imposes (a)
a "normal" tax of 1 per cent on the entire net income of every
corporation (engaged in business for profit);

(b) a "normal" tax of 1 per cent on the excess above $3000 of every
unmarried individual's income (or $4000 for husband and wife, as
indicated in the next section); (c) an "additional tax" (often called
a super-tax) ranging from 1 to 6 per cent on individual incomes of
larger amounts than $20,000. There are thus eight classes of persons,
those entirely exempt, those paying only at the normal tax rate, and
six different classes paying a super-tax.[10]

A person with an income of $1,000,000 thus pays $60,020, this being
the amount indicated, $25,020 for the first half million plus 7 per
cent on the second half million.

Sec. 8. #Exemptions and stoppage at source#. There are various
exemptions, the first being that of $3000 on every individual income
and of $4000 on the aggregate income of husband and wife living
together.[11] Among other exceptions are sums paid for taxes (except
assessments for local benefits), necessary business expenses, losses
sustained, and (for the normal tax only) those parts of individual
incomes derived from corporations which have paid the tax on them.

The difficulty of getting an honest and complete assessment of incomes
is great. All taxation is deemed by the taxpayer to be "inquisitorial"
in some degree, and this is particularly true of an income tax. In
England had been developed the plan called "stoppage at source." In
our law the taxation of corporations at the rate of the normal tax,
while requiring them to report the names of those receiving dividends
and interest payments, affords an ingenious way of checking up the
returns of individuals in respect to a class of investments which is
steadily increasing in importance.

Sec. 9. #The graduation principle#. The most disputed feature of the
income tax is the principle of graduation, or of progression. It is
upheld in part because in this case it but offsets _regression_, that
is relatively heavier taxation on the smaller incomes, in the case of
the other kinds of taxes (tariff, property taxes, etc.). It is urged
further that those of larger incomes, especially the largest, have
marked advantages over others in making investments. Further it is
urged that the higher the income the less does a certain rate cut into
"the amount necessary for good living" (as was said in Congressional
debate). This is in accord with t