Incomes not exceeding £160 a year pay no tax. Small and moderate incomes are relieved from taxation by being only taxed in part, i.e. "abatements" are allowed according to the size of the income. Over £700 a year there are no abatements. Unearned incomes are taxed at the nominal rate of fourteen pence in the pound. Earned incomes not exceeding £2,000 a year are taxed ninepence in the pound. Earned incomes over £2,000 a year, but not over £3,000 a year, are taxed one shilling in the pound. Finally comes what is called the "Super-Tax." Incomes, whether earned or unearned, over £5,000 a year are taxed an extra sixpence in the pound on such part of the income as exceeds £3,000.
The table on p. 307 shows, as the mere relation of the complicated provisions does not show, both the virtues and the faults of Mr Lloyd George's Income Tax. There is graduation, but it is effected so clumsily that it positively bristles with anomalies. Consider, for example, the gross anomaly of making a man with £3,000 a year pay only £150, while a man with £3,100 a year must pay £180. Or, again, of asking from the £5,000 man a £291 tax, and demanding £350 from the £5,100 man. Perhaps the worst feature in the scale, however, is the fact that unearned incomes from £701 to £5,000 pay the same rate.
EFFECT OF THE INCOME TAX IN 1910
| Income. | Abatement allowed. | Earned Incomes. | ||||
| Tax payable. | Nominal Rate. | Virtual Rate. | ||||
| £ | £ | £ | s. | d. | Pence in £ | Pence in £ |
| 160 | 160 | — | Exempt | — | ||
| 200 | 160 | 1 | 10 | 0 | 9 | 1.8 |
| 300 | 160 | 5 | 5 | 0 | 9 | 4.2 |
| 400 | 160 | 9 | 0 | 0 | 9 | 5.4 |
| 500 | 150 | 13 | 2 | 6 | 9 | 6.3 |
| 700 | 70 | 23 | 12 | 6 | 9 | 8.1 |
| 800 | Nil | 30 | 0 | 0 | 9 | 9.0 |
| 1,000 | " | 37 | 10 | 0 | 9 | 9.0 |
| 2,000 | " | 75 | 0 | 0 | 9 | 9.0 |
| 2,100 | " | 105 | 0 | 0 | 12 | 12.0 |
| 3,000 | " | 150 | 0 | 0 | 12 | 12.0 |
| 3,100 | " | 180 | 16 | 8 | 14 | 14.0 |
| 5,000 | " | 291 | 13 | 4 | 14 | 14.0 |
| 5,100 | " | 350 | 0 | 0 | 14 + 6 | 16.5 |
| 10,000 | " | 758 | 6 | 8 | 14 + 6 | 18.2 |
| 50,000 | " | 4,091 | 13 | 4 | 14 + 6 | 19.6 |
| 100,000 | " | 8,258 | 6 | 8 | 14 + 6 | 19.8 |
| Income. | Abatement allowed. | Unearned Incomes. | ||||
| Tax payable. | Nominal Rate. | Virtual Rate. | ||||
| £ | £ | £ | s. | d. | Pence in £ | Pence in £ |
| 160 | 160 | — | Exempt | — | ||
| 200 | 160 | 2 | 6 | 8 | 14 | 2.8 |
| 300 | 160 | 8 | 3 | 4 | 14 | 6.5 |
| 400 | 160 | 14 | 0 | 0 | 14 | 8.4 |
| 500 | 150 | 19 | 8 | 4 | 14 | 9.8 |
| 700 | 70 | 36 | 15 | 0 | 14 | 12.6 |
| 800 | Nil | 46 | 13 | 4 | 14 | 14.0 |
| 1,000 | " | 58 | 6 | 8 | 14 | 14.0 |
| 2,000 | " | 116 | 13 | 4 | 14 | 14.0 |
| 2,100 | " | 122 | 10 | 0 | 14 | 14.0 |
| 3,000 | " | 175 | 0 | 0 | 14 | 14.0 |
| 3,100 | " | 180 | 16 | 8 | 14 | 14.0 |
| 5,000 | " | 291 | 13 | 4 | 14 | 14.0 |
| 5,100 | " | 350 | 0 | 0 | 14 + 6 | 16.5 |
| 10,000 | " | 758 | 6 | 8 | 14 + 6 | 18.2 |
| 50,000 | " | 4,091 | 13 | 4 | 14 + 6 | 19.6 |
| 100,000 | " | 8,258 | 6 | 8 | 14 + 6 | 19.8 |
Now let us consider the reform of the Income Tax.
In the first place it is suggested that the Inhabited House Duty should be entirely abolished. As has been already pointed out, it is a clumsy second Income Tax and its incidence is most unequal. It is not paid in Ireland, and too much of it falls upon poor clerks and tradesmen in London and other big towns. It is urged here that if we properly reform the Income Tax it should not be necessary to levy a second one under another name.