Your vote and how to use it

by Gertrude Foster Brown

Federal Taxes: The United States government even before the war required an enormous amount of money with which to conduct its business. In the past its chief sources of revenue have been custom duties and internal-revenue taxes.

Custom Duties are taxes levied on the importation of articles into the United States from foreign countries. The tariff, which fixes the rates of the impost taxes, has been a constant subject for dispute between the major political parties. Whether the tariff should be imposed “for revenue only,” or whether it should be “a protective tariff” to protect American industries and American labor from the cheap labor of other countries, has been the chief point of difference between Republicans and Democrats at National elections. Impost taxes are indirect taxes which eventually come out of the pockets of the people in increased prices of the articles imported, and incidentally they raise the prices of similar articles of domestic manufacture.

Internal Revenue or Excise Taxes are taxes imposed on business or on the manufacture and sale of articles in the United States. The most important taxes of this character are those on the manufacture and sale of liquor and tobacco. The manufacture and sale of cosmetics, perfumes, oleomargarine, and playing-cards are also subject to internal-revenue taxes. In many cases these taxes are paid by the sale of stamps to the manufacturer, who has to affix them to the article before it is sold. As with many other kinds of taxation, the public, the ultimate consumer, pays this tax.

The Income Tax is a tax on the income of a person. Many who do not own land or other tangible property enjoy an income. As a farmer has to pay a tax on his farm, so a lawyer who has a lucrative practice, but does not own land or stocks, and the man who has an income from investments, are all required to pay their share of government expenses.

The income-tax law of 1916 taxes all incomes of married couples in excess of $4,000, and all incomes of unmarried persons in excess of $3,000. To provide further war revenue, an additional tax was imposed in 1917 on the income of every unmarried person in excess of $1,000 a year, and of every married couple in excess of $2,000 a year. The rate of these taxes increases with the size of the income. The combined income taxes may amount to as much as 67 per cent. in case of the largest incomes.

Public Debt; Bonds: If the government needs more money than it wishes to raise by taxation, it can borrow it by issuing bonds. A bond is a promise to pay a certain definite sum of money at a certain time with a fixed rate of interest. United States government bonds are the safest investment in the world. The State and municipalities may also issue bonds, although the amount a city may borrow may be limited by the value of its assessed property. The interest on bonds and the payment of the principal must be met by taxation.

Bonds should not be issued to pay for the running expenses of government, because that is putting on future generations the unjust burden of paying for something for which they receive no return. Their legitimate use is to meet the cost of some improvement which will continue to benefit those who go on paying for it.

When bonds are issued provision should be made for the redemption of their principal. This is done in New York State by raising annually by direct taxation a fixed sum to be invested and kept as a separate fund called a “sinking fund,” to be used only for this purpose. A sinking fund for the payment of the interest and for the redemption of the debt of the State is required by the State constitution.

The Budget: Before undertaking an enterprise a wise man considers how much it is going to cost, and where the money is coming from. A budget is a summary of the estimated expenses for the following year of the different departments of the government. It is a business-like method of determining the amount of money which should be raised by a State or municipality to meet its necessary expenses. The budget for New York State is made by the Legislature from an estimate furnished by each of the administrative departments of the State. It includes in detail the amount of salaries, traveling expenses, and maintenance of each department.

The making of a budget for a city is of the greatest importance to the taxpayers. Public hearings are held on it, when taxpayers may be heard for or against the use of the money in the designated way, and when they may ask for additional appropriations for some city activity. Public servants in this, as in every other department of service, work best under supervision. The taxpayer owes it to himself to maintain adequate representation at these hearings. It is on the basis of the budget as finally adopted that taxes are adjusted for the following year. (See Chapter IV on Greater New York.)