This, Dru pointed out, would deter owners from holding unimproved realty, for the purpose of getting the unearned increment made possible by the thrift of their neighbors. In the country it would open up land for cultivation now lying idle, provide homes for more people, cheapen the cost of living to all, and make possible better schools, better roads and a better opportunity for the successful cooperative marketing of products.
In the cities and towns, it would mean a more homogeneous population, with better streets, better sidewalks, better sewerage, more convenient churches and cheaper rents and homes. As it was at that time, a poor man could not buy a home nor rent one near his work, but must needs go to the outskirts of his town, necessitating loss of time and cost of transportation, besides sacrificing the obvious comforts and conveniences of a more compact population.
The Administrator further directed the tax board to work out a graduated income tax exempting no income whatsoever. Incomes up to one thousand dollars a year, Dru thought, should bear a merely nominal tax of one-half of one per cent.; those of from one to two thousand, one per cent.; those of from two to five thousand, two per cent.; those of from five to ten thousand, three per cent.; those of from ten to twenty thousand, six per cent. The tax on incomes of more than twenty thousand dollars a year, Dru directed, was to be rapidly increased, until a maximum of seventy per cent. was to be reached on those incomes that were ten million dollars, or above.
False returns, false swearing, or any subterfuge to defraud the Government, was to be punished by not less than six months or more than two years in prison. The board was further instructed to incorporate in their tax measure, an inheritance tax clause, graduated at the same rate as in the income tax, and to safeguard the defrauding of the Government by gifts before death and other devices.
Chapter XXXII
A Federal Incorporation Act
Along with the first board on tax laws, Administrator Dru appointed yet another commission to deal with another phase of this subject. The second board was composed of economists and others well versed in matters relating to the tariff and Internal Revenue, who, broadly speaking, were instructed to work out a tariff law which would contemplate the abolishment of the theory of protection as a governmental policy. A tariff was to be imposed mainly as a supplement to the other taxes, the revenue from which, it was thought, would be almost sufficient for the needs of the Government, considering the economies that were being made.
Dru’s father had been an ardent advocate of State rights, and the Administrator had been reared in that atmosphere; but when he began to think out such questions for himself, he realized that density of population and rapid inter-communication afforded by electric and steam railroads, motors, aeroplanes, telegraphs and telephones were, to all practical purposes, obliterating State lines and molding the country into a homogeneous nation.
Therefore, after the Revolution, Dru saw that the time had come for this trend to assume more definite form, and for the National Government to take upon itself some of the functions heretofore exclusively within the jurisdiction of the States. Up to the time of the Revolution a state of chaos had existed. For instance, laws relating to divorces, franchises, interstate commerce, sanitation and many other things were different in each State, and nearly all were inefficient and not conducive to the general welfare. Administrator Dru therefore concluded that the time had come when a measure of control of such things should be vested in the Central Government. He therefore proposed enacting into the general laws a Federal Incorporation Act, and into his scheme of taxation a franchise tax that would not be more burdensome than that now imposed by the States. He also proposed making corporations share with the Government and States a certain part of their net earnings, public service corporations to a greater extent than others. Dru’s plan contemplated that either the Government or the State in which the home or headquarters of any corporation was located was to have representation upon the boards of such corporation, in order that the interests of the National, State, or City Government could be protected, and so as to insure publicity in the event it was needful to correct abuses.