The Income Tax, as it now exists, is an instrument of extraordinary clumsiness and complexity. An intelligent foreigner, coming freshly to the examination of its curious provisions, would be driven to the conclusion that a junta of bureaucrats, intent upon hiding the mysteries of statecraft from the knowledge of the vulgar, had of set purpose wrapped its machinery and intention in every device of obscurement which perverted ingenuity could suggest.
In "Riches and Poverty," edition 1905, I gave an account of the Income Tax as it then stood. I reproduce the account in order to make the subsequent alterations clearer.
Incomes, from whatever source arising, which do not exceed £160 per annum, are entirely exempt from the tax.
Incomes between £160 and £700 are allowed certain abatements which are equivalent to a rough graduation of the tax. The following table shows the nature of the abatements:—
INCOME TAX ABATEMENTS
| Amount of Annual income. | Abatement. | |||
| Between | £160 | and | £400 | £160 |
| " | 400 | " | 500 | 150 |
| " | 500 | " | 600 | 120 |
| " | 600 | " | 700 | 70 |
The following table shows how the abatements graduate the Income Tax when the nominal rate of tax is 1s. in the £.
INCOME TAX. EFFECT OF THE ABATEMENTS
ON INCOME TAX AT 1s.
| Income. | Abatement Allowed. | Income after Abatement. | Actual Rate of Taxation when the Tax is 1s. in the £. |
| £ | £ | £ | Pence in the £ |
| 180 | 160 | 20 | 1.33 |
| 240 | 160 | 80 | 4.00 |
| 300 | 160 | 140 | 5.60 |
| 400 | 160 | 240 | 7.20 |
| 440 | 150 | 290 | 7.90 |
| 500 | 150 | 350 | 8.40 |
| 540 | 120 | 420 | 9.33 |
| 600 | 120 | 480 | 9.60 |
| 640 | 70 | 570 | 10.68 |
| 700 | 70 | 630 | 10.80 |
| 740 | nil | 740 | 12.00 |