llowed under the
income tax is L160 or $800; in Prussia it is 900 marks, or $225; and in
the State of Wisconsin it is $800 for individuals and $1,200 for a
husband and wife, with a further allowance for children or dependent
members of the family.

The sharply progressive rates and the comparatively high exemption have
given rise to the criticism that this is a rich man's income tax and
disregards the principle that all persons should contribute to the
expenses of the government in proportion to their several abilities. It
is often said that an income tax ought to reach all incomes with the
exception of those which are close to or below the minimum necessary
for subsistence, and that if people generally were called upon to
contribute directly to the government they would take greater interest
in public affairs and show more concern over any wasteful or unwise
expenditure of public money. In reply it is contended that the
limitation of the tax to the wealthy or well-to-do classes is justified
because these classes do not pay their fair share of the indirect
national taxes, or of local property taxes. These debatable questions
lie outside the scope of the present article. It is evident, however,
that the income tax should not be criticized as if it were a single tax
or formed the only source of revenue for the Federal government. From
the fiscal standpoint it occupies a subordinate position in the
national finances, being expected to yield about $125,000,000 annually
out of a total estimated tax revenue of $680,000,000.

The normal tax of one per cent, is to be levied upon the income of
corporations. In effect this provision of the law merely continues the
corporation or "excise" tax which was already in existence. But that
tax now becomes an integral part of the income tax, covering the income
which accrues to the stockholder and is distributable in the form of
dividends. On the theory that this income is reached at the source by
the tax upon the net earnings of the corporation the dividends as such
are exempt. They are not to be included, so far as concerns the normal
tax, in the taxable incomes of the individual stockholders and the law
does not provide that the tax paid by the corporation shall be deducted
from the dividend.

It is perhaps a question whether under these conditions income which
consists of dividends should be considered as subject to the normal tax
or as exempt. It may be contended that a tax upon t