Tax inequalities in Montana, an analysis of the tax burden in Montana as shown by state income tax
returns, 1936
by Winfield G OLeary
A THESIS Submitted to the Graduate Committee in partial fulfillment of the requirements for the
Degree of Master of Science in Agricultural Economies
Montana State University
© Copyright by Winfield G OLeary (1939)
Abstract:
It has been the purpose of this study to point out Inequalities in the distribution of the burden of
taxation to persons in the different occupations within the state. The criterion upon which the
comparisons between the occupations were made was the ability to pay principle of taxation. Net
incomee was used as the measure of ability to pay. Although the results cannot be considered without
qualification. because of the fact that they apply only to those filing state income tax returns, the results
may be regarded as being very representative of the true situation.
Is the ease of the state income tax, as might be expected. It was found that the tax conformed very
closely to the principle of ability to pays i.e., not only did those receiving higher incomes pay a higher
rate of taxes, but also the people in the occupations receiving the higher proportion of total income paid
the higher proportion of the total income tax.
In the case of taxes other than income taxes, however, the condition was found to be quite different.
There was found to be very little evidence of conformity of this system in which property is the tax
base, to the principle of ability to pay. It was found that the rates of these taxes varied among the
occupations from 1.8 per cent to 22.5 per cent of the net income. Furthermore, it was found that there
was no correlation between the size of income, or the ability to pay, end the rates of taxes paid by the
peoples in the different occupations# Because of this failure of the system to conform to the principle
of ability to pay, the tax burden is extremely heavy for those people who receive their incomes from
property investment, namely the business and Investor groups, the extreme being reached in the case of
the farmers, while for those who receive their Incomes as salaries and wages, the tax burden is
extremely light.
The proportion of the total taxes for the state made up of income taxes was found to be only 1.5 per
cent. Thus, it is obvious that when the income taxes and other taxes were added together, the results
obtained were almost identical with the results pointed out for taxes other than income taxes; i.e., the
total tax burden was found to be very unequally divided between these people whose incomes come
from property and those whose incomes come from salaries and wages. Thus, In conclusion, it may be
stated that the principle of ability to pay is quite foreign to this tax system, and that there exists grave
discrepancies in the distribution of the tax burden among the peoples in the different occupations of the
state# IAJC INEQUALITIES IS KOBTAKA
An A nalysis o f th e Tax Burden In Montana
As Bhom by S ta te Inoome Tax B etum a, 1956
by
W infield 0« O’ Leary
A TSESIS
Subm itted t o th e Graduate Corm ittee
In p a r t i a l fu lf illm e n t o f th e requirem ents
f o r th e Degree o f M aster o f Selenee
i n A g ric u ltu ra l Economics a t
Montana S ta te College
Approved*
luate Committee
Botcsaane Montana
Junee 1959
1/372
ACEGUEDaiXJiIS
The a u th o r la Indebted t o Br* B* E* Rome f o r h ie c a r e f u l guidance
and su p erv isio n in p rep a ratio n o f t h i s stu d y , and to th e Department o f
A g ric u ltu ra l Economics f o r fu rn ish in g c l e r i c a l a s s is ta n c e In com piling
th e data*
The a u th o r wishes a ls o t o acknowledge t h e a s s is ta n c e o f th e Works
Progress A d m inistration, P ro je c ts O.P, 466-91-5-125 (WP 2565), f o r a s s is tin g
In g ath erin g and com piling th e d a ta u se d , and f o r th e p re p a ra tio n o f th e
c h a rts used In t h i s th e s is *
68359
-S TABiE CF c ctm a n s
Pngo
AC!EOTLEDCECEBTS....................... ..........................................................................
Z
L la t o f I l l u a t r a t l o n a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
ABSTRACT..................................................................................................................
g
PART I t
7
IETRODUCTIOR....................
A b ility t o Pay aa a P rin e lp lo In T ax atio n .. . . ........................... ..
7
Inecrao *a a Ioaauro o f A b ility to P ny.. . . . . . . . . . . . . . . . . . .
$
Rirpoao and Method o f A n o ly sla.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Soureo o f Data and th o S a sy lo .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
> /
Tho Montana Ineomo Tax Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
%%
Tho S ta te Ineoraa Tax R a to a .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
XS
L im itatio n s o f.D ata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
%6
PART II#
CHARACTERISTICS CF ISSC UCBTAEA IRCCVE TAl BETOSSS.....
19
Kumbar o f Roturtai and P roportion o f Population F i l i n g .. . . . . .
19
S ls o o f Inooraoa.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
T o tal Income, Inoorae Taxes, and T o ta l TaxM a s In Ineono Tax
... .Trrrrr.Trrrr..zr.ir.... .Trrrr.rr.rr.::
M arital S ta tu s mm! Sox o f Thoae F ilin g S ta te Income Tax
P«rWrns.V . . . . . . . . . . . » . . * . . T
....TTTL
..
PART I I I * AS ANALYSIS CF THE TAX BlTEE£3 CARRIED BY VARIOUS GROUTS
13 KCKTAM...............................................................................
22
25
SI
In tro d u c tio n . ............................................................
51
Income i n R elation t o O eeupatloa.. . . . . . . . . . . . . . . . . . . . . . . . . . .
52
Income Taxes in E o latio n t o Occupation. .
59
Taxes CtJier Than Income Taxes in R e la tlm to O c c u p a tio n ...».
45
*4*
Page
T otal Taxca In R elatio n to Oooupfctloo
PAST Vf t
SlBdr-ABY ASD COKCLOSICS.• * • • • • • • •
APPESDII A ...* ...............................................
API3ESDIi .............. ..................*..............................
APfEKDII C ....................................... ..............
BIBLICKrEAKIY*................................................... . ...
63
62
64
60
68
69
List ef IlltMtratlom
Page
Figure ! • —Proportion o f t o t a l s t a t e Lncome ta x re tu rn s f i l e d
in comparison to th e t o t a l n e t Inooze receiv ed by occupa­
tio n a l groups, Montana, 1 9 3 6 . . . . . . .........
........... ..
37
Figure 2. —-Comparison o f average n e t income received by occupa­
tio n a l groups, Montana, 1 8 3 6 ............. ................................... .............
S3
Figure 3. —Proportion o f t o t a l n e t Income received la comparison
to t o t a l income tax es paid by occupational groups, Montana,
................................................... ................................................................................
Figure 4. —Comparison o f average n e t Income received and o f average
r a te s o f Income tax es p aid by occupational groups, Montana,
1 9 5 6 . . . .....................................................................................................
Figure 6. —Proportion o f t o t a l n e t ln o a ie receiv ed in comparison
to t o t a l ta x e s , o th e r th a n lneome ta x e s , paid t y occupational
groups, Montana, 1 S 5 6 ......
Figure 6. —Comparison o f average n e t lneome and o f average ra te s
o f ta x e s , o th e r th an Income ta x e s , paid by occupational
groups, Montana, 1 9 3 6 . . . . . • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • * * * * •
Figure 7. —Proportion o f t o t a l n e t lnooce receiv ed In eaapsrlson
t o t o t a l taxes p aid by occupational groups, Montana, 1 9 3 6 ....
41
42
49
60
£4
66
TAX XlEQIfALITIES B
1'OCTABA
Aa A nalysis o f th e ta x Burden In Montana
As Ehcm by S ta te Inooae Tax B etum s, IBM
ABSTRACT
I t has been th e purpose o f t h i s stu d y to p o in t o u t In e q u a litie s
in th e d is tr ib u tio n o f t h e burden o f ta x a tio n to persona in th e d if f e r e n t
occupations w ith in th e s ta te # The c r i t e r i o n upon which th e comparisons
between th e occupations were made was th e a b i l i t y to pay p rin c ip le o f ta x a ­
tio n # Ket lnoaae was used a s th e measure o f a b i l i t y to pay# Although th e
r e s u lts cannot be considered w ith o u t q u a lific a tio n # because o f th e f a c t t h a t
th e y apply o n ly t o th o se f i l i n g s t a t e Income ta x r e tu rn s , th e r e s u lts may be
regarded as being very re p re s e n ta tiv e o f th e tr u e s itu a tio n #
In th e e ase o f th e s t a t e income t a x , as might be expected, i t was
found t h a t th e ta x conformed v e ry c lo s e ly t o th e p rin c ip le o f a b i l i t y to
pay» i . e » , n o t o n ly d id th o se re c e iv in g h ig h er incomes pay a h ig h er r a t e o f
ta x e s, b u t a ls o th e people in th e occupations rec eiv in g th e h ig h e r p ro portion
o f t o t a l in case paid th e h ig h er p ro p o rtio n o f th e t o t a l Income tax#
In th e e ase o f tax es o th e r than income ta x e s , however, th e co n d itio n
was found t o be q u ite d i f f e r e n t . There was found t o be very l i t t l e evidence o f
conform ity o f t h is system i n which p ro p e rty i s th e ta x b a se , to th e p rin c ip le
o f a b i l i t y to pay# I t m e found th a t th e r a te s o f th e s e tax es v a rie d among
th e occupations from 1.8 p e r c e n t t o 22.6 p e r c e n t o f th e n e t Income. F u rth e r­
more, i t was found t h a t th e r e was no c o rr e la tio n between th e s ic e o f Income,
o r th e a b i l i t y to pay, end th e ra te s o f ta x e s paid by th e peoples in th e
d if f e r e n t o ccu p atio n s. Because o f t h i s f a i l u r e o f th e system t o conform to
th e p rin c ip le o f a b i l i t y to pay, th e ta x burden i s extrem ely heavy f o r
those people who rec eiv e t h e i r incomes from p ro p erty Investm ent, namely th e
b u tIneaa and In v e s to r groups, th e extreme b e in g reached in th e c a se o f th e
farm ers, w hile f o r th o se sh e re c e iv e t h e i r lneoaea a s s a l a r i e s and wages, th e
ta x burden is extrem ely lig h t#
The p ro p o rtio n o f th e t o t a l tax es f o r th e s t a t e made up o f jn core
tax es was found t o b e o n ly 1 .6 p er c e n t. Thus, i t i s obvious t h a t when th e
income tax es and o th e r ta x e s were added to g e th e r, th e r e s u lts o b tain ed were
alm ost id e n tic a l w ith th e r e s u lts p o in ted out f o r tax e s o th e r th a n Income
tax es I l .e » , th e t o t a l ta x burden was found t o be very u n eq u ally d ivided
between th e s e people whose incomes come from p ro p erty end th o se whose incomes
com from s a l a r i e s and w ages. Thus, i n conclusion, i t may be s ta te d t h a t
th e p rin c ip le o f a b i l i t y to pay is q u ite fo reig n to t h i s ta x sy e te n , and t h a t
th e re e x is ts grave d iscrep a n cies in th e d is tr ib u tio n o f th e t a x burden anone
th e peoples in th e d i f f e r e n t occupations o f th e s t a t e .
tax inequalities is pcrtaiul
An A nalysis c f th e Tax Burtlen in Kontena
As Shoen by S ta te Inccsre Tax EeturnSe 1338
BTBCCUCTICB
A b ility t o Pay as a P rin c ip le In Taxation
The main problem o f f a i r ta x a tio n is t o d is tr ib u te th e ta x so I t
w ill produce ample revenue and a t th e sane tim e place a s l i g h t a burden as
p o ssib le on th e taxpayers*
To accomplish t h i s r e s u l t , th e problem narrows
down t o th a t o f d is tr ib u tin g th e burden t o each in d iv id u al in accordance
* ith h is a b i l i t y to pay*
This p r in c ip le was recognised by Adam Smith over cne hundred and
f i f t y years ago a s a b a s is f o r J u s tic e and e q u a lity In t a x a t i o n ,! / Other
th e o rie s o f ta x a tio n have been advanced s in c e t h a t tim e, some o f which m e rit
c o n sid e ra tio n , b u t no one has e v e r suggested th a t tax es should n o t b e le v ie d
According to th e ta x paying a b i l i t y of t h e taxpayer*
In e a r l i e r days t h e property ta x
wgs
n o t u n ju s t, n o r d id i t r e s t
unequally upon th e shoulders c f th o se who p aid i t .
Property was an in d ica­
tio n c r measure o f a b i l i t y to pay and did n o t v io la te th e fundamental
P rin c ip le o f a Ju st system o f p u b lic f lc a n c e .2 / This i s n o t th e s itu a tio n
a t th e p re se n t tim e.
P roperty n o t only f a i l s t o rep resen t a b i l i t y t o pay
b u t in many in stan ces i s a d ra in upon incase derived from sources o th e r
than p r o p e r ty .' Although t h i s c o n d itio n is recognised by many a u th o ritie s
J r Im ilii,' Adam, '^he' I S d i k cil kat'Ions," liverymen's t u i t i o n , London, 1^1^,“
M . 11, p . SOT
2 / A u ll, 0 . R ., "Taxation and A b ility to Pay in South C aro lin a." S.C . A gric.
hxp. S ta . B ui. 286, 1932, p* 6 .
. uPon th e e u h je e t o f ta x a tio n . I t i s o f in te r e s t t o n o te t h a t 70.1 p e r c e n t o f
th e t o t a l ta x revenue o f th e U nited S ta te s in 1850 was from t h i s e e u r c e .s /
In c o n tr a s t t o t h i s c o n d itio n , i t i s f u r th e r po in ted o u t t h a t in 1952, p ro p e rty
accounted f o r only a1'c u t o n e-fo u rth o f th e n a tio n a l lnooae o f th e United S ta te s . 4 /
Inecrae a s a Keasure o f A b ility t o Pay
Cf th e Eany proposed ta x b a s e s , income is th e meet e q u ita b le and
s a tis f a c to r y c r i t e r i o n o r measure o f a b i l i t y to pay o f any y e t advanced.
It
la based upon a p re se n t r e a l i t y a s compared w ith a fu tu re p ro b a b ility In th e
case o f a p ro p erty ta x b a se ,
ta x paying a b i l i t y .
th e n an in d iv id u a l has income, be possesses
He la th en in a p o s itio n to pay ta x e s , and can do so
w ithout f in a n c ia l in ju ry to M s person o r t o h is b u sin e ss.
Under t h i s sy s to n ,
u n c e rta in tie s a re removed from th e tax in g problem , ta x delinquencies and
s h e r i f f ’ s deeds do n o t occur.
Those who a re unable t o pay a re n o t asked to
do s o , w hile th o se who a r e , do pay and t o t h e same e x te n t c f t h e i r a b i l i t y .
In c o n tra s t t o t h i s s i t u a t i o n I s th e general p ro p e rty ta x , which is
d is tin c tiv e ly Im personal,
Taxes a re le v ie d upon p ro p erty w ithout reg ard t o
th e n e t worth o r th e economic s ta tu s c f i t s p o sse sso r.
P roperty values a r e
based upon a n tic ip a te d Income which th e p ro p erty w i l l y ie ld .
In th e event
t h a t t h i s a n tic ip a tio n i s in c o rre c t, which very o fte n I s th e c a s e , th e
taxpayers mast b e a r th e consequence.
Because o f t h i s s itu a tio n . I n e q u a litie s
and d isc rim in atio n s In e v ita b ly o c cu r.
Some persons lo s e t h e i r p ro p erty and
homee o r a re burdened w ith ta x loads which absorb t h e i r income, w h ile o th e rs
3 / Jen so n , Jeas P ., "Government lin a n c e ," hew lo rk , 1958, p . 223."'
4 / A u ll, Op. c i t . p . 7 .
.....
XjflLy pay very l i t t l e in proportion to th e lncccies which th e y receive*
These In e q u a litie s which r e s u lt from a property ta x b a se , ©r a
• in g le ta x b a se, a re g aining wide spread recognition*
i s a r e s u l t many o f
th e s t a t e s , also th e F ederal Government, a re coming to u se , as a supplemen­
ta r y ta x , a ta x based upon n e t income*
In ICSG a g eneral personal Income
ta x was In o p e ra tio n in tw enty-eight o f th e fo rty -e ig h t s t a t e s * 6 /
Purpose and Method o f A nalysis
I t is th e purpose o f t h is study to p o in t ou t any in e q u a litie s o r
d iscrim in atio n s e x is tin g in reg ard t o th e ta x burden between th e d iffe re n t
occupational groups w ith in th e s ta te *
This lnoludoe comparison o f average
n e t incomes received by those in th e d if f e r e n t groups, average coney p e r
person dependent upon t h e i r incomes a s w ell as comparisons o f t o t a l n e t
incomes f o r th e groups*
Comparisons w ill then be made between th e r e la tio n
o f th e s e incomes and th e ta x burden borne by each.
This w ill c o n s is t o f
cOsparisons o f th e t o t a l and average tax es paid f o r each occupation and
f in a lly th e average ra te s o f ta x e s, b o th o f income taxes and ta x e s , o th e r
than income tax es paid by th e d iff e r e n t occupational groups.
By t h i s means
o f comparison i t w ill be p o ssib le a ls o t o compare r e l a ti v e m erits o f th e
s t a t e incore ta x w ith o th e r forms o f tax atio n *
Although a l l f a c ts w ill be presented as found in th e a n a ly s is ,
primary emphasis w ill be given to th e con d itio n o f th e fanners In re s p e c t
to th e above mentioned phases.
This course is pursued w ithout b ias between
th e d if f e r e n t occupations w ith in th e s t a t e , b u t because o f s p e c ia l i n te r e s t
Jensen, op* e it* p* Vr
-1 0 -
by th e a u th o r in t h is group#
Aa has been p rev io u sly s ta te d , th e d a ta used In t h i s stu d y a re f o r
o n ly one year*
I t had been o r ig in a lly planned to co v er th e e n t i r e p e rio d
f o r which th e income ta x law has been in o p e ra tio n , 1533-53, th e re b y making
comparisons between t h e y ears and showing any general tren d s o ver th e period*
But due t o lac k o f tim e and c l e r i c a l a s s is ta n c e in com piling th e d a ta , only
one y e a r could b e covered*
In o rd er t o o b ta in as la rg e a sample and to
in clu d e a s la rg e a p ro p o rtio n o f th e t o t a l population o f th e s t a t e a s p o ssib le
in th e sam ple, th e e n ti r e income ta x r e tu r n s , both ta x a b le and no n -tax ab le
f o r th e y e a r 1936 a re included in th e stu d y .
As a b a s is o f comparison t h a t would b e a p p lic a b le t o a l l occupations
and to a l l persons f i l i n g income ta x r e tu r n s , n e t income was chosen a s b ein g
th e most s a tis f a c to r y * ^ /
I t i s on t h i s b a s is t h a t a l l ta x r a t e s and o th e r
c a lc u la tio n s a r e computed.
Source o f Data and th e Sample
Ih e d a ta used i n t h i s stu d y were compiled e n ti r e l y from th e s t a t e
in d iv id u a l Income ta x re tu rn s f i l e d in Montana f o r th e y e a r, 1536*
These
fo r m were secured through th e Department o f A g ric u ltu ra l Economics from th e
S ta te Board o f E q u a lisa tio n in Helena*
The e n ti r e re tu rn s f o r th e y e a r were
used in t h e study* no method o f sam pling was employed in eny resp ect*
The stu d y , th e r e f o re , c o n s titu te s a com plete enumeration o f Sa f i e l d , covering
e n tir e ly th e 1936 s t a t e in case ta x r e tu r n s , which a f t e r removing some few
t h a t were incom plete and could n o t b e id e n tif ie d , numbered 30,256*
t / For a d e f in itio n oi1 n e t Income eee fo o tn o te on p* 12,
-U -
.
Although o n ly one y e a r was used In th e stu d y , th e y e a r 1935 Ie
considered as v e ry normal*
This Is v e r if ie d by t h e Index o f Wholesale
P rices f o r t h is year as compared to th e years 1309-14 and 1926, th e two most
w idely used base periods f o r Index c a lc u la tio n s*
th e n 1926 I s used a s th e
base p e rio d , th e Index o f w holesale p ric e s f o r 1936 Ie found t o b e 60, w hile
t h i s index f o r th e p erio d 1909-14 was 69*
I f th e b ase p erio d be s h i f t e d t o
1909-14, t h i s f o r 1936 i s found t o b e 118, w hile f o r 1926 I t Is 146«
In
e it h e r c ase th e index f o r 1936 i s n e a r th e c e n te r o f th e extremes marked by
th e o th e r years*
I f th e Index o f w holesale p ric e s be an In d ic a to r o f busin ess
c o n d itio n s, th e se r e s u l t s In d ic a te th a t t h i s year Is n e a re r an average and
th e re fo re n e a re r normal than e i t h e r of th e o th e r periods*
The same r e l a ti o n
Is found to e x is t between th e s e y ears f o r U nited S ta te s farm wage r a te s .
United S ta te s Iarm P rices end Sontena Farm P ric e s .
For t h is reason and a ls o
th e I a e t th a t th e e n t i r e f i e l d was covered In th e eseaple, th e a u th o r I s o f th e
opinion t h a t r e s u lts h e rs shown w i l l be In d ic a tiv e o f th o se over a lo n g er
period o f time*
The Montana Income Tax Lew
As a means o f c l a r i f i c a t i o n and understanding o f th e b a s is upon which
t h i s stu d y was made, some o f th e p ro v isio n s and requirem ents o f t h e s t a t e
income t a x law w i l l be discussed*
This law was enacted In th e S ta te o f
liontana by th e tw e n ty -th ird s e s s io n o f th e L e g isla tu re in 1933.
Tiho s h a ll f i l e an Income ta x re tu r n T Every person having a n e t in ­
come, f o r th e ta x a b le y e a r, o f one thousand d o lla r s ($1,000) o r o v e r. I f
sin g le o r i f m a rrie d , and n o t liv in g w ith o r sup p o rtin g a husband o r w ife
•1 2 *
c r f&ztlly. OP o f two thousand d o lla r s (#2,000) o r e v er I f m arried and l i r i n g
w ith a husband o r w ife, o r i f he i s th e head o f a fam ily , o r a gross income 7 /
o f tw e n ty -fiv e hundred d o lla rs (#2,600) o r o v er, re g a rd le ss o f h is n e t
In co m eOyZ
Personal exceptions e l lowed under th e law*
Ie
In th e ease o f a s in g le person o r o f a m arried perron n e t liv in g
w ith o r su p p o rting a husband o r w ife o r fam ily , a personal exemption o f one
thousand (#1,000) d o l l a r s . 9 /
2e
In th e e a se o f th e head o f a fam ily o r a m arried person l iv in g
w ith a husband o r w ife , a personal exemption o f two thousand d o lla r s (#2,000)#
J Z arose income le o rd in a rily understood i o mean a l l g a in s, p r o fits and income
derived from s a l a r i e s , wages end compensation f o r personal se rv ic e s * a ls o from
ren^** d iv id e n d s, s e c u r i t ie s o r th e tra n s a c tio n o f any busin ess c a rrie d on f o r
p ro fit# C ertain exceptions a r e made t o t h i s , however, under th e income ta x
law because o f c e r ta in incomes which a r e exempt from ta x a tio n under t h i s law,
such as * ( I ) th e proceeds from l i f e insurance p o lic ie s w hether received by th e
b e n e fic ia ry upon th e occasion o f d eath o f th e In su red , o r receiv ed b y th e i n su red in re tu rn o f premiums p a id by him under endowment in su ran ce p o lic ie s o r
annuity co n tra cts# (2) The refunds in th e f o r a o f patronage dividends payed
to share holders o f consumers* c o -o p e ra tiv e s. (3) S a la r ie s , wages and o th e r
compensation rec eiv e d from th e C nited S ta te s Government.
8 / Ket Income, a s used in t h i s s tu d y and upon which th e lnoore ta x i s Imposed,
i s found to be q u ite d if f e r e n t from t h a t o r d in a rily used in th e f i e l d o f b u si­
n e ss. In a d d itio n t o t h e deductions from gross Income as g e n e ra lly used in
i t s com putation, such a s lo sse s from f i r e , s to n e s , e tc # , n o t compensated f o r
by in su ran ce, bad d e b ts , reasonable d e p re cia tio n s o f p ro p e rty , a l l n ecessary
and oru in ary expense In cu rred i s th e operation, o f a b u sin e ss; c e r ta in o th e r
deductions a re allow ed such as* ( I ) a l l tax es o th e r than th o se imposed by
t h is a c t , w ith th e exception o f Improreraent ta x e s ; (2 ) a l l i n t e r e s t payed o r
accrued d u rin g th e y e ar on in debtedness; (3 ) a l l c o n trib u tio n s made to any
U nlt
t I?6 L\ lte d s t a te s f o r p u b lic purposes, o r war v eteran s o r ­
g a n is a tio n s , o r f r a te r n a l o rg a n isa tio n s o p e ra tin g under t h e lodge system .
JEZeThe R erlsed Codes o f Montana,* H elena, 1935, Y d , I , Chap. 204.
A husband o r w ife I I t I iir t o r e th e r . h a l l re c e iv e b u t one exemption, t h e amount
e f which s h a l l b e two thousand d o lla rs (12,000).
I f cuoh husband and w ife
aake se p a ra te r e tu r n , th e personal exemption s h a l l be divided e q u a lly between
them*
5.
Three hundred d o lla r s ($300) f o r each p e rso n , o th e r th an husband
and w ife , dependent upon and re c e iv in g h is c h ie f su p p o rt from th e taxpayer*
i f such dependent person i s under eig h teen (13) years o f age o r is incapable
o f s e lf-s u p p o rt because m e n tally o r p h y sic a lly d e fe c tiv e .
4.
In case o f a change In th e fam ily s ta tu s o f th e tax p ay er during
th e tax a b le y e a r, an exemption which b ears a r a t i o to one thousand d o lla rs
($1,000) f o r each month he was unmarried s h a ll be allow ed plus an amount
which bears th e ssme r a t i o t o two thousand d o lla rs (?2,000) as th e e m b e r o f
months which th e person was m arried and liv in g w ith a husband o r w if e .1 0 /
from th e requirem ents as to Wo s h a l l f i l e an income ta x r e tu r n and
th e provisions tmda f c r personal exemptions, b o th given above, i t may be
seen t h a t th e re w ill be a g re a t number o f re tu rn s made on which th e allow ed
exemptions w i l l exceed th e no t Income, and th e re fo re on which no ta x w ill be
p a id .
This gives th e b a s is fo r c la s s ify in g th e r e tu r n , a s to ta x a b le and non-
tax ab le re tu rn s as used in t h is stu d y .
The proportions f o r th e y e ar 1936
were cn 66.3 p er c e n t ta x a b le re tu rn s end on 33.7 p e r c e n t n o n -tax a b le .
The S ta te Ineome Tax Rates
The law s t a t e s , "There s h a ll be le v ie d , c o lle c te d and p aid f o r each
ta x a b le y e ar upon th e n e t income o f every in d iv id u a l su b je c t to t h i s ta x ,
J u / tbThe Revised Codes o f lo n ta n a " , Loe. C l t. 'p. iS ,
'
—14—
a f t e r making allcim noe f o r exemptions and deductions, a s h e ro in - a fte r provided,
a ta x a t th e fo llow ing r a t e s , to —w its
(a ) on th e f i r s t two thousand d o lla r s (#2,000) o f n e t Income, o r
any p a r t th e r e o f, a t th e r a t e o f one p e r centum (156)1
(b) on th e second two thousand d o lla r s (#2,000) o f n e t Income, o r
any p a r t th e re o f a t th e r a t e o f two p e r centum (2 £ )j
(c) on t h e t h i r d two thousand d o lla r s (#2,000) o f n e t income, o r
any p a rt th e re o f, a t t h e r a t e o f th r e e p e r contxa (SjQj
(d ) on any n e t income in excess o f s i x thousand d o lla rs (#6,000)
a t th e r a t e o f fo u r p e r centum (4J6), l l /
I t I s in te r e s tin g t o observe, a t t h i s p o in t, t h a t under t h e pro v isio n s
o f th e s t a t e income ta x law , th e r e e x is ts a d eb atab le co n d itio n in th e system .
This is in reg ard to t h e Income method o f perso n al exemptions«12/ Then th e se
exemptions a re su b tra c te d fron th e n e t incom es, th e s e n e t incomes a re lowered
by t h i s amount, thus each tends to f a l l i n to a low er b ra c k e t in which th e
ra te s a r e low er.
The amounts p a id by th e s e having la rg e incomes a r e , because
o f th e p ro g ressive r a t e s , a ffo o ted more by t h is th a n th e s e having lower
Incomes.
I f th e ra te s o f th e s e ta x e s continued t o in cre ase t o a h igh degree,
as th o se o f th e F ederal income ta x law , th e ra te s would be rendered le s s
p ro g ressiv e.
There would then b e a d isc rim in a tio n in fa v o r o f th e persona
having th e la r g e r incomes.
But when th e r a te s in c re a se only t o f o u r p e r cent
(4 £ ), a s in th e Kootana income ta x law , t h i s c o n d itio n ceases t o b e tr u e .
The rev e rse becomes t r u e - t h e t a x ra te s a re rendered more p ro g re ssiv e through
1 1 / "lh o he vised Codes o f Montana'',
1 2 / Jen sen , op, c i t . p . 7.
- 16—
tlilB ty p e o f exemption th an through th e A te ra a tlv e e e tb a d .
I f th e n th e r e be
eay flaw In th e system . I t I s due to t h e f a c t t h a t th e t a x r a te s r i s e t o only
fo u r p e r c e n t (4,t) and n o t because o f th e method o f p erso n al exemptions,
f o r t h i s method o f exem ption, under th e t a x r a te l i m i t s , renders th e ra te s
more p ro g ressiv e th a n would be tr u e o f th e o th e r method o f making exemptions
sad th e re fo re causes th e system, t o b e t t e r conform to t h e p rin c ip le o f a b i l i t y
to ja y .
The a lt e r n a tiv e method o f making personal exemptions under th e lneome
ta x law Is i l l u s t r a t e d b y t h a t o f t h e S ta te o f Iowa.
TIie ta x r a te s th e r e
r i s e t o only f iv e p e r c e n t, so t h a t th e method o f making perso n al exem ptions,
u n lik e t h a t o f Montana, does r a id e r th e t a x r a te s le s s p ro g re ssiv e .
Under
t h e i r eyet m t h e Iasr Ie made to apply t o th o se having sm a lle r incomes, and
th e personal exemptions a r e made In th e f o ra o f a f l a t sum deduction from th e
•mount o f Imposed ta x . 1 5 / S p e c ific a lly s t a te d i t is th u s ,
Every In d iv id u al
s h a ll f i l e en Income ta x r e tu r n who Is s in g le , o r m arried and n o t liv in g w ith
o r supporting a husband o r w ife o r fa m ily end whose n e t income Ie s i x hundred
d o lla rs (1600) o r e v e r, o r who Is m arried end liv in g w ith and supporting a
husband o r w ife o r fa m ily , and whose n e t income i s eleven hundred d o lla rs
(#1100) o r o v e r, o r anyone whose gross Income is th r e e thousand d o lla rs
(#5000) re g a rd le ss o f h is n e t Income.
The perso n al exemptions, made in th e
fo ra o f deductions from t h e amount o f Imposed ta x a r e ,
( I ) f o r an In d iv i­
dual who Ie s in g le , o r m arried and n o t liv in g w ith end su p p o rtin g a husband.
-1 6 -
w lfe o r f a a l l y , a lx d o lla rs ($ 6 ); (2 ) f o r an In d lv ld ia l who I s m t r i e d and
liv in g w ith and su p p o rtin g a husband o r w ife o r who I s th e Wad o f a fam ily ,
W elve d o lla r s ($12)j (S) f o r each c h ild who Is under twenty-one years ©f
age (21) o r o th ers who a r e m en tally o r p h y s ic a lly Incapable o f s e l f support and a c tu a lly dependent upon th e tax p a y er, two d o lla r s ( |2 ) .
L im itatio n s o f F ata
Before proceeding f u r th e r in to t h e stu d y , t h e r e a re c e r ta in l l n l t a tlo n s to th e s u i t a b i l i t y o f th e d a ta used t o t h is ty p e o f a n a ly s is t h a t shou ld
be pointed o u t.
Although no f e a s ib le and s a tis f a c to r y means could be employed
t o elim in ate th e s e weaknesses, th e y should be borne in mind and given due
© * sIderatlcai In th e r e s u lts h e re in shown.
The f i r s t o f th e s e t h a t should b e m entioned I s th e f a c t t h a t th e
d a ta Included only th e upper segments o f th e Income e arn in g p o p u latio n .
This c o n d itio n sem e q u ite obvious when one r e c a l l s th e requirem ents o f th e
law ae t o vho s h a ll f i l e an ln o m e t a x r e tu r n .
This lim ita tio n I s , however,
in p a rt compensated f o r by th e f a c t t h a t f o r th e period covered, s l i g h t l y
over o n e -th ird o f th e re tu rn s were n o n -tax ah lej which moans t h a t th e s e resp ec­
t iv e incomes were equal t o , o r le s s th a n , th e allow ed exem ptions.
S e, even
though th e sample covered I s from th e to p segments downward. I t descends to
a f a i r l y low l e v e l.
I t m ight b e more c o rre c tly s ta te d th a t th e sample lncludos
a l l b u t th e lowest segment o f th e lnom e e arn in g p o p u latio n .
Another l lm lta tlc n worthy o f mention is t h e f a c t t h a t th e re a re
In e v ita b ly some sm all and Irre g u la r Incomes which a r e n o t l i s t e d In th e In­
come ta x r e tu rn s , and which o f course escape ta x a tio n .
This co n d itio n occurs
-1 7 -
M A ™ 8ult o f th e r e b ein g no
f o r th e government t o check m In d iv id u a l
lnccoce o th e r th a n th e s e f r c n r e g u la r ccurees and oeeupatlons*
I t should
he added f u r t h e r t h a t n o t a l l o f th e s e I r r e g u la r incomes ea m issed from th e
l i s t i n g a r e due to w il lf u l evasion b y th e people, b u t i n th e m a jo rity ©f th e
***** ln wU ch t h i s i s expected t o o ccu r, m ainly t h a t o f sm all businesses and
o f la b o rin g p eo p les, v ery Inadequate re c o rd s, or no reco rd s a t a l l , axe k e p t.
Tlaie many sm all item s would be u n in te n tio n a lly o m itted .
The t h i r d lim ita tio n t h a t should be mentioned i s one o f te c h n ic a lity ,
M a p p lied t o t h i s s tu d y .
e n tir e ly a s t o so u rc e .
I t i s t h a t o f b ein g unable to se p a ra te th e ln c o es
In th e form used, se v e ra l spaces a re provided f o r th e
l i s t i n g o f incomes by ty p e , l . e . , according t o s a l a r i e s , wages, bu sin ess
p ro fe ssio n , o r re n ts and d iv id e n d s.
Meh re tu rn was th en l i s t e d .
In
The occupation o f t h e person
sobs
in stan c es th e s e Incomes were broken
down a s t o ty p e , b u t in o th e rs th e y were l i s t e d a s b e in g o f one ty p e and
•o u rce which In some cases made f o r extrem ely la rg e s a la r ie s end wages which
le d one to doubt t h i s a s bein g th e tr u e s i t u a t i o n .
The a lte r n a tiv e employed
10 e lM s lf y eaoh r e tu m u sd e r one ty p e and so u rce o f income a s shown by
th e la r g e s t s in g le item o f income.
This i s explained more f u l l y under th e
method o f a n a ly s is .
F in a lly , th e r e i s a lim ita tio n to th e use o f n e t income a s a b a s is f o r
comparing th e w e ll b e in g e f formers w ith t h a t o f e th e r b u sin esses or occupa­
tio n s .
Farmers have le s s liv in g expenses th a n t h a t o f people in m ost o th er,
occupations due t o th e f a c t t h a t in e ase o f a re n te d form t h e house i s
fu rn ish ed f r e e from r e n t , w a ter f o r home use i s g e n e ra lly fu rn ish e d f r e e
-1 8 -
farwi c o s t, and th e farm er u s u a lly r a is e s much e f h is sen food*
F or th e s e
reaso n s, th e farm er may have a h ig h er le v e l o f w e ll being and s t i l l h a te a
considerably lower n e t income th a n t h a t o f most o th e r occupations.
Because
o f t h i s s i t u a t i o n , th e lew n e t incomes o f farm ers may p re se n t a somewhat
f a ls e p ic tu re *
This f a c t should b e borne in mind and given due c o n sid e ra tio n
when ask in g comparisons between th e s e l l b e in g o f farm e rs, on an income b a s is ,
tnd th a t o f o th e r occupations • S e t Income Is a ls o su b je c t to a lim ita tio n
whm used a s a means t o compare t h e w e ll being e f lan d lo rd s and In v m to rs
w ith t h a t o f o th e r occupations under th e income t a x law*
A lj money sp e n t
f o r payment o f I n te r e s t i s exempted from t h e s t a t e income t a x , w hile t h a t
•p e n t in payment o f re n t I s n o t exempted.
F or t h i s reason th e r e i s a h e a v ie r
ta x imposed on th e incomes o f people in o th e r b u sin esses who pay re n t th a n
th e re i s on th e incomes o f lan d lo rd s and In v esto rs
f o r borrowed c a p ita l m ainly in th e f o r a o f in te r e s t*
who make t h e i r payments
-1 9 -
CHAMCTKBISTICS OF 18556 KCKTAZA ZSCGKE TAX PETUBNS
Emsbor o f Betarna and P roportion o f Population Fll<wg
Tbo t o t a l number o f s t a t e lnootne ta x re tu rn s f o r Etmtsna l a 1956
VBM found t o b e 50,266.
Of t h i s number, th e pro p o rtio n o f ta x a b le re tu rn s
was 66.5 p e r o m t and th a t o f n a n -ta x a b le , 33.7 p e r s e a t , b e in g alm ost
p e rf e c tly d iv id ed In to th e r a t i o
o f 2 t o I . 1 4 / Aeeordlng t o th e m id-year
estim ate o f population o f 631,000, which was given In th e B t a t l s t l e a l A b stra ct
o f th e U nited S ta te s f o r Montana, in 1936, th e p ro portion o f population
f i l i n g s t a t e Income t a x retu rn s was c a lc u la te d a s 6 .6 p e r c e n t.
In Iowa t h e pro p o rtio n o f popu latio n f i l i n g s t a t e re tu rn s In 1854
was 7 .6 p e r c a n t, o f which s l i g h t l y le s s th a n two th ir d s were t a x a b l c l S /
This
uId seem t o in d ic a te t h a t incomes a r e on th e average h ig h e r In Iowa
than l a Montana, b u t t h i s Is u n tru e , f o r t h e average n e t Income f o r th e s e
f i l i n g re tu rn s In Montana was $2,435, w hile th a t o f Iowa was only $1,597.
The reaso n f o r t h i s c o n d itio n i s made c le a r when one remembers t h a t , s s
given e a r l i e r In comparisons o f t h e two income ta x law s, l a Iowa th e Income
ta x law begins t o a p p ly a t a low er f ig u r e .
This h elp s ex p la in why th e
average n e t income shown f o r Iowa i s so much below t h a t o f Montana.
But
an o th er v ery obvious reason f o r t h i s la th e f a c t t h a t a much h ig h e r pro­
p o rtio n o f th e ln ern e ta x re tu rn s in Iowa a re f i l e d b y fanners th a n In
Montana, and In l o w a s In Montana th e average n e t Income o f farm ers Is
much below t h a t o f o th e r occupations.
1 6 / E eld and B r itto n , o p . c i t . p , 15.
-2 0 -
TABLB I .
STATE IECOlIE TAX RETURBS CLASSIFIED ACCCRDIBG
TO TYPE CF SETUBR ASD ACCCEDISG TO OCCUPATION.
KCETASA, 1936
Occupation
Bo. o f
Return#
Be. Of
Taxable
Returns
Business
F a n s , d a ir ie s & rnnehes
R e ta il and w liolesale
Cafes and h o te ls
Gas* o i l and garage
Insurance and Eeal e s t a t e
O ther business
T otal bus lness
1,669
2,121
374
60S
102
610
6,369
P ro fe ssio n a l
D octors, d e n ti s t s , e t c .
Edueators
Lawyers
Other P ro fessio n al
T otal p ro fe ssio n a l
668
437
2,000
308
241
3,107
1 ,8 2 8
276
3,705
361
669
417
2,310
2,477
1,061
60S
416
616
210
4,477
1,006
166
2,696
279
406
472
302
. 1,623
1,745
' 789
413
304
423
167
2,861
666
536
559
Employees ,
Farms, d a ir ie s & ranches
lin in g
Lumbering
M anufacturing
Motors, g ara g es, e t c .
C onstruction
Govem atot
R e ta il
lh o lto a le
Gas, o i l , and re f in in g
BenkB es., R, E . & Finance
C afes, end h o te ls
T ren ep o rtetien A Ccernn.
Power, gas & w ater
Sew papers & p rin tin g
Other employees
T o tal employees
In v esto rs
T o tals
880
H o.ef Io n Taxable
Returns
P er c e n t o f
Returns
Taxable
694
1 ,0 6 5
1,210
911
180
212
29
211
2,608
36.8
67.0
61.9
87.8
71.6
66.4
61.4
m
574
73
47
616
78.3
81.3
76.3
80.8
60.8
121
1,110
82
164
208
116
787
734
262
190
112
66.2
70.0
77.3
72.4
69.4
72.4
65.9
70.4
76.1
194
291
73
599
2,761
236
194
2 ,4 9 8
195
6 8 .6
73.1
68.7
74.8
63.7
602
20,202
584
15,790
63
1,626
360
197
118
6,412
1,678
1,010
668
64.0
30,266
20,063
10,205
66.3
66.2
63.2
76.6
63.3
-2 1 -
S l f e f Incoraqa
Tha Average n e t lnoone f o r a l l occupations end f o r b oth ta x a b le
and non-taxable re tu rn s was $2,435 In 1935 f o r th e s t a t e .
This fig u re Is
▼ory ty p ic a l o f a l l th e incones, f o r a s may be seen from t a b l e I I , th e
inooae c la s s In which i t f a l l s i s th e d i s t in c t iv e ro d a l c l a s s .
In t h is
c la s s , which ranges from $2,000 to $2,999.9, 30.6 p e r c e n t o f th e t o t a l in ­
comes f a l l .
I t may be se en , however, t h a t th e re a re alm ost th re e tim es as
away o f th e rem aining In d iv id u a l Incomes below th e modal c la s s , o r c la s s in
which th e a rith m e tic average f a l l s , a s th e re a re above I t .
This co n d itio n
In d ic a te s t h a t th e r e Is t o a marked degree unequal d is tr ib u tio n o f Incoae
emooE th o se f i l i n g r e tu r n s .
The same c o n d itio n could be expressed by
saying t h a t , a f t e r removing th e 30*6 p er c e n t c f th o se whose Incomes f a l l
w ith in th e modal c la s s , th e re would b e th re e In d iv id u a ls below t h i s c la s s
to one above I t w ith th e same t o t a l aggregate Income* l . e . , th e average n e t
Income f o r th o se above I s th r e e tim es t h a t f o r th e In d iv id u a l below th e
modal c la s s .
This f a c t may b e more r e a d ily comprehended by n o tin g from
ta b le I I th a t Z p e r c en t o f a l l th o se f i l i n g retu rn s had a n e t l o s s , 3.7
p s r c en t had a n e t Income o f le e s than $600, 7.9 p e r s e n t le s s than $1,000,
and 60.1 p e r c e n t le s s th an $2,000, w hile f o r th e rem aining 42.9 p e r c e n t
th e n e t Income w e $2,000 o r above.
bhen given th e se f a c ts as an average f o r both ta x a b le and nont AxatIe r e tu r n s , one n a tu ra lly wonders how each would d i f f e r from t h is
av erag e.
The average n e t Income f o r a l l n o n-taxable re tu rn s i s found to be
le s s th an o n e -h a lf t h a t o f th e ta x a b le o n e s.
These fig u re s a r e $2,936 and
-2 2 -
11,462 f o r th e te u a h le and non-tax& ble r e tu r n s , r e s p e e tlv e ly ,
ta b le I I
• I s o shows t h a t th e n e t lnoceies o f th e non-taxable re tu rn s a re c lu s te re d
In to t h e lower Income b ra c k e ts , w ith r e r y few cases appearing above th e
b ra c k e t, $2,000 to $3,000#
T his c o n d itio n I s expected because th e allow ed
personal exemptions seldom exceed t h i s range.
At th is p o in t, one might
q u estio n th e p o s s ib i l i ty o f a n cn -tax ab le re tu rn e v er reaching th e hi gh
lnoeee b ra c k e ts , a s l a shown l a ta b l e I I # ' This c o n d itio n a r is e s from, th e
f a c t t h a t a l l Incomes receiv ed from th e F ed eral Government, and th o se receiv ed
as proceeds from l i f e insurance p o lic ie s a re exempted from th e s t a t e Income
ta x , a ls o from th e f a c t t h a t a l l c o n trib u tio n s made t o any p o l i t i c a l d iv is io n
o f th e U nited S ta te e f o r public purposes, and a l l c o n trib u tio n s made t o any
f r a te r n a l o rg a n isa tio n o p e ra tin g under th e lodge system o r t o war veterans*
o rg an isatio n s a re a llc r o d a s deductions when computing n e t income#
As f o r th e ta x a b le r e tu r n s , i t may be seen from t a b l e I I t h a t th e y
ten d toward t h e h ig h er Income b ra c k e ts , sad seldom i s th e re m e found below
th e $1,000 mark#
This I s r e a d ily comprehended by refe ren c e again t o th e
allowed personal exemptions under th e law#
The few re tu rn s t h a t a re found
below th e $1,000 mark occur a s a r e s u lt o f a person re s id in g la th e s t a t e
f o r a f r a c tio n a l p a rt o f t h e ta x a b le y e a r. In which e a se th e exemptions
a r e p ro rate d on a monthly b a s is In pro p o rtio n t o t h a t allowed f o r th e year#
>
T o ta l Income, Ieeoae Taxes and T otal Taxro
As fehow in Ineotito TajTRe-Iurne*
The t o t a l n e t Income f o r th o se f i l i n g Income ta x re tu rn s In
Montana f o r 1956 was $73,668,931.
Of t h i s amount, $68,664,684 o r 79.8
-2 3 -
IABLE XX* STATE BCCKE TAX EETBEStS CLASSIFIED ACCCRDDK*
TO TIFE CF EETUESS ASD SIZE CF IET XffCOHB,
M M im i9 1936.
Claae In te rv a le
(D o lla rs)
t
Eon-Taxable
E e tu m i
Taxable
R eturns
T o ta l
Returns
613
Per Cent
Of T otal
Returns
2 .0
615
O-
249.9
218
260 -
499.9
293
2
296
1 .0
600 -
749.9
367
I
369
1 .2
750 «
999.9
892
2
894
3 .0
1,000 - 1,499.9
1,878
6,676
7,463
24.7
1,600 - 1 ,999.9
2,697
2,677
5,274
17.6
2,000 - 2 ,9 9 9 .9
3,249
6,994
9,243
30.6
3,000 - 3,959.9
IOO
2.833
2,938
9 ,7
4,000 - 4 ,9 9 9 .9
4
1,151
1,165
3 .8
6,000 - 6,699.9
I
620
621
2 .0
6,000 - 6,999.9
362
562
1.2
7,000 - 7 ,9 9 9 .9
233
238
•8
8,000 - 8,989.9
198
196
.6
9,000 - 9,999.9
73
73
,2
324
525
1 .1
10,000 e r Over
I
S
B et Loss
•7
24-
p o r cen t irae from pore one having ta x a b le incomes, w hile 114,814,347 o r
20,1 p er c e n t was from th o se having so n -tax ab le Incomes#
7he t o t a l income t a x shown a s paid on th o se incomes was $468,088#
Thus when c a lc u la te d f r m th e s e f i g u r e , th e average p ro p o rtio n o f n e t income
absorbed In. income ta x e s f o r a l l persons f i l i n g re tu rn s was 0 .7 p e r c e n t.
This r a t e seems extrem ely low, b u t i t is to be remembered t h a t a l l th e In­
come tax es a r e paid by th o se having ta x a b le incomes, so t h a t f o r th o se
who pay t h e lncane ta x th e average proportion o f n e t income absorbed in
tax es i s ra ise d to 0 .8 p er c e n t.
The t o t a l ta x e s , o th e r th an Income ta x e s , a s shown in th e s e re tu rn s
In 1936, was $4,216,£82.
D ividing t h i s fig u re by th e t o t a l n e t in case as
shown fo r th e y e a r, th e average p ro p o rtio n o f n e t Income f o r a l l th o se
f i l i n g r e tu r n s , re q u ire d f o r payment o f o th e r tax es I s found to b e 6.7 p e r c e n t.
By adding th e two ta x r a te s to g e th e r i t may be seen t h a t th e p ro p o rtio n o f
n o t income re q u ire d f o r payment o f a l l tax e s i s 6 .4 p e r c e n t.
These ra te s
*hen p ro rated equally f o r a l l persons a re found t o be q u ite low, and
seemingly th e r e would be no cau se f o r a I a r a over th e ta x burden, b u t, as
w i l l b e shown l a t e r in th e s tu d y , th e s e r a te s a r e n o t p ro rated e q u a lly to
persons i n d i f f e r e n t occupations, and on sens th e ta x burden i s a d i f f i ­
c u lt lo a d .
The q u estion no doubt has a ris e n in th e mind o f th e re a d e r, as t o
what p ro p o rtio n o f th e t o t a l tax e s p a id i n Montana i n 1836 was included in
th e income t a x r e tu r n s , and a s t o what pro p o rtio n o f th e t o t a l ta x was
*ado up o f income ta x e s .
The t o t a l ta x le v ie d f o r a l l p u rp o ses, e x clu siv e
Cf s t a t e income ta x e s , in 1936 was $32,070,600 .1 6 / This f i m r e a ls o
k ;::i= r =
is :
-SC-*
inoludes F ed sral laoaae tax e s paid b y people i n Sontana.
Rhen th e t o t a l o th e r
ta x s s sham In th e re tu rn s i s div id ed by t h i s t o t a l f o r th e s t a t e , i t giv es
14*6 p e r c en t as th e p ro p o rtio n o f th e t o t a l s t a t e ta x e s , ex clu siv e o f
income ta x e s , shewn in th e s t a t e Income ta x retu rn s*
The t o t a l taxes le v ied
in Kontana in clu d in g th e Income ta x f o r t h i s year i s found to be #32,569,468*
Rhea th e t o t a l income ta x le v ie d is d ivided by t h i s fig u re . I t gives 1 ,6 p e r
e e n t as th e p ro p o rtio n o f th e t o t a l ta x le v ie d t h a t i t made up o f income
tax ss*
For th o se f i l i n g income tax re tu rn s th e p ro p o rtio n o f t o t a l ta x
p a id , as shown. Is found to be 1G.4 p e r c e n t.
Even though th e p ro p o rtio n o f t o t a l tax es made up by those f i l i n g
lnco.Ee ta x re tu rn s i s o f co n sid erab le a is©, th e p ro p o rtio n o f th e s t a t e
t o t a l tax es cade up o f Income ta x e s i s very low.
This c o n d itio n would lead
one t o conclude t h a t , reg a rd less o f hew good th e th eo ry iray be o f a d ju s tin g
th e ta x burden to a b i l i t y to pay, th e s t a t e income ta x law has done r e la tiv e ly
l i t t l e toward accom plishing t h i s r e s u lt up to t h i s t i n e .
£ « r l ta l S ta tu s and Sex o f Those * l l l n r S ta te Income Tax E etum s
th e estim ated p ro p o rtio n o f th e t o t a l popu latio n who f i l e d s t a t e In c m e ta x re tu rn s in 1930 was given e a r l i e r In th e study a s 6 .6 p e r ea t .
This f ig u r e alo ne gives an incom plete p ic tu r e , end one is n a tu r a lly in te re s te d
in k owing th e d is tr ib u tio n o f th e s e re tu rn s f o r t h e a d u lt p o pulation on th e
baasa o f sex and m a rita l s t a t u s .
By r e f e rrin g to ta b le V, i t may be seen th a t o f th e 30,266 re tu r n s ,
£4,005 o r 79.6 p e r c e n t were f i le d by r a l e s , 4,349 o r 14.3 p e r c e n t by
-2 6 -
T /J U I I I .
TOTAL A!:r ATZTAGZ EZT IECCZ ET OCCUPATION AED BT
n r s CF RSISBH FOB THOSE FILIEO ISCCKB TAX RgTUBES.
UL'ETAEA, 1856.
Cecsunation
Bualnoes
F am e, D a irie s & Eanchee
R e ta il and w holesale
Cafes aad h o te ls
Sas, e l l and garage
Ineuranse & r e a l e s ta te
O ther business
T otal b u siness
F ro feesio n al
Doctors, d e a t i s t s , e tc .
Educators
lawyers
Other p ro fe ssio n a l
T o ta l p ro fe ssio n a l
Eaiplcyees
l a m s , d a ir ie s 4 reaches
F ining
Lumbering
Manufacturing
Motors, garages, e t c .
C onstruction
Government
R e ta il
b h c le sa le
Gas, o i l , end r e fin in g
Bank
Insurance, E . E ., and F in .
Cafee end h o te ls
T ransp o rtatio n A Coramun.
Power, gas & w ater
Sewspepers & p rin tin g
Other employees
T otal employees
In v esto rs
T otals
*
TAXABLE KETvKr-S
to ta l
average
Ret
Ket
Income
Income
KCN-TAXAiSLE RETUSKS
T o tal
average
R et
B et
2,164,571
4,775,523
681,565
1,268,120
284,655
1,675,586
11,055,745
3,644
3,946
3,613
4,367
4,035
4,696
4,006
664,364
1,068,943
140,472
266,961
36,907
242,340
2,299,987
530
1,162
780
1,212
1,273
1,148
882
2,249,586
2,847,253
1,298,019
660,742
6,845,680
6.148
1,726
6,624
2,858
2,402
163,362
694,463
117,997
74,384
660,186
1,360
1,669
1,616
1,683
1,645
490,238
6,267,606
615,976
1,108,682
1,547,952
742,986
5,369,977
4,674,654
2,572,680
1,168,198
1,038,519
1,454,741
360,002
6,700,769
1,747,363
679,879
1,013,497
34,761,649
3,163
2,299
2,917
2,733
2,866
2,460
2,206
2,602
3,261
2,877
3,416
3,439
2,293
2,550
2,663
2,696
2,639
2,521
162,019
1,878,527
126,761
300,721
583,811
166,942
1,526,939
1,192,470
*99,706
338,322
194,861
322,764
71,623
3,165,367
703,608
389,601
178,871
11,481,121
1,604
1,682
1,634
1,553
1,845
1,704
1,666
1,626
1,907
1,730
1,740
1,J372
1,367
1,966
2,010
1,873
1,516
1,790
6,091,610
6,031
63,043
146
68,854,684
2,936
14,814,347
1,462
■27.
TABLE IV.
TOTAL TAXES PAID PT TTPS CF TAX, MD TOTAL EET
KCOLE PT OCCUPATIONS. FCU TDOEB FILILU STATE
KCCKE TAX RLTims. BCSiTAFA, 1S36
Io ta T
Ineor-c
Taxes Paid
IETtaI
O ther
Ttuces Paid
I e ta I ----A ll
Taxes Paid
42,728,955
5,132,471
822,067
1,626,081
331,462
2,115,726
13,555,732
18,137
44,606
6,250
12,686
2,390
24,648
107,703
614,643
400,460
100,484
120,026
20,466
141,562
1,337,041
632, SftO
444,966
105,722
132,911
22,666
106,110
1,605,644
2,412,933
3,441,696
1,416,016
626,126
7,895,776
27,061
10,362
16,190
4,202
67,816
136,650
62,736
66,606
19,332
306,223
162,611
73,088
104,796
25,534
564,053
Eaplcyeoe
Farms, d a ir ie s A ranches
672,257
Mining
7,146,133
Luaberlng
939,757
Manufacturing
1,409,413
Motors, g arag es, e tc .
1,731,743
C onstruction
938,023
Government
4,606,876
R e ta il
6,807,033
Wholesale
3,072,385
Gaa, o i l , and r e fin in g
1,526,520
Bank
1,233,330
Insurance, R.E. and F in .
1,777,455
Cafes and h o te ls
431,926
T ran sp o rtatio n & Core,am.
9,696,116
Power, gaa & w ater
2,450,861
Eewspapers & p rin tin g
1,269,680
O ther Employees
1,192,368
Total employees
46,242,770
3,128
28,816
8,563
6,893
9,323
6,070
12,461
27,367
16,142
8,690
9,880
11,834
2,226
21,758
9,401
3,826
6,913
192,320
40,717
133,604
26,661
45,122
45,441
26,635
122,210
166,266
76,781
45,895
62,896
72,686
15,015
255,784
64,454
26,964
44,262
1.276,661
43,845
168,400
35,404
52,016
64,764
31,605
154,691
192,643
92,823
£4,486
72,776
84,730
17,239
277,642
73,856
50,889
61,176
1,468,581
6,174,653
131,120
1,234,667
1,365,887
73,668,931
488,958
4,216,582
4,704,650
Occupation
. Business
Fam e, D airies & Ranches
R e ta il and w holesale
Cafes and h o tels
Cas, o i l and garage
Insurance & r e a l e s ta te
O ther business
T otal business
P ro fe ssio n a l
D octors, d e n ti s t s , e t c .
Educators
Lawyers
Other p ro fessio n al
Total p ro fe ssio n a l
In v esto rs
T otals
T otal
Ket
Inooroo
fcsi&les and 1,644 o r 6*1 p e r c o a t wore f i l e d J o in tly by a hue band and
wife*
In th e c ase o f th e s a l e s , th e m J c r i t y o f re tu r n s , 67*2 p e r c o n i,
wore f i l e d by m arried men*
In th e case o f th e f e r a l o s, th e revere o I b
t r u e , th e E a jo rity o r £1.6 p e r c e n t o f th e re tu rn s being f i le d by s in g le woman.
These r e s u lts a re e x a c tly what one would expect because in th e case o f
th e s a le group, th e o ld e r mm, who a re g e n e ra lly m arried , have la rg e r lncoses
on th e average and th e re fo re f i l e p ro p o rtio n a te ly more re tu rn s th an th e s in g le
s-en*
Cn the e th e r hand, in th e case o f th e female group, v ery few m arried
women work o u tsid e o f t h e i r homes, and consequently few have Incomes# a ls o
m arried wonen who have incomes sa y f i l e j o in t l y w ith t h e i r husbands, p lacin g
t h s re tu rn under th e j o i n t re tu rn c l a s s i f i c a t i o n .
Both c f th e s e conditions
a re conducive to giving th e m ajo rity o f re tu rn s f i l e d to th e s in g le women.
I t i s q u ite in te r e s tin g to n o te how th e m a rita l s t a tu s and sex v ary
ancng th e d if f e r e n t o ccu p atio n s.
From ta b le V i t ra y be seen th a t th e b u e i-
ness group i s made up n e arly e x c lu siv e ly o f s a l e s .
In th e p ro fessio n al group,
however, th e females lead even in numbers, which moans t h a t th e p ro portion
o f th e t o t a l females In t h i s group i s very much g re a te r than th a t o f t a l e s .
This i s tr u e because o f th e nurses in t h is group which a re e x c lu siv e ly women,
and a ls o because, as shown la appendix B, th r e o - f if tte o f th e e d u cato rs, which
a re placed in th is group a re woaon.
In th e employee group th e numbers f o r
both males end f m a le s a re g re a te r than th a t f o r any o th e r occupational
group, b u t th e proportion o f men f a l l i n g in th is group i s much c re a to r than
t h a t c f won on.
As f o r m a rita l s t a t u s , i t may bo seen t h a t in th e case o f th e m ales,
th e g re a te r p o rtio n f a l l in g in th e bu sin ess and p ro fe ssio n a l groups a re made
•2 9 *
up o f m arried mm, w h ile th e sin g le men a r e la rg e ly e oneentra te d In th e
employee group.
This c o n d itio n one would expect because o ld e r men, who a re
u su a lly m arried, a re th e ones found t o be in bu sin ess f o r thorns e lv e s .
But
i t Is In te r e s tin g to n o te th a t c o n tra ry t o th e s e groups, the p ro p o rtio n o f
•In g le mm i n th e In v e s to r group i s such g re a te r than f o r m arried s e n ,
Die
reason fo r t h i s I s th e f a c t t h a t young h e ir s who have coma in to possession
o f w ealth have I t Invested f o r them in t r u s t funds, o r in v e s t I t otherw ise
f o r thonselves u n t i l they become o f age o r f i n is h t h e i r sc h o o lin g .
In th e fe n a le group th e co n d itio n s i n t h i s re s p e c t s r e th e re v e rs e .
The s in g le women a re by f a r in th e m a jo rity o f th e t o t a l women and th e pro­
p o rtio n o f th e s in g le women In th e bu sin ess and p ro fe ssio n a l groups Is v ery
much g re a te r than t h a t o f m arried women, w h ile th e c a rrie d women a re con­
c e n tra te d In t h e employee group.
I h la c o n d itio n Is tr u e because th e educators
a re made up la rg e ly c f women and th e nurses s r e women e x c lu siv e ly , and In both
eases most c f th e s e women a re s in g le .
TABLE V.
MFITAL STATUS ARD CEXf BY OCCUPATIONAL GROUPS, CF TRUCE
FILING STATS IKCOVS TAX SSTuSSSf SCSTAEAf I 839*1/
Sex
Ccouptttlonal
Bale
Female
A ll
RmtnmM
T otal
P a r r ied
S in rle
Total
Business
6,369
4,683
3,721
862
322
P ro fe ssio n a l
3,107
1,413
1,067
361
Employees
20,202
17,117
10,866
In v esto rs
1,678
846
30,266
24,063
Groups
TOTALS
S in g le
J o in t
Returns
89
233
464
1,660
182
1,308
139
6,262
1,894
433
1,661
1,091
666
390
483
97
366
160
18,208
7,866
4,349
COl
3,646
1,644
P arried
l / ^ j o i n t re tu rn la f i l e d by a husband and a t l f e who have s e p a ra te ineoines, b u t who p r e f e r to f i l e only
one re tu rn jo in tly #
»31™
m ATALTSIG CF HIB TAX L'JBCO CARRIED BI VARIOUS SRCBFS IR BGRTAKA
In tro d u ctio n
Occupation w ill be used In t h i s s tu d y as a b a s is upon which to
comparisons as to income d is tr ib u tio n , amounts and r a te s o f ta x e s , b o th Income
tax es and o th e r ta x e s .
These occupations number tw en ty -eig h t and a re considered
as th o se being most common and w idely d is trib u te d In t h e s t a t e ,
Host o f th e s e
a re designated by common and f a m ilia r term s which a re s e lf-e x p la n a to ry .
The occupations a r e grouped in to fo u r d i s t i n c t c la s s e s , based upon
th e fo ra o f Income re c e iv e d ; l . e . , w hether p r o f its from b u sin e ss, p ro fe ssio n a l
incomes, wages o r s a l a r i e s , o r Income from Investm ents,
These groups a re then
d esignated as b u sin e ss, p ro fe s s io n a l, employees and In v e s to rs •
In th e In v e s to r group, no attem pt was made to subdivide th e s e incomes
in to sm a ller u n i ts , b u t a l l Incomes from Investm ents w hether from r e n ts .
I n te r e s t, dividends o r r o y a ltie s a re placed In to t h i s c l a s s i f i c a t i o n .
F rm
t h i s i t may be seen t h a t th e incomes o f t h i s group a r e very la r g e ly from
p roperty in one f o ra o r a n o th e r.
Under each o f th e o th e r groups, th e occupations l i s t e d a re s e l f ex p lan ato ry , w ith th e exception o f th e one designated as " o th e r,"
This c l a s s i ­
f ic a tio n Is employed t o allo w f o r p lac in g i n th e group those occupations
r ig h tf u lly belonging th e r e , b u t which occur only v e ry r a r e ly , and which a re
o f m inor Importance in comparison w ith th e t o t a l f o r th e group.
Under th e
business group, t h i s "other* Includes p rin c ip a lly plumbers, u n d e rta k e rs,
c o n tra c to rs , tr a n s p o rta tio n and newspaper b u sin e sse s.
Under p ro fe ssio n a l i t
Includes m ainly n u rse s, emhalmers, and e n g in e ers, w h ile under employees I t
Includes m ostly sten o g rap h ers, plum bers, end th o se re c e iv in g wages and s a l a r i e s
s*o l i s t e d no occupation.
Incona in R clailo n t o Oeowpatlcn
Tho t o t a l n e t Income es ehcen In th e s e retu rn s f o r th e y ear 1936
was $73,668,931*
This f ig u r e , whm d iv id ed by th e t o ta l nuniber o f re tu rn s
f o r th e y e a r gives $2,435 as th e average n e t lneome p e r re tu rn file d *
One w ill be In te re s te d In knowing how th e average n e t Incomes f o r
th e d if f e r # t occupational groups compare w ith t h a t o f th e s t a t e average,
** w ell as how th e t o t a l n e t Income Is d is tr ib u te d among th e s e groups*
By r e f e r r in g t o ta b le T I, I t may be seen t h a t a s f o r t o t a l n e t Income, th e
employee group leads w ith #46,242,770 o r 62.7 p e r cen t o f th e s t a te t o t a l j
th e b u sin ess group i s second w ith $13,365,732 o r 18.1 p e r c e n t o f th e s t a t e
t o t a l I th e p ro fe ssio n a l group Is t h i r d w ith $7,896,776 o r 10.7 p e r cen t o f
th e s t a t e to ta l} and fo u rth and l a s t i s t h e In v e s to r group w ith $6,174,663
o r 8 .6 p e r cen t o f t h e s t a t e t o t a l .
For a graphic comparison o f th e pro­
p o rtio n o f t o t a l n e t income to t h a t o f t o t a l re tu rn s f i le d by th e se groups,
see fig u r e I .
Eow do th e s e occupational groups compare a s t o average n e t income
per person f i l i n g a re tu rn in each?
The f i r s t and most in te r e s tin g ob­
se rv a tio n Is th e f a c t t h a t th e o rd e r o f magnitude i n which th e s e groups
appear in e ls e o f average n e t inoone Is th e complete rev erse o f t h a t f o r
t o t a l 1n e t Income f o r each group.
The in v e s to r group, although l a s t Ir. o rd er
o f t o t a l n e t income, ranks f i r s t w ith an average n e t income o f $4,913,
The
p ro fessio n al group, th ir d i n rank o f t o t a l n e t Income, ranks second w ith an
average o f 12,641.
The business group, second In rank o f t o t a l , ranks t h ir d
w ith an average n e t income o f $2,488.
And th e employee group, although
-5 3 -
f i r a t in rank Cf t o t a l , ranks fo u rth o r l a s t w ith an average n e t lnccsra o f
(2 ,2 6 9 .
See fig u re 2 f o r a graphic c o rp sr lr c n o f average n e t in c a se by
occupational groups.
At t h i s p o in t COTiment should be made aa to how ty p ic a l o r re p re se n ta ­
t iv e th e s e average n e t incomes a re o f each re s p e c tiv e occupational group.
It
may be seen by re fe re n c e to ta b le VI t h a t w ith in th e employee group th e r e Ie
r e la tiv e ly l i t t l e divergence o f each minor u n i t from th e average f o r th e group
as a whole.
The av ers e n e t incomes f o r t h e minor u n its a re f a i r l y uniform .
As f o r th e in v e s to r group, th e re a r e no su b d iv isio n s, so t h a t th e average f o r
t h i s group may b e considered a s p e r f e c t.
In th e p ro fe ssio n a l group, i t may be
n o ticed t h a t th e re is a v e ry wide range w ith in th e averages f o r t h e su b waits*
The average incomes f o r th e lawyers end doctors rank second and t h i r d
re s p e c tiv e ly f o r a l l o ccu p atio n s, b ein g exceeded o n ly by t h a t o f th e in v e s to rs ,
sdiile th e average f o r th e educators ranks nex t to th e lo w est, th e average f o r
th e farm ers being th e low est o f any.
In th e bu sin ess group, in which th e
farm ers f a l l , th e average f o r t h e su b -u n ite ranges from low est o f a l l occupa­
tio n s t o t h a t o f fo u rth h ig h est i n case o f th e u n it "other* b u sin e sse s.
Thus
when th e average n e t lneoaes f o r th e s e m ajor groups a re m entioned, i t should
be remembered t h a t th e average f o r t h e educators i s f a r below t h a t o f th e
o th e r p ro fe ssio n a l groups, end t h a t f o r th e farm er, although placed in th e
group being t h ir d high i n average n e t income, hie average n e t income i s t h e
low est o f a l l occupations in th e s t a t e .
In ta b le VII i s shown th e d is tr ib u tio n o f n e t incomes by e ls e f o r
th e o ccu p atio n al groups.
I t may b e n o tic e d t h a t w ith in th e p ro fe s sio n a l and
employee groups a l i k e th e re i s a heavy c o n c e n tra tio n o f In d iv id u a l incomes
% Hhta th e range o f «1,000 to «4,000.
Thla c o n cen tratio n I* a l i g h t l y he low
th o «2,000—13,000 group. In which th e average f o r th e s e occupations end
f o r a l l occupations f a l l , h u t th e number f a l l i n g below th e «1,000 mark la
r e la tiv e ly very few, b e in g c o n sid era b ly le s s In th e ease o f th e p ro fe ssio n a l
Eroup.1T/ I t may be seen a ls o t h a t th e r e i s . In b o th e a s e s , a c o n sid era b le
number o f th e s e incomes fa llin g In t h e cla ss o f «4,000 o r o v er.
I t could
he s ta te d then t h a t i n b o th cases th e m a jo rity o f in d iv id u a l Incomes f a l l
w ith in th e range o f «1,000 t o «4,000, and t h a t th e number f a l l i n g below t h i s
range Is q u ite lew a s compared to th o se f a l l i n g above.
I t may b e seen th a t In ease o f th e b u sin e ss group, in t h i s r e s p e c t,
th e s itu a tio n la q u ite d if f e r e n t from t h a t o f th e s a l a r y and wage groups.
The lneoraes are le s s c o n cen trated in th e «1,000 - #4,000 range, th u s th e r e i s
w ider d isp e rsio n o f Incomes i n t h i s group.
As may be seen a ls o , t h e pro­
p o rtio n o f th e Incomes o f t h i s group f a l l i n g below «1,000 is much h ig h e r
th an t h a t o f t h e p ro fe ssio n a l and employee groups.
Likewise i t may be seen
th a t t h i s s i t u a t i o n la much more tr u e f o r th e In v e s to r group th an f o r th a t
o f th e p ro fe ssio n a l group.
I t w ill be remembered th a t th e Income o f t h e busin ess group is
p rin c ip a lly from p ro p e rty , end to a a o see h at l e s s e r degree a ls o o f th e
in v e s to rs .
So i t seems q u i te ev id en t t h a t th e r e a r e Iesa flu c tu a tio n s and
r is k s involved In t h e Income d e riv e d from wages and s a la r ie s th a n Is th e case
o f th o se Incomes d eriv ed from p ro p e rty .
This b ein g t r u e , i t would seem t h a t
IAElE V I.
AVEEAGE EET IECOBE BECEIYED AED PEE CET CsP
TOTAL EET CTCOKE RECEIVED BI OCCOPATICES AS
CIiOP^ CT STATS CICOKE TAX RSTGRBS. SCKTAKA.
IBZG
Occupation
Business
F am s, d a ir ie s & ranches
R e ta il and W holesale
Cafes and h o te ls
Gas. o i l and garage
Insurance and Real E s ta te
O ther bu sin ess
T o tal b u sin ess
P ro fe ssio n a l v.
D octors, d e n t i s t s , e t c .
Educators
Lawyers
O ther P ro fessio n al
T o tal p ro fe ssio n a l
Employee#
Farms, d a ir ie s A ranches
Mining
Lumbering
!lamif&oturlng
Motors, g arag es, e t c .
C onstruction
Goverment
R e ta il
lh o le s a le
Gas, e l l , and re f in in g
Bank
I n s . , R.E. & Flnanoe
C afes, and h o te ls
T ran sp o rtatio n A Common.
Power, gaa & w ater
Eewspapers & p rin tin g
O ther employees
T o tal employees
In v esto rs
T o tals
T o ta l E e t
... Income
2,728,835
5,632,471
822,057
1,626,081
831,462
2,115,726
13,355,732
Lumber
o f Tax
ReturtM
Average
E et
Income
P er c e n t
o f T otal
E et Income
1,669
2,121
374
603 ’
102
610
6,369
1,646
2,760
2,198
3,032
3,260
3,468
2,488
3 .7
7 .9
1 .1
2 .1
•4
2 .9
18.1
2,412,838
3,441,696
1,416,016
625,126
7,896,776
568
2,000
306
241
3,107
4,324
1,721
4,697
2,694
2,541
3 .3
4 .7
1 .9
.8
10.7
672,267
7,146,153
939,757
1,409,413
1,731,743
938,923
4,686,876
6,867,033
3,072,585
1,526,520
1,233,380
1,777,495
431,925
9,896,116
2,460,861
1,269,680
1,192,368
46,242,770
276
3,706
361
659
680
417
2,310
2,477
1,061
603
416
616
210
4,477
1,006
536
502
20,202
2,436
1,829
2,603
2,521
2,647
2,662
2,029
2,369
2,923
2,632
2,965
2,886
2,056
2,210
2,436
2,369
2,375
2,289
•9
9 .7
1 .3
1 .9
2 .3
1.3
6 .3
8 .0
4 .2
2 .1
1 .7
2 .4
.6
13.4
5 .3
1 .7
1 .6
62.7
6,174,653
1,678
4,913
6 .6
73,668,931
30,266
2,435
100.0
TABLE V II.
C lass I n te r r a ls
(D o lla rs)
STATE ISCtTJS TAX JtSTtJRKS CLASSIFIED ACCOtoISC TO
OCCUPATICSAL GROUPS MD SIZE OF BET ISCOKg, SOSTASAe
1B56
Business
P ro fe sslc n a l
461
IS
O - 249.9
114
260 - 499.9
Employees
In v esto rs
TOTAL
ES
SG
613
6
66
42
218
166
11
67
61
295
EOO - 749.9
170
21
103
68
368
76(j - 999.9
264
66
480
94
694
1000 - 1499.8
669
1077
6492
216
7463
1600 - 1999.9
733
666
5680
200
6274
2000 - 2989.9
1261
696
7118
278
9243
SOOO - 3999.9
666
274
1844
165
2933
4000 - 4999.9
339
123
E92
101
1165
6000 - 5999.9
220
67
277
67
621
0000,- 6989.9
107
68
169
38
362
7OOC - 7998.9
65
26
118
39
233
BOOO - 6689.9
45
22
no
19
196
9000 - 9999.9
23
17
17
16
73
10000 — o r over
106
74
36
109
325
6369
3107
20,202
1678
50.256
E et Loss
T otals
INCOME TAX RETURNS
NET INCOME
F ig u re !.--P ro p o rtio n o f t o t a l s t a t e income ta x retu rn s f i l e d , in comparison
to th e t o t a l n e t income receiv ed by occupational groups, Montana, 1936.
38
THOUSANDS OF DOLLARS
0
1 2
3
4
5
INVESTORS..........
PROFESSIONAL-••
ALL BUSINESSES
EMPLOYEES-
-
FIGURE 2A
Comparison of average n e t income receiv ed by
occupational groups, Montana, 1936.
THOUSANDS OF DOLLARS
O
1 2
3
4
ALL BUSINESSES
OTHER THAN FARMERS
FARMERS
FIGURE 2B
Comparison o f average n et income rec eiv e d by
farm ers and of a l l o th er b u sin e sse s,
Montana, 1936*
5
“ 33—
th e re Ie a grave flaw in th e use o f p ro p erty as a measure o f a b i l i t y to pay
o r as a b a sis f o r tax atio n *
As may be se en , th e re i s a co n sid erab le nunber
Of incomes in th e bu sin ess and in v e s to r groups which show a n e t l o s s ,
th e n
p ro p erty is used as a b a s is f o r ta x a tio n , as Is very la rg e ly th e c ase i n
th e s e groups, those whose Income i s a n o t lo ss nay be taxed a t th e same r a t e
a s th o se re c e iv in g la rg e Incomes.
P ro p erty In such cases would n o t o ily
f a i l to re p re se n t a b i l i t y to pay, b u t would a c tu a lly b e a d ra in upon incomes
d erived from o th e r so u rces, i f any.
In view o f t h i s s i tu a tio n i t is easy to
se e why many w rite rs en th e su b je c t o f ta x a tio n a p p ra ise income a s a measure
o f a b i l i t y to pay, and as a j u s t said e q u ita b le b a s is f o r ta x a tio n .
Income Taxes in R elatio n t o Occupation
The t o t a l s t a t e income ta x e s le v ie d in 1936, a s shown. In th e Income
ta x re tu rn s was $480,968.
This amount was d is tr ib u te d t o t h e fo u r occupational
groups, in o rd e r o f magnitude as follow s*
th e employee group $152,320 o r
39.4 p e r c en t of th e t o t a l , th e In v e s to r group $131,120 o r 26.8 p e r c e n t o f
th e t o t a l , th e b u sin e ss group $107,703 o r 2 2 .0 p e r c e n t o f t h e t o t a l , and th e
p ro fe ssio n a l group $67,816 o r 11.8 p e r c e n t.
The re a d e r w ill remember t h a t
th e o rd er in which t o t a l n e t incomes f o r th e s e groups appeared, according t o
magnitude was th u s ,
th e employee group w ith 62.7 p e r c e n t o f th e t o t a l , th e
business group w ith 18.1 p e r c e n t, th e p ro fe ssio n a l group w ith 10.3 p e r oont
and th e in v e s to r group w ith 8 .6 p er c e n t.
At f i r s t glance, one may wonder how
i t is p o ssib le f o r th e in v e s to r group, having th e low est t o t a l n e t Income, t o
renk second in t o t a l Income ta x e s p a id .
This is explained by th e e f f e c t o f th e
p ro g ressiv e r a te s o f ta x a tio n employed In th e income ta x system .
The in v e s to r
-40-
group, having th e h ig h e st average n e t Income o f th e fo u r groups, i s taxed
a t a h ig h er ra te *
The aggregate amount produced from t h is so u rce th ereb y
exceeds t h a t o f e ith e r th e b u sin ess o r p ro fe s sio n a l group*
This co n d itio n
is shown g rap h ic a lly in fig u re 3 .
Eow do th e income ta x r a te s compare f o r th e d if f e r e n t occupational
Crcu P8* These ra te s a re given a s pro p o rtio n o f n e t income absorbed in income
taxes*
The average r a t e f o r a l l o ccu p atio n s, as shown in ta b le V III, i s 0 .7
p e r cent*
The ra te s f o r t h e d if f e r e n t o ccupational groups. In o rd e r o f
magnitude a re a s fo llo w si
th e In v e s to r group 2 p e r c e n t, th e bu sin ess group
•8 p e r c e n t, th e p ro fe ssio n a l group .7 p e r c e n t, and th e employee group
•4 p er c e n t.
As explained above, th e s e r a te s te n d t o fo llo w th e average n e t lncotao
f o r th e groupj i .e * , th e group having th e h ig h e s t average n e t ir c o e p e r
person w ill lik e w ise te n d t o pay a h ig h e r r a t e o f tax es because o f th e progres­
siv e rate s*
This l in e o f reasoning, however, f a l l s to hold tr u e I n a l l c a s e s ,
as may b e n o ticed in th e case o f th e business and p ro fe ssio n a l groups*
By
r e f e r r in g t o ta b le s VI and IX re s p e c tiv e ly . I t m y b e seen t h a t th e average
n e t Ineoae i s h ig h er f o r t h e p ro fe ssio n a l group th a n t h a t o f th e busin ess group,
y e t th e r a te s a re h ig h e r fo r th e b u sin e ss group*
This co n d itio n a r is e s because
o f th e f a c t , t h a t th e Incomes o f th e bu sin ess group a re more w idely d is tr ib u te d
in range o f e ls e than a re th o se o f th e p ro fe ssio n a l group*
This would mean th a t
a g re a te r p ro p o rtio n o f th e business incomes would f a l l In th e upper lnemae
b ra c k e t, than f o r th e p ro fe ssio n a l Incomes, end would th e re fo re be tax ed a t
a higher ra te *
T h is, obviously, would r a is e th e average r a t e f o r th e group*
In co nclusion, i t may be s a id o f th e income ta x t h a t i t causes
EMPLOYEES
62.7%
NET INCOME
B
INCOME TAXES
F igure 3«—P ro p o rtio n o f t o t a l n e t income received in comparison to t o t a l
income taxes paid by occupational groups, Montana, 1936,
THOUSANDS OF DOLLARS
5
4
3
2
A
NET INCOME
I
PERCENT
O
O
.5
I
1.5
2
B
RATES OF INCOME TAXES
F igure 4 ,—Comparison o f average n e t income received, and o f average r a te s o f income tax es
paid by o ccupational groups, Montana, 1936. (Rates o f taxes in p e r cen t o f n e t
income req u ire d f o r payment o f th e t a x .)
15-
TAELE V III*
PER CEKT CF EET IFCCKS ABSOBBEE IE STATE IECCEZ
TAXES BI OCCUPATIONS FOR TBOSB FILEO ECOfg
TAX RETUFTS, KCRTA3A, 1956
Ocoupfttlon
T otal E et
Incorite
Sualnese
Farms, d a ir ie s & ranches
2,728,935
R e ta il end w holesale
6,852,471
Cafee and h o te ls
822,067
Gas, o i l and garage
1,626,061
Im uranoe and Real E sta te
551,482
Other business
2,116,726
T otal b u sIneee
15,566,752
T o tal
Income
Taxes Paid
Per c e n t o f n e t
Income absorbed
In Income Taxm
18,157
44,606
6,258
12,685
2,590
24,648
107,703
•7
.8
.6
.8
.7
1.2
.8
P ro fe ssio n a l
D octors, d e n ti s t s , etc*
Educators
Lawyers
O ther pro fees I m a l
T otal p ro fe ssio n a l
2,412,958
5,441,696
1,416,016
625,126
7,695,776
27,061
10,362
16,190
4,202
67,616
1.1
•5
1.1
.7
.7
Employees
F a rm , d a ir ie s & ranches
ElnLng
Lumbering
Eeumfaoturlng
r o t o r s , garages, etc*
Ccmstructlon
Government
R e ta il
W holesale
Gas, o i l , and re fin in g
Bank
In s* , R.E* & Finance
Cafee and h o te ls
T ran sp o rtatio n & Common.
Power, gas & w ater
Kewspapere & p rin tin g
Otiior employees
T otal employees
672,267
7,146,155
959,767
1,409,415
1.751,743
958,928
4,686,876
8,867,055
3,072,586
1,626,620
1,253,580
1,777,496
451,925
9,896,116
2,460,861
1,269,580
1,192,368
46,242,770
5,128
28,816
8,663
6,893
9,523
6,070
12,481
27,587
16,142
8,590
9,880
11,834
2,226
21,768
9,401
3,926
6,915
192,520
.6
.4
•9
.5
.5
•6
.5
.5
.6
.6
.8
.7
.5
.2
•4
.3
.6
•4
6,174,663
131,120
2 .0
73,688,931
488,968
•7
In v esto rs
T otals
>44'
TA3LF, IX*
FERCEKTAaE CF TOTAL WZT BCCMS RSCZBZD AHD PZBCEKTACSS CF ISC0M2 TAXES, OTHER TAXES AZD TOTAL
TAXES PAID BY OCCDPATIOES FOR TBOGE FILBC STATE
ZZCOMB TAX SETuEES, MCSTAHA, 1956
Oeeupatloa
P er c e n t o f Jfer c en t o f per « an t o f ">©r c e n t o f
TotAl E e t R jtal Iaeone T otal o th e r T o tal Taxes
Iaoome
Tkxea Paid
Taxes Paid
Peid
Buelnees
F arae, d a ir ie s & ranches
R e ta il end w holesale
Cafes and h o te ls
Gas, o i l and garage
Insurance & r e a l e s t a t e
O ther business
T o tal b u sin ess
3 .7
7 .9
1.1
2 .1
•4
2 .9
18.1
3.7
9.1
1.1
2 .6
•6
6.0
22.0
14.7
9 .6
2 .3
2 .8
.6
3 .3
33.1
13.5
9 .6
2 .2
2 .8
.6
3 .6
52.0
P ro fe ssio n a l
D octors, d e n ti s t s , etc*
Educators
lawyers
O ther p ro fe ssio n a l
T o ta l p ro fe s sio n a l
3 .3
4 .7
1 .9
•8
10.7
6.6
2.1
3.3
.9
11.8
3.2
1 .6
2 .1
.6
7 .3
3 .5
1 .6
2 .2
.6
7.8
Eaployeee
F a ras, d a ir ie s & reaches
Mining
Lumbering
M anufacturing
Motors, g arag es, e t c .
C onstruction
Government
R e ta il
W holesale
Ge*, o i l , and re f in in g
Bank
las* ReE*, end Finance
Cafes and h o te ls
T ran sp o rtatio n A Contain*
Power, gas A w ater
newspapers A p r in tin g Other employees
T o tal employees
•9
9.7
1 .3
1.9
2 .3
1 .5
6 .3
8 .0
4 .2
2 .1
1 .7
2 .4
•6
13.4
3.3
1.7
1 .6
62.7
.6
6 .9
1.7
1.4
1 .9
1 .0
2 .6
6 .6
3 .3
1.8
2 .1
2 .4
.6
4 .6
1 .9
.8
1.4
39.4
1 .0
3 .3
.6
1 .0
1.2
.6
2 .9
3 .9
1 .8
1 .1
1 .6
1 .7
•4
6.1
1 .6
.6
1 .0
30.2
.9
3 .6
.7
1 .1
1 .2
.7
2 .8
4 .1
1 .9
1.2
1 .6
1.8
•4
6 .9
1 .6
•7
1 .1
31.2
8 .6
26.8
29.4
2S .0
100.0
100.0
100.0
100.0
In v esto rs
T otals
-46-
thoc« who have th e g r e a te r Incomes t o pay, n o t only a g r e a te r amount, b u t
alao a g re a te r pro p o rtio n o f th o s e Incomes In taxes th an f o r those having
le s s Income,
I t a ls o provides t h a t th o se who have only sm all lncoaos, o r no
r e a l lnoonee a t a l l , w i l l be re q u ire d to pay no t a x .
T herefore, t o th e
p rin c ip le o f a b i l i t y to pay, which most w r ite r s th in k I s t h e soundest b a s is
f o r a j u s t s y s tm o f ta x a tio n , th e Income t a x I s seen t o conform v e ry c lo s e ly .
T h is, In no sm all way, j u s t i f i e s th e p ra is e t h a t ta x s p e c ia lis ts give t o
th e income ta x .
Taxes Other Than lnoome Taxes In R elation t o Oeoupatlon
The t o t a l amount o f ta x e s o th e r th a n Income ta x e s paid by th e s e f i l i n g
income ta x re tu rn s was $4,216,682 f o r t h e y e a r 1956.
This fig u re d ivided by
th e t o t a l number o f re tu rn s giv es an average o f 1139 p e r person f i l i n g a s t a t e
Income ta x r e tu r n .
By comparing t h i s fig u r e w ith th e average amount o f Income
tax e s p aid p e r person f i l i n g a r e tu r n , which was #16, I t may be se en t h a t
t h i s source o f t a x revenue i s a l l im portant from a q u a n tita tiv e s ta n d p o in t.
I t w ill be remembered a ls o t h a t th e Income tax e s f o r t h i s y e a r amounted t o
o n ly 1 .6 p e r c e n t o f th e s t a t e ’ s t o t a l ta x e s .
In view o f th e predominant lm portanee o f t h i s source o f ta x revenue,
i t eoens q u ite j u s t i f i a b l e to determ ine who b e ars th e burden o f i t s payment,
and a s to how th e manner In which I t Is d is tr ib u te d conforms to th e p rin c ip le s
Cf e j u s t and e q u ita b le system o f ta x a tio n .
Cf th e fo u r occu p atio n al groups,
i t was found t h a t th e b u sin ess group leads in t o t a l amount o f th e se ta x e s w ith
33.1 p e r c e n t o f th e t o t a l f o r th e s t a t e , th e employer group ranks second
w ith 30.2 p e r cen t o f th e t o t a l , th e In v e s to r group t h i r d w ith 29,4 p e r c e n t
and th e p ro fe s sio n a l group l a s t w ith 7 .3 p e r cen t o f th e s t a t e t o t a l .
I t w ill
b® r ezr,c!r.t)9r ©d th a t tii® d lsb rib u blcaa o f bho to t& l Bob in coin® to th eso groups
q u ite d iffe re n t*
In th e n e t lncoae d is tr ib u tio n , th e employee group
Jranks f i r s t w ith 62*7 p e r c e n t o f th e t o t a l , th e busin ess group second w ith
18.1 p er c e n t, th e p ro fe ssio n a l group t h ir d w ith 10*7 p e r c e n t and th e
In v esto r group l a s t w ith 6*6 p e r c e n t o f th e to ta l *
A graphic comparison o f
th e s e two d is trib u tio n s i s shown i n fig u re E.
t h a t smkea f o r th e d iffe re n c e in th e way i n which th e t o t a l income
snd th e t o t a l "o th e r" tax e s a re d is trib u te d ?
ObrloueI y i t I s because o f th e
d iffe re n c e in th e percentages o f n e t income o f th e d i f f e r e n t occupational
groups t h a t is re q u ire d f o r payment o f t h e i r re s p e c tiv e ta x burdens*
This
V
we may t e r n f o r eonrenieoee, t a x rate s*
d if f e r e n t occupations in ta b le X I,
These ra te s a r e shown f o r th e
IIore i t way b e seen t h a t t h e ta x r a te s
range fro n 2*8 p e r c e n t in th e e ase o f th e employee group to 20 p e r c e n t in
th e case o f th e l n r e s to r group, th e r a te s f o r th e b u sin e ss and p ro fe ssio n a l
group being 10*6 end 3.8 p e r c e n t re sp e c tiv e ly *
This seems t o show t h a t
th e re i s a g re a t d is p a r ity in th e r a te s o f "o th er" tax es paid f o r th o d i f f e r ­
e n t occupations, b u t th e case I s made even more s t r i k i n g i f one observes
th e In d iv id u al occupations w ith in th e groups*
By so doing, one fin d s t h a t
th e r a te s range from 1.8 p e r c e n t in th e e a se o f th e educators to 22*6
p er c e n t in th e c ase o f th e farmers*
I t was pointed o u t in th e s e c tio n d e a lin g w ith th e s t a t e income ta x
t h a t th e income ta x r a te s follow ed v e ry c lo s e ly t h a t o f average n e t income
f o r th e occupational groups.
I i t h an In cre ase in th e s i t e o f t h e in c a s e ,
th e r e was an in cre ase in th e r a te s o f ta x a tio n .
Upon t h i s s c o r e , th e income
U x system receiv es much p ra is e , and Is seen to conform v ery c lo s e ly t o th e
- 47 -
fundamental p r in c ip le o f e J v s t ta x system , n sa e ly , a b i l i t y to pay*
How do t h e r a te s f o r th e s e "o th er" ta x e s , which a r e le v ie d p rim a rily
on a p ro p erty b a sis f o r th e d if f e r e n t occupations, compare w ith th e re s p e c tiv e
average n e t lncomee ?
I t was found t h a t f o r th e occupational groups, th e
In v esto rs ranked f i r s t In h ig h e s t average n e t ineoae, end lik e w ise f i r s t in
th e h ig h e st r a t e o f "o th e r" taxes*
T h is , so f a r , would seem t o in d ic a te t h a t
t h i s ta x Is conforming t o th e p r in c ip le o f a b i l i t y to pay.
But on f a r t h e r in ­
q u iry , a n o th e r and very d e f i n i te reaso n is found f o r th e c lo s e c o rre la tio n
in th e high r a te s o f ta x and high average n e t income.
The answer i s t h a t
th e lneones o f th e in v e s to r group a re , a s p rev io u sly s ta te d , n a ln ly from
p ro p e rty . In one form o r a n o th e r, and t h a t reg a rd less o f th e incomes d eriv ed
from th e p ro p e rty , t h e t a x ra te s would change v e ry l i t t l e .
So i t m ight b e
s a id th a t th e r a te s cn p ro p e rty a r e le v ie d w ith l i t t l e a tte n tio n to income
produced th ere fro m , and t h a t t h e c o rr e la tio n between th e high ta x ra te s and
high lnoomea o f th e in v e s to r group I s more n e a rly a c c id e n ta l than I t i s
a u th o r ita tiv e ly predeterm ined,
Chi tu rn in g t o t h e p ro fe ssio n a l group. I t may
be n o tic ed t h a t th e average n e t income Ie second only t o t h a t o f th e in v e s to rs ,
w hile in th e r a te s o f "other* ta x e s p aid th e y f a l l n e x t t o l a s t .
I t could be
b r i e f l y , b u t c o r r e c tly s ta te d th e r e f o r e , t h a t t h i s group, i n l ig h t o f a b i l i t y
to pay, f a l l s to pay t h e i r p ro p o rtio n a te sh a re o f th e s e ta x e s .
The bu sin ess
group, i t may b e n o tic e d , f a l l s t h i r d in th e e l s e o f average n e t income, b u t
second h ig h e s t I n th e r a t e s o f th e s e ta x e s .
This group th e r e f o re i s obviously
paying more th an t h e i r p ro p o rtio n a te sh a re o f t h e t o t a l o f "o th er" ta x e s .
f o r th e employee group, th e y f a l l low est in average n e t income and lik ew ise
l a th e r a te s o f "o th er" tax e s p a id .
I t could be s ta te d t h a t th e cause f o r
As
tb * low r a te s o f th o se tax es f o r t h i s group Is due p rim a rily t o Uio f a c t
th a t th e y c m very l i t t l e p ro p e rty , and th e re fo re a r e n o t a sse sse d f o r th e s e
ta x e s ,
from t h i s d isc u ssio n i t Is q u ite evident t h a t th e se "o th er" ta x e s ,
q u ite u n lik e t h a t o f th e lnoceae ta x , a re n o t le v ie d In accordance w ith a b i l i t y
to pay, and th e re fo re t h i s fundamental p r in c ip le o f a j u s t eye te n o f ta x a tio n
I s v io la te d .
This means t h a t t h e r e does e x is t in th e system d isc rim in atio n s
In th e d is tr ib u tio n o f t h e ta x b u rden.
Because o f t h i s d is p a r ity . I t Ie
seen t h a t th e burden f a l l s e x tre a a ly h e a v ily on th o se whose Incomes a re from
p ro p erty w hile f o r th o se whose incomes a r e from s a la r ie s and wages th e burden
I s , to say th e l e a s t , q u ite l i g h t .
I t Is f u r th e r seen t h a t th e r a t e s paid by
th e d i f f e r e n t occupations f a i l e d t o fo llo w , except In s p e c ia l o a se s, th e
a b i l i t y to pay a s measured by Income.
These cond itio n s produce t h e r e s u lts
o f having th e lmrden o f th e s e ta x e s borne o u t o f p ro p o rtio n by th e b u sin e ss
end in v e s to r groups.
The extreme o f t h i s d is p a r ity i s re a d ie d in th e case
o f th e farm ers, who having th e low est average n e t Income o f a l l occu p atio n s,
pay th e h ig h e st ra te o f th e s e tax e s o f any o ccu p atio n .
A graphic rep re se n ta ­
tio n o f th e se f a c ts Is shown In fig u re G.
I t I s I n te r e s tin g t o Caspars th e s e r e s u l ts f o r
o th e r a re a s .
w ith th a t o f
In a stu d y v ery s im ila r t o t h i s one, i t was found in South
C aro lin a t h a t th e r e s u lts compared v ery c lo s e ly , end showed even greater
d is p a r ity th an th o se j u s t po in ted o u t.1 8 / There th e r&tee o f " o th e r” tax es
v a rie d frcea 2 .13 p e r c e n t. In t h e e a se o f th e occupational group term ed c le r k s ,
Tfi/ AulI , u . fc., **Taxation and A b ility to fa y la Soutk C a ro lin a", h . c . Kxp.
S ta . B ui, 286, p . 29.
^
A
NET INCOME
B
OTHER TAXES
Figure 6 .--P ro p o rtio n of t o t a l n e t income received in comparison to
t o t a l ta x e s , o th e r than income ta x e s, paid by occupational
groups, Montana, 1936.
PERCENT
THOUSANDS OF DOLLARS
4
3
2
1
IO
0
I
$ 4 ,9 1 3
15
INVESTORS
#______
$ 2 ,5 4 1 I
i
PROFESSIONAL
1 3 .8
|
$ 2 ^ 4 8 8 1 ALL BUSINESSES
t
I
2^2B9~|
EMPLOYEES
FARMERS
NET INCOME
B
OTHER TAXES
F igure 6 .—Comparison o f average n e t income, and of average ra te s o f ta x e s , o th e r than
income ta x e s , p aid by occupational groups, Montana, 1936. (Rates o f tax es in
p e r cent o f n e t income re q u ire d f o r payment of th e t a x .)
-Cl-
m iJ 2 X* XVZKAGE TAILS, CTZEB TBA3 IFCOlIE TAXfL, AFD PER
CEKT CSF TOTAL OTIIEB TAXES PAID BY OCCUPATIONS FOS
TLCGli I ILEO STATE IKCCJ.'E TAX PETUERS, KOBTAM,
Occupation*
T o ta l
O ther
Taxes
E m ber
of
Returns
Average o th e r
Per c e n t o f
tax e s p aid p e r t o t a l e th e r
person f i l i n g
ta x e s p aid
re tu rn s
by groups
Buelness
Fans*, d a ir ie s & ranches
614.843
R e ta il and w holesale
400,460
CaTw and h o te ls
100,484
Gas, o i l and garage
120,028
Insurance and Real e s ta te
20,466
Other Business
141,662
T o tal Bualneea
1,387,641
1,669
2,121
374
603
102
610
6,369
382
189
289
239
201
232
260
14.7
9 .6
2 .3
2 .8
.6
5 .3
33.1
P ro fe ssio n a l
D octors, d e n tis ts , e t c .
Edueators
Laeyers
O ther p ro fe ssio n a l
T o tal p ro fe ssio n a l
568
2,000
308
241
3,107
243
SI
288
80
99
3 .2
1 .6
2 .1
.6
7 .3
Employees
Farms, d a ir ie s A reaches
F ining
!timbering
M anufacturing
Motors, g arag es, e t c .
C en stru o tlm
Government
R e ta il
Wholesale
C ss, o i l and r e fin in g
Bank
I n s . , R.E. A Finance
C afes, and h o te ls
T ran sp o rtatio n A Comaun.
Power, gas A w ater
Lewspapers & p rin tin g
Other employees
T o ta l employees
40,717
276
139,684
3,706
26,661
361
45,122
669
46,441
680
26,536
417
122,210
2,310
166,260
2,477
76,781
1,061
46,896
60S
62,898
416
72,896
616
16,013
210
266,784
4,477
64,464
1,006
26,864
636
44,262
502
1,276,661 20,202
148
38
74
81
67
64
ES
67
73
76
161
118
71
67
64
60
88
63
1 .0
3 .3
•6
1 .0
1.2
.6
2 .9
3 .9
1.8
1 .1
1 .6
1 .7
.4
6*1
1 .6
•6
1 .0
30.2
In v esto rs
1,234,867
763
29.4
136,660
62,738
88,605
19,332
306,223
1,678
C2
TAELS AT*
PJE CETT CF TET HCCFS FEQFLFED FOS PATTCET CF
TAXES, CTHER THAI? EXCKS TAXES, FOR TEOSS FILIES
STATE HCO5jE TAX RETURNS, FCHTAHA, 1956
T o tal
O ther
Taxes
T otal
F et
Income
.Per c e n t n e t Income
Required in Payment
c f Other Taxes
2,728,955
6,852,471
822,067
1,625,081
551,462
2,116,726
15,556,752
22.6
6*9
12,2
7 .9
6 .2
6 .7
10.6
156,660
62,756
68,606
19,552
506,225
2,412,838
5,441,696
1,416,016
625,126
7,886,776
6 .6
1.8
6.2
5.1
3.8
Employees
F a ro s, d a ir ie s A ranches
40,717
E lnlng
159,684
ltoiberlng
26,851
EanuTaoturlng
46,122
E o to rs, g arag es, e t c .
46,441
C onstruction
26,656
Covemnent
122,210
E e ta ll
166,266
E holeeale
76,781
Gas, o i l , end re fin in g
46,896
Lank
62,696
In s* , S*B* & Finance
72,696
Cafes end h o te ls
16,015
T ran sp o rtatio n & Coomm.
266,784
Power, gas k w ater
64,464
Kewepapers & p rin tin g
26,864
O ther employees
44,262
T o tal employees
1,276,661
672,257
7,146,155
939,757
1,409,415
1,751,745
958,928
4,686,876
6,867,055
5,072,585
1,626,620
1,255,580
1,777,496
451,625
9,896,116
2,460,861
1,269,680
1,192,368
46,242,770
6 .0
1 .9
2 .8
3.2
2 .6
2.8
2 .6
2.8
2.5
3 .0
6 .1
4 .1
3.6
2 .6
2 .6
2 .1
3 .7
2 .8
Occupation
Buelnese
Farms, d a ir ie s & ranohee
€14,845
E e ta ll and T lh o lesale
400,460
CaTea and h o te ls
100,484
Gee, o i l and garage
120,026
Insurance and Real e s ta te
20,466
O ther bus lneaa
141,662
T o ta l L aelness
1,597,841
P ro fessio n al
D octors, d e n ti s t s , etc*
Educators
Lsayere
O ther p ro fe ssio n a l
T o tal p ro fe ssio n a l
Investor#
T o tals
1,254,867
6,174,665
4.216.592
75,668,951
*
2 0 ,0
6.7
t o 27.23 p e r c e n t In th e ceae o f th e farm e rs.
The r a t e s o f t h e In v e s to r group
th e r e , as h e re , were second o nly t o t h a t o f th e farm e rs.
T o tal Taxes I t. R ela tio n t o Oooapatloa
I t was pointed o u t In th e preceding se c tio n t h a t th e p ro p o rtio n
o f th e Income ta x paid b y th e d i f f e r e n t occupational groups follow ed r a t h e r
c lo s e ly th e p ro p o rtio n a l d i s t r ib u t i o n o f th e t o t a l n e t Income t o th e s e groups,
being a ffe c te d however b y th e average e l s e Income o f th e occupation.
But i t
was found t h a t w ith th e ta x e s o th e r th a n Income ta x e s , th e re was v e ry l i t t l e
c o rre la tio n between th e d is tr ib u tio n o f th e t o t a l n e t Income and t h e t o t a l
amount o f th e s e ta x e s .
Since th e lneone tax es amounted t o o n ly 1 .5 p er c e n t o f th e t o t a l tax es
f o r th e y e a r, one can s e e why th e d i s t r ib u t i o n o f th e t o t a l ta x e s among th e
occupational groups w i l l b e much th e ease a s t h a t f o r "o th er* ta x e s .
The
d is tr ib u tio n o f th e t o t a l ta x I n o rd e r o f m agnitude, along w ith t h a t o f t o t a l
n e t Income d is tr ib u tio n Ie thus t
th e b u sin e ss group f i r s t w ith 32 p e r cent
o f th e t o t a l t a x , b u t having only 18 p e r c e n t o f th e t o t a l n o t Incomej second
i s th e employee group w ith 31.2 p e r c e n t o f th e t o t a l t a x , b u t having 62.7
p e r c e n t o f th e t o t a l n e t income; t h i r d Ie t h e In v e sto r group w ith 29 p e r c e n t
o f th e ta x , b u t having o n ly 6 .6 p e r c e n t o f t h e income; l a s t Is th e pro­
fe s s io n a l group w ith 7 .8 p e r c e n t o f th e t o t a l ta x , b u t having 10.7 p e r cent
o f th e t o t a l n e t Income.
These comparisons a re shown g ra p h ic a lly la fig u r e 7 .
I t i s found from th e s e comparisons t h a t th e c o n d itio n s in r e l a t i o n t o
t o t a l tax e s p aid a re much th e same a s t h a t f o r ta x e s o th e r th a n income ta x e s .
There e x is ts g re a t v a ria tio n la th e r a te s o f tax e s p aid b y t h e peoples l a th e
I
cn
ipI
TOTAL TAXES
NET INCOME
■> > ,
Figure 7 .—P roportion of t o t a l n e t InooAe receiv ed in comparison to t o t a l tax es paid
by occupational groups, Montana, 1936.
THOUSANDS OF DOLLARS
5
4
3
2
1
PERCENT
O
IO
15
20
INVESTORS
$ 2 ,5 4 1 1
PROFESSIONAL
$ 2 , 4 8 8 I ALL BUSINESSES
$ 2 ,2 8 9 1
EMPLOYEES
FARMERS
NET INCOME
B
TOTAL TAXES
F igure 8 ,—Comparison of average n e t income, and o f ra te s of t o t a l tax es paid by
occupational groups, Montana, 1936. (Rates of tax es in p er cen t of
n e t income req u ire d f o r payment of t a x .)
25
IABtE X I I .
PROPCBIim CF IOTAL SET KCOf-E RECEIVED AKD Cf
TOTAL TAXES PAID BY OCCURATIOCS, FOR THOSE FILKO
SIATE KCOltB TAX RETUEES, BOBTAKA, 1956.
fa ta l
E et
Ineoae
, Per Cent
o f T o ta l
E et Income
Per Cent
Of T o tal
Taxes Paid
632,980
444,665
105,722
152,911
22,856
166,110
1,505, £44
2,728,935
6,632,471
822,067
1,625,081
351,462
2,115,726
13,555,732
3.7
7.9
1 .1
2.1
•4
2 .9
18.1
13.5
9 .5
2 .2
2 .8
.5
3 .5
32.0
162,611
75,098
104,795
25,554
364,058
2,412,958
3,441,696
1,416,016
626,126
7,895,776
3.3
4 .7
1 .9
.8
10.7
3 .6
1 .6
2.2
.6
7.8
Employees
F a rm , d a ir ie s & ranches
Mining
lumbering
M anufacturing
M otors, garages, e t c .
C onstruction
Oorernrwnt
R e ta il
Wholesale
Oas, o i l , end r e f in in g
Bank
I n s . , B.E. and Finance
Cafes and h o te ls
T ran sp o rtatio n & Cocsnun.
Power, gsa A e a t e r
Eeeepapers & p r in tin g
O ther employees
T o ta l employees
43,845
168,400
55,404
62,015
64,764
31,605
154,691
192,645
92,923
54,465
72,776
64,750
17,239
277,642
73,855
50,669
61,175
1,468,951
672,257
7,146,153
939,757
1,409,413
1,731,743
938,928
4,686,876
6,867,033
3,072,386
1,626,620
1,233,380
1.777,495
431,926
9,896,116
2,450,861
1,269,680
1,192,566
46,242,770
•9
9.7
1.3
1.9
2 .3
1 .5
6.3
8 .0
4 .2
2 .1
1.7
2 .4
.6
15.4
5.3
1.7
1 .6
62.7
•9
3 .6
.7
1.1
1.2
.7
2 .8
4 .1
1 .9
1.2
1 .6
1.8
•4
6 .9
1 .6
.7
1 .1
31.2
In v esto rs
1,566,987
6,174,653
8 .6
29.0
4,704,550
73.668.931
100.0
100.0
Ocou nation
Buelneee
Farsie, d a ir ie s A ranehee
R e ta il and w holesale
Cafes and h o te ls
Gee, o i l end garage
Insurance & r e a l e s t a t e
O ther bus lneee
T o tal lsielneee
P ro feeelonal
D octors, d e n ti s t s , e t c .
Educators
Lawyers
O ther p ro fe ssio n a l
T o tal p ro fe s sio n a l ,
T o tals
T otal
Taxes
•G 7 *
TABLE X III.
TOTAL, AVEKAOE, AED PER CBST CF BET IKCOKE REQS IKED
FOR PAYmT CF ALL TAXES BI OCCUPATIONS, FOB TEOSB
FILIEG STATE IECOMB TAX BETUBES, WORTAKA, 1936.
Oocupatlon
T otal
Taxes
Bualnesa
Fanna, d a ir ie s A ranches
1632,980
B e ta ll end w holesale
444,965
CafM and h o te ls
106,722
Sas, o i l and garage
132,911
Izusuranee and Real E sta te
22,866
O ther b u sin ess
166,110
T o ta l b u sin ess
1,606,644
Average Rates
Of TaxM In
Per Cent
I 383
210
• 283
265
224
272
280
23.2
7 .7
12.8
8 .7
6 .9
7 .9
11.3
291
SG
341
97
162,611
73,098
104,795
23,634
564,038
CO
2
P ro fessio n al
D octors, d e n tis ts , e t c .
Educators
Lawyers
Other p ro fe ssio n a l
T otal p ro fe ssio n a l
Avemge
Tax Paid
Pmr R eturn
6 .7
2 .1
7 .3
3.8
4 .5
Employees
Farms, d a ir ie s A ranches
F ining
Ltmberlcg
M anufacturing
M otors, garages, e t c .
C onstruction
Government
R e ta il
Wholesale
Gas, o i l , end re fin in g
Bank
I n s . , B.E, A Finance
CafM and h o te ls
T ran sp o rtatio n A Coranun.
Power, gaa A w ater
Eewspapers A p rin tin g
Other employee#
T o ta l employees
43,846
168,400
36,404
62,016
64,764
31,606
134,691
192,643
92,923
54,485
72,776
84,730
17,239
277,642
73,866
30,889
61,176
1,468,981
169
46
98
93
81
76
68
78
8891
176
137
82
62
73
67
112
73
6 .6
2 .3
3 .7
3.7
3.1
3 .3
2 .9
3 .3
3 .0
3 .6
6 .9
4.8
4 .0
2 .8
3 .0
2 .4
4 .3
5 .2
In v esto rs
1,366,987
, 806
22.0
4,704,660
147
6 .4
T o tals
d if f e r e n t o ccupations, end because o f t h i s th e burden la found, I l t o t h a t o f
"e th e r" ta x e s , to f a l l extrem ely heavy on th o se who rec eiv e t h e i r lneomee
f r m p ro p e rty , w hile th e burden Ie q u ite l ig h t on th o se who re c e iv e t h e i r
incones in t h e f o r a o f e a l a r Ies and wages.
The extreme# l a t h e range o f ta x
r a te s may be seen to be from th e e d u ca to r group w ith 2 ,1 p e r c e n t t o t h a t o f
th e farm ers *ho have an average ta x r a t e o f 25.2 p e r cen t o f t h e i r n e t Ineoswe.
A graphic comparison o f th e average n e t Incomes and r a te s o f t o t a l tax es f o r
th o se groipe i s shown in f ig u r e 8 .
That we may determ ine t h e e f f e c t th a t choice o f occupation W* upon
th e a c tu a l as cunts t h a t persona c o n trib u te t o th e support o f government, l e t
us ta k e a s an example a person s im ila r ly s i t u a t e d I n every re s p e c t, o th e r
than occupation, and compare M e t o t a l ta x b i l l s p aid In th e d if f e r e n t posi­
tio n s ,
Suppose t h a t o u r h y p o th e tic a l person has a n e t Income o f $3,000
throughout t h e I l l u s t r a t i o n , and t h a t he Is a m arried man w ith no dependents,
e th e r th a n a w ife .
Thus I n every c a se he w ill be id e n tic a l w ith re s p e c t to
th e lnoorae t a x , and w ill be paying th e same amount, which under t h i s co n d itio n
M il be H O ,
In fig u rin g th e amounts o f o th e r ta x e s , p r in c ip a lly on p ro p e rty ,
l e t us u se th e average r a te s a s found f o r th e re s p e c tiv e occupation.
F i r s t l e t us suppose our. h y p o th e tic a l taxpayer t o b e a farm e r,
fils
ta x b i l l f o r 1836 th en would have been a s follow s t
S ta te Income ta x e s - - - 4 10
Othwr ta x e s (P ro p erty ) - G75
T o ta l
4686
Sow l e t o u r ta x puppet b e placed In th e In v e s to r group.
have been hie ta x b i l l f o r th e years
T his would
-SS-
S ta te Income ta x e s - - - $ IO
O ther ta x e s (p ro p erty ) •
T o ta l
COO
#610
I f he he an o p e ra to r o f a h o te l o r r e s ta u r a n t, h ie ta x h i l l f o r th e
y e a r would h a re Seen*
S ta te Income ta x e s —— — $ 10
Other ta x e s (p ro p e rty ) •
T o ta l
366
|S 76
l e t him h e an o p e ra to r o f a w holesale o r r e t a i l e stab lish m en t, th en
h is tax b i l l would h are beem
S ta te Income ta x e s - - - $ 10
O ther ta x e s (p ro p e rty ) T o ta l
807
#817
Thas f a r , we haws considered o n ly t h e b u sin e ss and in v e s to r groups
In t h i s Cttnperism .
few l e t u s c o n sid er th a t o f one in a p ro fe s s io n a l c a r e e r .
Suppose our h y p o th e tic a l t a x payer t o be a law yer.
Bis ta x b i l l th e n f o r
1956 would have been*
S ta te income ta x e s - - - I 10
O ther ta x e s (p ro p e rty ) T o ta l
186
#196
I f o u r ta x puppet b e a d o c to r, h is ta x b i l l f o r th e y e a r would have
been*
S ta te Income ta x e s - - - #10
Otiter ta x e s (p ro p e rty ) - 178
T o tal
#188
«»60*
I f ho had been aa e d u c a to r, t h i s would have been h ie t a x b i l l f o r
th e y e a n
S ta te lncorae tax es * ~ • $ 10
O ther ta x e s (p ro p e rty ) *
T o ta l
67
* 67
Eow I f our h y p o th e tic a l taxpayer be a member o f t h e employee group
and h ie r a te s o f ta x e s be th a t o f th e average f o r t h i s group, h ie t a x b i l l f o r
1836 would have been*
S ta te Income ta x e s * * * S 10
O ther ta x e s (p ro p erty ) *
T o ta l
84
# 84
From tills example o f comparing a c tu a l amounts o f ta x e s paid by
persons ld e a tlo a l except f o r o ccu p atio n . I t ra y b e seen t h a t th e conclusions
a rriv e d a t a re th e seme as th o se p o in ted o u t e a r lie r * namely, t h a t th e d is ­
crim in atio n s In th e d is tr ib u tio n o f th e ta x burden a re g r e a tly a g a in st th o se
who receiv e t h e i r lnoome from p ro p erty Investm ent#,
In a stu d y , conducted
much on t h i s p r in c ip le , r e s u lts were found t o e x i s t In W isconsin which were
c lo s e ly comparable w ith th e s e .1 9 /
I t may be argued a t t h i s p o in t, a s i t fre q u e n tly I s , t h a t th e re I s
j u s t i f i c a t i o n f o r th o se who own p ro p erty t o pay a h ig h er r a t e c f ta x e s th a n
th o se who own none, b u t who a re e n ti r e l y dependent upon t h e i r wage o r s a la r y
lnooae.
The argument Is fre q u e n tly heard t h a t p ro p erty owned provides f o r
s e c u r ity and t h a t incomes therefrom re p re s e n t more a b i l i t y t o pay th a n Inccxaes
Xg/ Proves, ii. k , , " A b ility i o Pay and th e Tax Syetea in bane County, h l s o .,
Ih e U n iv e rsity o f W isconsin, J u ly , 19% .
**61—
from personal s e r v ic e s .
I t Ie f u r th e r argued t h a t th o s e who own p ro p erty
re c e iv e more b e n e f its from th e government than th o s e who do n o t, and th e re fo re
th e y should pay a h ig h e r r a t e o f ta x e s .
In re p ly t o th e se c o n te n tio n s, th e
opponents t o t h i s th eo ry p o in t o u t t h a t p ro p erty which f a l l s t o y ie ld an
lnooroe Is v a lu e le s s and in some cases Is a d e trim en t to i t s owner.
They
a ls o p o in t o u t t h a t th e b e n e f it p rin c ip le Is over-em phasised, and th a t when
a l l w elfare a c t i v i t i e s o f th e government, such a s sc h o o ls, h e a lth s e rv ic e s ,
re c re a tio n a l a c t i v i t i e s , and r e l i e f measures a re ta k e n in to a cc o u n t, which
s r s f o r people as such and have no necessary connection w ith p ro p e rty , th e
governmental b e n e fits enjoyed by th o s e people who do n o t own p ro p erty a re
v ery n e a rly e q u al t o th o se enjoyed b y th e p ro p erty owners.
There may be some j u s t i f i c a t i o n f o r th e s e d iffe re n c e s in th e burden
o f ta x a tio n borne by th e d if f e r e n t occupations to th e s t a t e , b u t th e au th o r
i s o f th e opinion t h a t a f t e r due allow ance has h em made f o r any such j u s t
c la to s . th e re would s t i l l e x i s t d is c rim in a tio n . I* th e ta x system mush t h e e * ,
•a th o se found a t t h e p re se n t tim e .
But re g a rd le ss o f what t h . tr u e s i t u a t i o n
suey be i n t h i s re s p e c t, th e purpose o f t h i s stu d y has been only t o measure th e
« t e n t t o which th e a b i l i t y to pay p rin c ip le i s a p p lie d to th e Montana ta x
system , and n o t to J u s ti f y th e p r in c ip le .
—52—
SCmSABI JQD COKCUJSI«.S
Xho r e s u l t s o f t h i s study c l e a r l y in d ic a te t h a t th e t a x system o f
th e s t a t e f a i l s to conform t o th e p rin c ip le o f a b i l i t y t o pay, as measured
by incomes received*
The p ro p o rtio n o f n e t income req u ire d t o pay th e
imposed tax es was found t o v ary eatong persons In th e d i f f e r e n t occupotlens
from 2*8 p e r c e n t t o 23*2 p e r cent*
This In i t s e l f is n o t n e c e s s a rily
alarm ing, b u t t h a t is o f concern i s th e f a c t t h a t th e s e h ig h er ra te s o f
tax es a re n o t g e n e ra lly paid by th o se who re c e iv e th e h ig h er incomes*
Chi
th e c o n tra ry , th e h ig h e st r a t e o f ta x e s p aid by any group was paid by th e
group who receiv ed th e low est average n e t Income—th e farm ers *
The case o f th e farm er may b e s l i g h t l y exaggerated because o f th e
f a c t t h a t n e t income i s s poor measure o f h is tr u e w e ll-b e in g , o r a b i l i t y
to pay, b u t re g a rd less o f t h i s condi t ic n , h is c ase i s q u ite re p re s e n ta tiv e
o f t h a t f o r a l l groups sho re c e iv e t h e i r p rin c ip a l Income from p ro p erty In v e st­
m ents.
Thus, because o f t h i s
s i t u a t i o n , i t Is concluded t h a t th e la x le v ie d
on a p ro p erty b a sis i s n o t le v ie d in accordance w ith a b i l i t y to pay, and f o r
th is reaso n , i t is concluded t h a t th e p ro p erty ta x i s not a j u s t and e q u it­
a b le form o f tax atio n *
In c o n tra s t to th e g en eral p ro p e rty ta x , th e s t a t e Income ta x was
Seen t o conform v ery c lo s e ly t o th e p rin c ip le o f a b i l i t y to pay*
Upon t h i s
p o in t i t Is e amended as b ein g a j a t and e q u ita b le f o r a o f p u b lic finance*
I t was f u r th e r seen t h a t th e Income t a x has a balancing In flu en ce on th e
v a ria tio n In ra te s o f taxes imposed, through th e g e n e ra l p ro p erty ta x , upon
persons in th e d if f e r e n t o ccu p a tio n s.
But I t Ie s t i l l t o be r e g r e tte d t h a t
-65-
t h i s ta x accounted f o r o n ly IeB p er cen t o f th e s t a t e ’ s t o t a l ta x e s f o r th e
y e a r, so t h a t th is d e s ira b le e f f e c t I s q u ite suall.
Tlxts th e f i n a l conclusion i s th a t th e re e x is ts grave d isc rep a n cies
In th e ta x system o f th e s t a t e , and because o f t h i s condition th e burden o f
ta x a tio n i s extrem ely heavy on th o se whose p rin c ip a l Income i s from p ro p erty
I r v e s tr e n ta i
namely, t h e b usiness and in v e s to r groups f w hile th e burden is
extrem ely l i g h t on th o se who re c e iv e t h e i r Inromee a s s a l a r i e s and wages,
namely, th e p ro fe s sio n a l and employee groups*
JLPPESDIX Xm EET ISCCSiES CUCSIFIED ACCOFXKS TO SK E FCE
ALL OCCUPATIONS, AS SNORT; IS STATE BCCMB TAX
SETCESS, MCSTATIA, 1236
Occupation
4
4 O #2E0 B o o 4760 IT(XX) Sisoo *2000
E et
to
to
to
to
to
to
to
Loss 248.9 495.9 749.9 989.9 1499.9 1999.9 2999.9
Eualnose
F am e, d a i r i e s , ranches 2E4
64
R e ta il end w holesale
HO
SG
Cafee end h o te ls
26
6
Gas, o i l and garage
23
6
Ins* & r e a l e s ta te
4
I
O ther b u sin ess
54
I
T o ta l b u sin e ss
461 114
P ro fe ssio n a l
D octors, d e n t i s t s , etc*
Educators
lawyers
O ther p ro fe s sio n a l
T o tal p ro fe ssio n a l
76
60
10
10
O
I
166
78
66
18
14
O
10
176
94
67
31
21
I
20
254
222
263
64
61
U
68
669
246
289
61
65
11
77
758
302
669
76
158
28
HS
1261
10
O
3
O
13
4
0
2
O
6
2
6
I
3
11
3
12
2
4
21
10
43
4
9
66
26
960
20
Tl
1077
48
624
54
60
666
159
529
82
46
696
Employees
F a rss, d a i r i e s , ranches
Mining
Loaberlng
M anufacturing
Motors, garages, etc*
C onstruction
Government
R e ta il
Wholesale
Gas, o i l , end re f in in g
Bank
In suran ce, R. E* and
Finance
Cafee and h o te ls
T ran sp o rtatio n A Commmu»
Power, gas A w ater
Rewspepers A p rin tin g
O ther employee*
T o tal employees
63
2
O
I
O
13
6
3
4
2
2
3
O
O
O
8
18
6
3
2
O
8
4
I
3
S
2
10
9
I
3
2
12
3
I
2
3
3
28
IS
4
3
2
14
65
12
12
16
7
68
98
13
21
14
67
1770
143
HG
173
100
602
694
199
133
64
43
686
42
97
115
61
694
447
140
116
87
72
889
107
216
217
162
723
657
417
210
117
3
I
8
O
S
O
ES
3
I
3
3
2
2
66
6
I
4
4
3
4
67
11
2
8
I
O
6
103
12
5
79
15
18
21
480
99
87
814
192
80
162
6492
89
S3
806
146
Tl
88
3680
262
55
2188
476
283
127
7U 8
In v esto rs
66
42
61
68
94
215
200
278
613 218
295
358
894
7453
6274
6243
T otals
APIjEKBII A, Sheet 2
Occupation
*5000 §4000 #6000 @6000 &7000 '68000 @9000 #10000
to
to
to
to
to
to
to
and
3393.9 4933.9 6999.9 6999.9 7999.!9 8999.9 9939.9 Over
Buslneca
Fairai, d a i r i e s , reaches
K c ta il and w holesale
Cafes and h o te ls
Ges, o i l and garage
Insuranoe A r e a l e s ta te
Other business
T o tal b u sin e ss
146
247
46
73
18
108
666
76
135
23
53
17
66
339
P ro fe ssio n a l
D octors, d e n tis ts , e t c .
Educators
Lawyers
O ther p ro fe ssio n a l
T o ta l p ro fe ssio n a l
111
84
62
27
274
63
16
35
11
123
46 .
103
20
28
4
24
35
4
19
IS
24
107
220
41
10
11 •
6
67
I
8
30
4
2
0
11
66
6
26
I
I
2
10
46
26
12
15
6
58
9
2
11
IS
10
2
26
0
2
18
8
9
11
3
I
13
4
4
4
I
I
11
33
13
8
7
7
8
28
16
10
2
7
0
4
4
15
8
6
16
8
4
22
I
22
I
17
0
I
0
4
23
9
2
6
0
17
20
42
4
17
4
19
106
47
20
7
74
Employees
Farus, d a i r i e s , ranches
31
!lining
163
lumbering
22
Kanufaoturlng
63
Kot o r s , g arag es, e t c .
77
C onstruction
28
Government
160
D e ta il
272
I h c le s a le
167
Gas, o i l , and r e f in in g
67
Eank
61
68
I n s . , B. E ., end F in .
CafM and h o te ls
14
T ran sp o rtatio n A Comsun,. 473
102
Power, gas A w ater
Eewepapers A p r in tin g
44
O ther employees
52
T o tal employees
1844
16
45
7
23
34
12
69
116
61
22
26
37
4
61
33
16
30
692
U
29
4
10
11
4
22
66
21
12
17
24
6
10
10
9
13
277
8
10
0
7
159
7
118
HO
17
4
6
3
2
36
Inveetore
165
101
67
38
39
19
16
109
2938
1165
621
862
238
196
73
326
T otals
I
S
5
IS
2
4
4
0
6
2
I
I
I
3
2
2
3
I
8
IS
I
66 -
APPEECIX B.
SEX MD KABITAL STATUS BY OCCCPATIOH OF THOSE
F I L m STATE CCCT-S TAX RETCPKS, MCSTAMAe ISSS
Oaoupatlm
Business
F am s, d a i r i e s , ranches
R e ta il and iB holeeale
Cafm and h o te ls
Cm , o i l and garage
Insursnee & r e a l e s t a t e
O ther b u sin e ss
T o ta l b u sin e ss
P ro fm slo n a l
D octors, d e n tis ts , e t c .
Educators
Lawyers
Other p ro fe ssio n a l
T otal p ro fe ssio n a l
Bapleyem
F a re s, d a i r i e s , ranches
lin in g
Lusiberlng
Kanufactu rin g
M otors, Garages, e t c .
C onstruction
Government
R e ta il
Wholesale
C ss, o i l , and re fin in g
Benk
In s e , R.Be A Finance
Cafee and h o te ls
T ran sp o rtatio n A CoBcoun,
Power, Gas, and E a te r
Kewspapers & P rin tin g
Other employees
T o tal employees
In v esto rs
T o tals
MAIE
A ll
R eturns
T o ta l
S a rrle d
S in g le
1,669
2,121
574
603
102
610
6,569
1,611
1,760
266
444
80
623
4,683
1,174
1,449
211
388
66
467
3,721
311
84
89
16
#6
862
668
2,000
508
241
3,107
-e/
600
499
269
160
1,418
439
507
223
98
1,067
61
192
46
62
381
276
3,706
SOL
669
660
417
2,310
2,477
1,061
603
416
616
210
4,477
1,006
636
602
20,202
238
3,639
328
484
500
392
1,666
1,898
896
612
327
483
140
4,076
869
461
340
17,117
167
1,603
170
m
376
226
1,012
1,168
660
346
247
377
68
2,966
643
367
190
10,866
Tl
1,936
168
173
206
166
673
730
236
167
90
86
82
1,119
216
104
ISO
6,262
1,678
946
666
390
30.266
24,063
16,208
7,866
W
-6 7
APtWDII B,S heet 2
FEMALE
61
144
61
16
8
52
522
17
*6
21
6
S
8
89
24
285
44
109
40
11
6
P ro fe ssio n a l
D octors, d e n tis ts , e t c .
Educators
lawyers
Other p ro fe ssio n a l
T o ta l p ro fe ssio n a l
16
1,458
—
170
18
1,288
76
1,560
12
180
M
1.588
Employees
Forms, d a i r i e s , ranches
Mining
Im dierlng
Manufacturing
M otors, Garages, e t c .
C cn stru ctlo a
Government
D e ta il
lh o le e a le
Gas, o i l , and r e f in in g
Bank
I m , , B, E, & Flnanee
Cafes end E otela
T ran sp o rtatio n A Comeatm.,
Power, Gas A Water
Iem p a p ers A P rin tin g
O ther e mployees
T o tal employees
14
60
17
56
47
11
679
570
72
62
84
109
60
251
88
64
120
1,994
Investors
T o tals
J o in t
Betueee
87
Sesess
M errled _____ S in g le
Eseee
Buelnese
F em e, d a i r i e s , reaches
B e ta ll and w holesale
Cafee and het e l e
Gae, o i l and garage
lnaurenoo & r e a l e e ta te
O ther bus lnese
T o ta l b u sin ess
T otal
U
16
24
11
85
27
14
21
455
14
58
14
50
58
9
458
297
85
41
49
85
59
188
61
40
99
1,861
59
21
41
1,091
485
97
586
150
4.549
601
5,548
1,844
24
121
75
SgtegsiSssessK
O c c u lt I o n ______
APFESBIX C.
ECHETULB EMPLOYED IW EECUPIWO BFORWATIOfT |p0*4
THE STATE, PEESOSAL ISCOKE TAX RETUKS
1937 STATE ISCOME TAX ANALYSIS
COUHTYa ................................. .. . S e ria l Wo...
Incomes
S a la r ie s , Wages, etc*
S e ................
Business o r P ro fessio n #...................
I n te r e s t
i ......... ..
P a rtn e rsh ip s , e t c .
8...................
R ents, R oyalties
I ...................
Sales p ro f• from PaE .. e tu i_________
DlTldends
I ............. ..
Other# K inde.a.aee.aee,
Amount
TOTAL ZWCOITE
8...............
Deductions#
I n te r e s t Paid
I . .................
Taxes Paid
$...................
Losses by F ir e , e to , $....................
Bad Debts
................
C ontributions
t ...................
Other
...........
TOTAL DEDUCTIONS
I ...............
EET INCOME
a ........
EXEMPTICE3
D-CCITE SUBJ. TO TAX
TOTAL TAX LEVIED
t ...............
Taxee Paid#
Federal
County
C ity '
Less Xmpror. Taxes
TOTAL PAID
$ . ...........
8 ._____
8.............
8.............
I ........
fem ale. ____ __________
ewl. . . . . . . . . . . . . . .
G ln g l# ..e ,eeeweee.ee »e
W ife ... . . . . . _____ . . . .
JoInW PaWnm. . . . . . . . . .
Dead o f Pam#I v. . . . . . . .
Dependents, b u t n o t
Bead o f F a m i l y ......
Ho* o f
__
Business o r P rofeaelon
K in d ........... ..
Gross Income (sales# etOa) Ie a 4
Ket Inoceae front Business $ . . 4
•6 9 »
•
BIBLIOGRAHIT
A u lla G* Be, T a m t Ion and A b i l i t y t o Pfty I n S o u th C iurollna- S , Ca A cre Bxne
Stfte B ule isOe ¥ 8 6 , MOVe l S l l e
Qrovw, Re Be, A b ility t o Pfty and th # Tax S y t* * l a ta x* Countv. B le e w e t o ,
Tho B n lv e ra lty o f VlmV9 k u re a u o f Sue* & Seotu Roeearch^ tu l# Be. 2 ,
J u ly 1950*
*
Jeaeon, Jerw P a, Qevenmmt Finance. Thema Te C ro m ll C e ,, Be* Torfc, 1933.
R eid , Margaret Ge and B r itto n , V irg in ia , Io m Inoomee as Reported In Ineome
Tea B eturna. Iowa AgTe Exp, S ta . Bee, m l . K o /T W , 1 6 # .
—
Renno, R. B ., Montana Farm T axes. Mcmt. Agr. Exp. S ta . B ui. Re. 886, 1934.
Reraie, B. Be, and Lord, Be Be, Aeeeeeeent o f Ndntena Farm Lands. Moot. A ar.
Exp. s t a . Bule Eo. 343. 1937•
—
" f
Seventh E lw n la l B egort o f th e S ta te Board o f E q u a lis a tio n . J u ly I . 1934 to
June SO, 1936, S ta te o f ^ S ta S S T T s I S ;
-------------—
V=I. I , E ta t= fttM L h in g C =., 8 . 1 « . . 1955.
Rlsponeln In d iv id u a l Ineone Tax S t a t l e t l c a . V ole. I , I I . and I I I , e ia e . Tax
Comaisele n , la d la o n , 193u.