chased within two years previous to the year for which income is estimated: Provided, Tha no deduction shall be made for any amount paid out for new buildings, permanent improvements, or betterments, made to increase the value of any property or estate: Provided further, That only one deduction of four thousand dollars shall be made from the aggregate income of all the members of any family, composed of one or both parents, and one or more minor children, or husband and wife; that guardians shall be allowed to make a deduction in favor of each and every ward, except that in case where two or more wards are comprised in one family, and have joint property interests, the aggregate deduction in their favor shall not exceed four thousand dollars: And provided further, That in cases where the salary or other compensation paid o any person in the employment or service of the United States shall not exceed the rate of four thousand dollars per annum, or shall be by fees, or uncertain or irregular in the amount or in the time during which the same shall have accrued or been ea ned, such sa ary or other compensation shall be included in estimating the annual gains, profits or income of the person to whom the same shall have been paid, and shall include that portion of any income or salary upon which a tax has not been paid by the employer, where the employer is required by law to pay on the excess over four thousand dollars: Provided also, That in computing the income of any person, corporation, company or association there shall not be included the amount received from any corporation, company or association as dividends upon the stock of such corporation, company or association if the tax of two per centum has been paid upon its net profits by said corporation, company or association as required by this act.

Sec. 32. That there shall be assessed, levied, and collected, except as herein otherwise provided, a tax of two per centum annually on the net profits or income above actual operating and business expenses, including expenses for materials purchased for manufacture or bought for resale, losses, and interest on bonded and other ndebtedness of all banks, banking institutions, trust companies, saving institutions, fire, marine, life, and other insurance companies, railroad, canal, turnpike, canal navigation, slack water, telephone, telegraph, express, electric light, gas, water, street railway companies, and all other corporations, companies, or associations doing business for profit in the United States, no matter how created and organized, but not including partnerships:

*

*

*

*

*

*

*

*

The net profits or income of all corporations, companies, or associations shall include the amounts paid to shareholders, or carried to the account of any fund, or used for construction, enlargement of plant, or any other expenditure or investment paid from the net annual profits made or acquired by said corporations, companies, or associations.

That nothing herein contained shall apply to States, counties or municipalities; nor to corporations, companies or associations organized and conducted solely for charitable, religious or educational purposes, including fraternal beneficiary societies, orders or associations operating upon the loge system and providing for the payment of life, sick, accident and other ben fits to the members of such societies, orders or associations and dependents of such members; nor to the sticks, shares, funds or securities held by any fiduciary or trustee for charitable, religious or educational purposes; nor to building and loan associations or companies which make loans only to their shareholders; nor to such savings banks, savings institutions or soci ties as shall, first, have no stockholders or members except depositors and no capital except deposits; secondly, shall not receive deposits to an aggregate amount, in any one year, of more th none thousand dollars from the same depositor; thirdly, shall not allow an accumulation or total of deposits, by any one depositor, exceeding ten thousand dollars; fourthly, shall actually divide and distribute to its depositors, rat bly to deposits, all the earnings over the necessary and proper expenses of such bank, institution or society, except such as shall be applied to surplus; fifthly, shall not possess, in any form a surplus fund exceeding ten per centum of its aggregate deposits; nor to such savings banks, savings institutions or societies composed of members who do not participate in the profits thereof and which pay interest or dividends only to their depesitors; nor to that part of the busine-s of any savings banks, instit tion or other similar association having a capital stock, that is conduc'ed on the mutua' pan solely for the benefit of its depositors on such plan, and which shall keen its accounts of its business conducted on such mutual plan separate and apart from its other accounts.

Nor to any insurance company or association which conducts all its business solely upon the mutual plan, and only for the benefit of its policy holders or members, and having no capital stock and no stock or shareholders, and holding all its property in trust and in reserve for its policy holders or members; nor to that part of the business of any insurance company having a capital stock and stock and shareholders, which is conducted on the mutual plan, separate from its stock plan of insurance, and solely for the benefit of the policy holders and members insured on said mutual plan, and holding all the property belonging to and derived from said mutual part of its business in trust and reserve for the benefit of its policy holders and members insured on said mutual plan.

That all State, county, municipal, and town taxes paid by corporations, companies, or associations, shall be included in the operating and business expenses of such corporations, companies, or associations.

Sec. 33. That there shall be levied, collectol, and paid on all salaries of officers, or payments for services to persons in the civil, military, naval, or other employ ment or service of the United States, including Senators and Representatives and Delegates in Congress, when exceeding the rate of four thousand dollars per annum, a tax of two per centum on the excesss above the said four thousand dollars and it shall be the duty of all paymasters and all disbursing officers under the Government of the United States, or persons in the employ thereof, when making any payment to any officers or perso s as aforesaid, whose compensation is determined by a fixed salary, or upon settling or adjusting the accounts of such officers or persons, to deduct and withhold the aforesaid tax of two per centum; and the pay roll, receipts, or account of officers or persons paying such taxes as aforesaid shall be made to exhibit the fact of such payment. And it shall be the duty of the accounting officers of the Treasury Department, when audit ng the accounts of any paymaster or disbursing officer, or any officer withho ding his salary from moneys received by him, or when settling or adjusting the accounts of any such officer, to require evidence that the taxes mentioned in this section have been deducted and paid over to the Treasurer of the United States, or other officer authorized to receive the same. Every corporation which pays to any employee a salary or compensation exceeding four thousand dollars per annum shall report the same to the collector or deputy collector of his district and said employe shall pay thereon, subject to the exemptions herein provided for, the tax of two per centum on the excess of his alary over four thousand dollars: Provided, That salaries due to State, county, or municipal officers shall be exempt from the income tax herein levied.

Sec. 3167. That it shall be unlawful for any collector, deputy collector, agent, clerk, or other officer or employee of the United States, to divulge or to make known in any manner whatever not provided by law to any person the operations, style of work or apparatus of any manufacturer or producer visited by him in his official duties, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any income return by any person or corpo ration, or to permit any income return or copy thereof or any book containing any abstract or particulars thereof, to be seen or examined by any person except as provided by law; and it shall be unlawful for any person to print or publish in any manner whatev r not provided by law, any income or part thereof or the amount or source of income, profits, losses, or expenditures appearing in any income return; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding one thousand dollars or by imprisonment not exceeding one year, or both, at the discretion of the cour; and if the o ender be an officer or employee of the United States he shall be dismissed from office and be incapable thereafter of holding any office under the Goverment,

PLAYING CARDS.

Sec. 38. That on and after the first day of August, eighteen hundred and ninetytour; there shall be levied, collected, and paid, by adhesive stamps, a tax of two cents for and upon every pack of playing cards containing not more than fifty-four cards, manufactured and sold or removed, and also upon every pack in the stock of any dealer on and after that date; and the Commissioner of Internal Revenue, w th the approval of the Secretary of the Treasury, shall make regulations as to dies and adhesive stamps.

MR. BRYAN'S SPEECH

In the House of Representatives January 30, 1894.

The House being in Committee of the Whole on the state of the Union, and havIng under consideration the income tax amendment to the bill (H. R. 4864) to reduce taxation, to provide revenue for the Government, and for other purposes

Mr. BRYAN said:

Mr. CHAIRMAN: If this were a mere contest in oratory, no one would be presumptuous enough to dispute the prize with the distinguished gentleman from New York, [Mr. Cockran]; but clad in the armor of a righteous cause, I dare oppose myself to the shafts of his genius, believing that "pebbles of truth" will be more effective than the "javelin of error," even when hurled by the giant of the Philistines. [Applause.] What is this bill which has brought forth the vehement attack to which we have just listened? It is a bill reported by the Committee on Ways and Means, as the complement of the tariff bill. It, together with the tariff measure already considered, provides the necessary revenue for the support of the Government. The point of attack is the income tax, individual and corporation (which is expected to raise about $30,000,000), and to that I will devote the few minutes which are allowed for closing the debate.

The gentleman from New York insists that sufficient revenue will be raised from the tariff schedules, together with the present internal-revenue taxes, and that it is therefore unnecessary to seek new objects for taxation. In tus opinion he is not supported by the other members of the committee, and we have been constrained to follow our own judgment rather than his. The internal-revenue bill which is now pending as an amendment to the tariff bill imposes a tax of two per cent upon the net incomes of corporations, and in the case of corporations no exemption is allowed.

I need not give all the reasons which led the committee to recommend this tax, but will suggest two of the most important. The stockholders in a corporation limits his liability. When the statute creating the corporation is fully complied with the individual stockholder is secure except to the extent fixed by the statute, whereas the entire property of the individual is ordinarily liable for his debts. Another reason is that corporations enjoy certain privileges and franchises. Some are given the right of eminent domain, while others, such as street car companies, are given the right to use the streets of the city-a franchise which increases in value with each passing year. Corporations occupy the time and attention of our Federal courts and enjoy the protection of the Federal Government, and as they do not ordinarily pay taxes the committee felt justified in proposing a light tax upon them.

Some gentlemen have accused the committee of showing hostility to corporations. But, Mr. Chairman, we are not hostile to corporations; we simply believe that these creatures of the law, these fictitious persons, have no higher or dearer rights than the persons of flesh and blood whom God created and placed upon his footstool. [Applause.] The bill also imposes a tax of per cent upon individual incomes in excess of $4,000. We have proposed the maximum of exemption and the minimum of rate. The principle is not new in this country. For nearly ten years, during and after the war, an income tax was levied, varying from 21⁄2 to 10 per cent, while the exemption ranged from $600 to $2,000. In England the rate for 1892 was a little more than 2 per cent, the amount exempt, $750, with an additional deduction of $600 on incomes of less than $2,000. The tax has been in force there in various forms for more than fifty years.

In Prussia the income tax has been in operation for about twenty years; incomes under 900 marks are exempt, and the tax ranges from less than 1 per cent to about 4 per cent, according to the size of the income.

Austria has tried the income tax for thirty years, the exemption being about $113, an the rate ranging from 8 per cent up to 20 per cent.

A large sum is collected from an income tax in Italy; only incomes under $77.20 are exempt, and the rate runs up as high as 13 per cent on some in

comes.

In the Netherlands the income tax has been in operation since 1823. At present, incomes under $260 are exempt, and the rate ranges from

per cent to 3 1-5 per cent, the latter rate being paid upon incomes in excess of $3,280. In Zurich, Switzerland, the income tax has been in operation for more than half a century. Incomes under $100 are exempt, and the rate ranges from about 1 per cent to almost 8 per cent, according to the size of the income.

It will thus be seen that the income tax is no new device, and it will also be noticed that the committee has proposed a tax lighter in rate and more liberal in exemption than that imposed in any of the countries named.

If I were consulting my own preference I would rather have a graduated tax, and I believe that such a tax could be defended not only upon principle, but upon grounds of public policy as well; but I gladly accept this bill as offering a more equitable plan for making up the deficit in our revenues than any other which has been proposed. The details of the bill will be discussed to-morrow under the five-minute rule, and any necessary changes can be made. The committee presents the bill after careful consideration, but will cheerfully accept any changes which the wisdom of the House may suggest. The bill not only exempts from taxation, buɩ from annoyance as well, every person whose income is below $3,50. This is an important feature of the bill. In order to guard against fraud the bill provides that every person having an income of more than $3,500 shall make a return under oath, but no tax is collected unless the net income exceeds $4,000. The bill also provides severe nalties to restrain the tax-collector from disclosing any information gained from the returns made by citizens.

OBJECTIONS ANSWERED.

And now, Mr. Chairman, let us consider the objections which have been made. The gentleman from New York [Mr. Bartlett] who addressed the House this forenoon, spent some time trying to convince us that, while the Supreme Court had without dissent affirmed the constitutionality of an income tax, yet it might at some future time reverse the decision, and that, therefore, this bill ought to be rejected. This question has been settled beyond controversy. The principle has come before the court on several occasions, and the decisions have always sustained the constitutionality of the income tax. (Hylton vs. United States, 3 Dall., 171; Deasie Bank vs. Fenno, 8 Wall., 533; Scholey vs. Rew, 23 Wall., 331; Pacific Insurance Company vs. Soule. 7 Wall., 433.)

In Springer vs. United States (102 United States, 586) the question was directly raised upon the law in force from 1863 to 1873, and the court held that the income tax as then collected was not a direct tax within the meaning of the Constitution, and therefore need not be apportioned among the States according to weir population.

But gentlemen have denounced the income tax as class legislation, because it will affect more people in one section of the country than in another. Because the wealth of the country is, to a large extent, centered in certain cities and States does not make a bill sectional which imposes a tax in proportion to wealth. If NewYork and Massachusetts pay more tax under this law than other States. it will be because they have more taxable incomes within their borders. And why should not those sections pay most which enjoy most?

The census shows that the population of Massachusetts increased less than half a million between 1880 and 1890, while the assessed value of her property increased more than half a billion during the same period. The population of New York increased about 900.000 between 1880 and 1890, while the assessed value of the property increased more than $1.100.000.000. On the other hand, while the population of Iowa and Kansas combined increased more than 700.000. their assessed valuation increased only a little more than $300.00C.000. This bill is not in the line of class legislation, nor can it be regarded as legislation against a section, for the rate of taxation is the same on every income over $4,000, whether its possessor lives upon the Atlantic coast. in the Mississippi Valley or on the Pacific Slope. I only hope that we may in the future have more farmers in the agricultural districts whose incoms are large enough to tax. [Applause.]

But the gentleman from New York Mr. Cockran] has denounced as unjust the principle underlying this tax. It is hardly necessary to read authorities to the House. There is no more just tax upon the statute books than the income tax, nor can any tax be proposed which is more equitable; and the principle is sustained by the most stinguished writers or political economy. Adam Smith says:

The subjects of every State ought to contribute to the support of the Government, as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State. la the observation or neglect of this maxim consists what is called the equality or in equality of taxation.

The income tax is the only one which really fulfills this requirement. But it is said that we single out some person with a large income and make him pay more than his share. And let me call attention here to a fatal mistake made by the distinguished gentleman from New York [Mr. Cockran]. You who listened to his speech would have thought that the income tax was the only Federal tax proposed; you would have supposed that it was the object of this bill to collect the entire revenue from an income tax. The gentleman for gets that the pending tariff bill will collect upon imports more than one hundred and twenty millions of dollars-nearly ten times as much as we propose to collect from the individual income tax. Everybody knows that a tax upon consumption is an unequal tax, and that the poor man by means of it pays far out of proportion to the income which he enjoys.

I read the other day in the New York World-and I gladly join in ascribing praise to that great daily for its courageous fight upon this subject in behalf of the common people-a description of the home of the richest woman in the United States. She owns property estimated at $60,000,000, and enjoys an income which can scarcely be less than $3,000,000, yet she lives at a cheap boarding house, and only spends a few hundred dollars a year. That woman under your direct system of taxation does not pay as much toward the support of the Federal Government as a laboring man whose income of $500 is spent upon his family. [Applause.]

Why, sir, the gentleman from New York [Mr. Cockran] said that the poor are opposed to this tax because they do not want to be deprived of participation in it, and that taxation instead of being a sign of servitude is a badge of freedom. If taxation is a badge of freedom, let me assure my friend that the poor people of this country are covered all over with the insignia of freemen. [Applause.]

Notwithstanding the exemption proposed by this bill, the people whose incomes are less than $4.000 will still contribute far more than their just share to the support of the Government. The gentleman says that he opposes this tax in the interest of the poor! Oh, sirs, is it not enough to betray the cause of the poor-must it be done with a kiss? [Applause.]

Would it not be fairer for the gentleman to fling his burnished lance full in the face of the toiler, and not plead for the great fortunes of this country under cover of the poor man's name? [Applause.] The gentleman also tells us that the rich will welcome this tax as a means of securing greater power. Let me call your attention to the resolutions passed by the New York Chamber of Commerce. I wonder how many poor men have membership in that body! Here are the resolutions passed at a special meeting called for the purpose. The newspaper account says:

Resolutions were adopted declaring "the proposal to impose an income tax is un wise, unpolitic and unjust for the following reasons: "First. Experience during our late war demonstrated that an income tax was inquisitorial and odious to the people, and only tolerated as a war measure, and was abrogated by universal consent as soon as the condition of the country "ermitted. "Second. Experience has also shown that it is expensive to put in operation: that it can not be fairly collected, and is an unjust distribution of the burdens of taxation and promotes evasions of the law.

"Third. The proposal to exempt incomesunder $4.000 is purely class legislation. which is socialistic and vicious in its tendency, and contrary to the traditions and principles of republican government."

Still another resolution was adopted declaring "that in addition to an internal revenue tax the necessary expenses of the Government should be collected through