he net earnings of
corporations is virtually a tax on the stockholder's income, and in
theory this is true. But so long as the tax is not actually withheld
from the dividends, or the dividends are not reduced in consequence of
the tax, the stockholder's current income is not affected. The
imposition of the tax might indeed affect his prospective income and
might depreciate the value of his stocks. It is hardly likely, however,
that such effects will be perceptible, at least as regards the stocks
of railroads and other large corporations. If, however, it be
considered that income consisting of dividends pays the tax, it follows
that the stockholder's income is taxed no matter how small it may be.
No minimum is left exempt. On the other hand, if it be considered that
all dividends are virtually exempt, the stockholder would seem to be
unduly favored under this form of taxation in comparison with people
whose incomes are derived from other sources. Doubtless in future the
investor will look upon dividends as a form of income not subject to
the normal income tax.

In the levy of the normal income tax there is to be a limited
application of the method of assessment and collection at the source of
the income. This method is applied very completely in the taxation of
income in Great Britain. It may be well to recall summarily the
essential features of the British system. The tax is levied upon the
property or industrial enterprise which yields or produces the income.
But the person occupying the property or conducting the enterprise, and
paying the assessment in the first instance, is authorized and required
to deduct the tax from the income as it is distributed among the
persons entitled to share in it either as proprietors, landlords,
creditors, or employees. Under the English system, an industrial
corporation, for instance, pays the income tax upon its gross earnings
and then deducts it from the dividends, interest, salaries, and rents
as these payments are made. The householder pays an assessment levied
upon the annual value of his dwelling (less an allowance for repairs
and insurance) and then if he occupies the premises as tenant deducts
the tax from his rent. The income from agriculture is reached by a
similar assessment upon the farmer, based upon the annual or rental
value of the farm and with the same right of deduction from the rent if
he is a tenant farmer.

From the standpoint of the government, the main advanta