normal income tax
as regards both the method of assessment and the rates. It is, however,
to be administered through the same machinery, and no doubt to some
extent the information obtained as to the sources of income in
connection with the assessment of the normal tax will prove useful as a
check upon the returns of income required for assessment of the
additional tax. Every person whose income exceeds $20,000 will be
subject to both taxes, the normal and the additional, but presumably
will be required to make only one declaration. For the purposes of the
additional tax he will be required to declare his income from all
sources, and therefore any relief from the obligation of making a
complete revelation of income which may be secured to him through the
application of the principle of assessment at the source in connection
with the normal tax will be entirely sacrificed.

The administration of a direct personal income tax--using that term to
describe a tax levied directly on individual incomes--is a
comparatively simple matter, however ineffective it may prove to be in
reaching the income subject to it. Under this method of taxation it is
easy to exempt a minimum, to apply progression in the rates, or to make
any other adjustments that may be deemed equitable with reference
either to the size or character of the income or to the circumstances
of the taxpayer. But as soon as we depart from this simple method and
resort to taxation at the source, we encounter difficulties in varying
the rates, allowing exemptions, or making any similar adjustments. In
the English income tax, these difficulties are squarely met and
surmounted. As previously explained, that tax is in the first instance
levied indiscriminately on all accessible sources of income and the
adjustments are effected by refunding the tax collected at the source
so far as may be necessary. No provision is made for forestalling the
deduction of the tax, and no returns are required of the names and
addresses of persons to whom payments of incomes are made. The
exemption, however, is small ($800), and the abatements extend only to
incomes below $3,500. Above that point the entire income is taxable.

A tax which provides for the exemption of $3,000 or $4,000 from every
individual income places a formidable barrier in the way of a
thoroughgoing application of assessment at the source. It is evident
that with a universal exemption as high as this, a very large amount