The characteristic difference between the House Bill and the revenue measures of Great Britain (I am not referring to those of France and Germany, because they are incomparably less drastic than ours or Great Britain's) is, first, that we do not resort to consumption taxes and only to a limited degree to general stamp taxes, and, secondly, that our income tax on small and moderate incomes is far smaller, on large incomes somewhat smaller and on the largest incomes a great deal heavier.

The House rate of taxation on incomes up to, say, $5,000, averages only one-fifth of what it is in England; the House rate of taxation on maximum incomes is approximately fifty per cent. higher than it is in England. Moreover, married men with incomes of less than $2,000 are entirely exempted from taxation in this country. In England all incomes from $650 on are subject to taxation.

I believe, on the whole, our system of gradation is juster than the English system, but I think we are going to an extreme at both ends. And it must be borne in mind that our actual taxation of high incomes is not even measured by the rates fixed in the House Bill, because to them must be added State and municipal taxes. There must further be added what to all intents and purposes is, though a voluntary act, yet in effect for all right-minded citizens tantamount to taxation, namely, a man's habitual expenditures for charity and his contributions to the Red Cross and other war relief works.

The sentimental and thereby the actual effect of extreme income taxation is not confined to the relatively small number of people in possession of very large incomes directly affected by it. The apprehension caused by the contemplation of an excessively high ratio of taxation is contagious and apt to react unfavorably on constructive activity.

It is highly important that taxation should not reach a point at which business would be crippled, cash resources unduly curtailed and the incentive to maximum effort and enterprise destroyed. And it should not be forgotten that both theoretically and actually the spending of money by the Government cannot and does not have the same effect on the prosperity of the country as productive use of his funds by the individual.

If all the European nations have stopped during the war at a certain maximum limit of individual income and inheritance taxation, even after four years of war, the reason is surely not that they love rich men more than we do or that they are all less democratic than we are. The reason is that these nations, including the financially wisest and most experienced, recognize the unwisdom and economic ill effect under existing conditions of going beyond that limit.