not. That is not the point affected by these words. The paragraph specifies that guardians shall make these deductions in favor of their wards, and then it says trustees shall not make these deductions. It says trustees under a deed, marriage settlement, or in any other way, shall not make these deductions. I ask the reason for it.

Mr. STEVENS. It is unreasonable, and there is no reason for it. [Laughter.] The amendment was agreed to.

Mr. HUBBARD, of Connecticut. I move the following amendment:

On page 110, line twenty-five hundred and twentythree, after the word "repairs," add: And ordinary expenses when absent from home relative to matters connected with the business, trade, or profession of such person.

ascertained to be worthless, but excluding all estimated depreciation of values, and.

I offer this for the purpose of determining what loss may be deducted in addition to those now specified by the law. Last year it was held by the Commissioner that no loss should be deducted from the income which was not incurred in some business out of which the party derived a profit, and where the loss incurred overbalanced the amount of profit. Now, I propose to extend that so that all losses from the causes mentioned, either by fire or shipwreck, or incurred in trade, shall be deducted from the income. I think there can be no objection to it, and I believe the Committee of Ways and Means concur in the propriety of the amendment.

The amendment was agreed to.

Mr. DAVIS. I move to amend by inserting after line twenty-five hundred and thirty-six the following:

Provided, That any gains and profits of any company, association, or partnership which shall be returned and the tax thereon paid before the same shall be divided, shall to the amount on which such tax has been paid be exempt from tax when afterward divided.

Mr. HOOPER, of Massachusetts. I believe that is already provided for in the bill. Mr. DAVIS. I do not find any such provision

in it.

The amendment was not agreed to.

Mr. BERGEN. I move to amend by striking out the words "labor or" in line twenty-five hundred and nineteen, and by inserting after the word "interest" the words "and the actual cost of labor;" so that the clause will read:

The amount actually paid for interest and the actual cost of labor by any person who rents lands, or hires labor to cultivate land, or who conducts any other business from which income is actually derived.

The object of the amendment is this: as it now stands the farmer hiring men who board themselves charges their entire wages in his income account, while his neighbor who boards his own men and pays them ten dollars a month can charge but the ten dollars in his account. There should be an equality about it. The actual cost of the labor should be put in the bill in such a shape that the board might be reckoned in the one case as well as the other.

The amendment was not agreed to.

Mr. HALE. I move to amend by inserting after the word "purchased" in line twenty-four hundred and eighty-six the words "within the year or;" so as to make it grammatical, as follows:

Profits realized within the year from sales of real estate purchased within the year or within two years previous to the year for which the income is estimated.

Mr. MORRILL. No objection to that.
The amendment was agreed to.

Mr. HALE. I now move to insert after the word "family" in line twenty-five hundred and thirty-three the words and have joint property interests;" so that it will read:

Except that in case where two or more wards are comprised in one family and have joint property interests only one deduction shall be made in their favor.

This proviso in the case of wards as it now stands seems to be ambiguous. "Except that in case where two or more wards are com

Mr. Chairman, I offer this amendment at the request of my friend from Pennsylvania, [Mr. MILLER.] If he were here he would doubtless explain the object of it much better than I can. I think it is in harmony with this part of the bill as proposed by the Committee of Ways and Means. It is well known that persons engaged in business are compelled to go abroad to promote the interests of the business in which they are engaged. A merchant, forprised in one family." That means, I supinstance, goes from home to purchase his goods. The judges of the court in my State are compelled to travel from county to county, and receive $2,000, out of which they are compelled to pay $500 and more for traveling expenses. I think this deduction should be allowed.

The amendment was rejected.

Mr. MORRILL. I move, in line twentyfive hundred and forty-seven, after the word "except" to insert the words "that portion of."

The amendment was agreed to.

Mr. WILSON, of Iowa. I move, before the word "loss," in line twenty-five hundred and seventeen, to insert these words:

Loss actually sustained during the year arising from fire, shipwreck, or incurred in trade, or debts

pose, simply a residence with their guardian as a part of one family. I presume it is only intended to cover the case of those so connected by relationship or by community of property that they would constitute what would be considered as one family for the purpose of taxation only, and that I think is properly reached by the amendment I propose. Not that their property shall be necessarily all joint property, but if they have any joint property interests and are members of one family they shall have exemption. On the other hand, if they have no joint property interest they should be treated as individuals.

The amendment was agreed to.

Mr. JENCKES. I move an amendment in order to meet a point not covered by the amendment of the gentleman from Iowa, [Mr.

WILSON,] to insert in line twenty-five hundred and eighteen, after the words "two years," the words "or upon sales of other property;" so

that the clause will read:

Losses on sales of real estate within the year purchased within two years or upon sales of other property purchased more than two years previous to the year for which income is estimated.

The amendment already adopted excludes estimated depreciation of property, but does not cover actual losses from the sale of property purchased to be held as investments, or of which the title is derived in some other way more than two years previous.

Mr. GARFIELD. That would never do. It would allow a purchase twenty years ago to

come in.

Mr. JENCKES. Not at all.

The amendment was not agreed to.

Mr. BIDWELL. I move to insert after the word "estimated," in line twenty-five hundred and nineteen, as follows:

But the term real estate as hercin used shall not be deemed to include mining stocks or mining claims where the paramount title of the lands on which the mines or claims are situated is in the United States.

Mr. WILSON, of Iowa. It seems to me the gentleman is not accomplishing what he desires. This is a deduction. I suppose he does not desire that mining stock shall not be included in the deduction.

Mr. BIDWELL. My object is to prevent men from deducting losses incurred in mining claims and mining stocks, calling it real estate.

Mr. GARFIELD. The language of the amendment is "mining stocks or mining claims where the paramount title of the lands is in the United States." As a matter of course they would not be considered real estate. Mining stock never was considered real estate. terms are so vague and indefinite that I think we ought not to incorporate them in the lawcertainly not "mining stock."

The

Mr. BIDWELL. If I am correctly informed, there is a large number of persons who are escaping the payment of just taxes by saying that their losses in mining should be deducted from their sales of real estate. It is for the purpose of saving to the Government the revenue that is its just due that I want this put in.

Mr. GARFIELD. The purpose of the gentleman is all right, but I think we ought not to use so indefinite a term.

Mr. BIDWELL. I am willing to let it be passed by for further consideration.

The amendment was not agreed to. Mr. DODGE. I move to insert after the word "estimated," in line twenty-five hundred and nineteen, the following:

Provided, That money received for leases of coal, oro, or limestone lands which exhaust the freehold shall be taxed as sales and not as income.

The object of the amendment is this: there are large quantities of lands in the State of Pennsylvania, and in other States, that are leased on a royalty, coal lands, for instance, for a period of ten or fifteen years, the lessees paying ten, twelve, or fifteen cents for the coal in the ground, and in the course of ten or fifteen years the entire amount of coal is exhausted and the land is worthless. This amount received from year to year is not income but it is the proceeds of the freehold. It is the property itself. In ten years when the coal is exhausted the land in the mountains becomes worthless. It is the habit of the assessors to collect from the farmers and others who have leased these lands the amount they have received for the property. It is the very life-blood of the property that is taken. They reckon that as income. At the expiration of the ten years there is no income left, and the owner has two or three hundred acres of land rendered valueless because of the excavation below, or because it was of no value except on account of the mineral that was there.

Mr. MORRILL. I trust the amendment will not be adopted, either in substance or in form. It will be seen if it is inserted that it will make nonsense of the rest of the paragraph. But it ought not to be inserted even upon its merits. There are many similar cases. Take the farmer

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