LOGIC OF INCOME TAX

Evening Post, Volume CXVIII, Issue 92, 16 October 1934, Page 8

LOGIC OF INCOME TAX

(To the Editor.) Sir, —Your sub-leader of today draws attention, forcibly to hardship imposed by the exaction of iiieome tax from those who can ill-afford the extra drain. It is therefore opportune to again point out how allowance is made jto the wealthy In direct contravention .of the Land and Income Tax Act of 1923. Section 79, subsection 2, defines: — "Earned income" as "income derived from any source by reason of the taxpayer's personal exertions." Yet the wealthy exporter is permitted to treat the 25 per cent, bonus which is given to him on exchange- and paid for by other? sections of the community—the very poor included —as "earned income," and so escape payment of the extra one-third tax on "unearned income" —which this bonus is in truth, in fact, and in law. In the same way, the wealthy farmer, operating on a large scale, often times with several farms: which the owner may rarely or never see, and with a host of agents, factors, and others to do his work and earn the profits for him, is privileged to treat these profits as though earned by the "taxpayer's personal exertions," and so again evade tax. Were there any. practical difficulty in taxing such farming profits, it could be easily overcome by limiting the amount which, for purposes of taxation, anyone could receive as "earned income," say, £1000 a year. . The amount of tax so evaded is enormous, and a worse case of "straining at a gnat and swallowing a camel" it would be hard to conceive. I am informed (but this I cannot vouch) that that highly-privileged class of "superannuitants" are permitted to treat their annuities as "earned income" and so evade tax. Were there a proper system of income tax and, of course, "super-tax" in this Dominion, as advocated by Sir Francis Bell, and if it were administered _in accordance with law, and without fear or favour, many of the taxes, which are now pressing on us so heavily could be eliminated. —I am, etc., J.F.P.Y.

October 15,