to those of France and
Germany, because they are incomparably less drastic than ours or Great
Britain's) is, first, that we do not resort to consumption taxes and
only to a limited degree to general stamp taxes, and, secondly, that our
income tax on small and moderate incomes is far smaller, on large
incomes somewhat smaller and on the largest incomes a great deal
heavier.

The House rate of taxation on incomes up to, say, $5,000, averages only
one-fifth of what it is in England; the House rate of taxation on
maximum incomes is approximately fifty per cent. higher than it is in
England. Moreover, married men with incomes of less than $2,000 are
entirely exempted from taxation in this country. In England all incomes
from $650 on are subject to taxation.

I believe, on the whole, our system of gradation is juster than the
English system, but I think we are going to an extreme at both ends. And
it must be borne in mind that our actual taxation of high incomes is not
even measured by the rates fixed in the House Bill, because to them must
be added State and municipal taxes. There must further be added what to
all intents and purposes is, though a voluntary act, yet in effect for
all right-minded citizens tantamount to taxation, namely, a man's
habitual expenditures for charity and his contributions to the Red Cross
and other war relief works.

The sentimental and thereby the actual effect of extreme income
taxation is not confined to the relatively small number of people in
possession of very large incomes directly affected by it. The
apprehension caused by the contemplation of an excessively high ratio of
taxation is contagious and apt to react unfavorably on constructive
activity.

It is highly important that taxation should not reach a point at which
business would be crippled, cash resources unduly curtailed and the
incentive to maximum effort and enterprise destroyed. And it should not
be forgotten that both theoretically and actually the spending of money
by the Government cannot and does not have the same effect on the
prosperity of the country as productive use of his funds by the
individual.

If all the European nations have stopped during the war at a certain
maximum limit of individual income and inheritance taxation, even after
four years of war, the reason is surely not that they love rich men more
than we do or that they are all less democratic than we are. The reason
is that these nations, including th