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Page 174
uations have been in oil, where the percentage depletion allowances provide a particularly easy route to the receipt of tax-free income.
In judging the desirability of graduated income taxation it seems to me important to distinguish two problems, even though the distinction cannot be precise in application: first, the raising of funds to finance the expenses of those governmental activities it is decided to undertake (including perhaps measures to eliminate poverty discussed in chapter xii); second, the imposition of taxes for redistributive purposes alone. The former might well call for some measure of graduation, both on grounds of assessing costs in accordance with benefits and on grounds of social standards of equity. But the present high nominal rates on top brackets of income and inheritance can hardly be justified on this groundif only because their yield is so low.
I find it hard, as a liberal, to see any justification for graduated taxation solely to redistribute income. This seems a clear case of using coercion to take from some in order to give to others and thus to conflict head-on with individual freedom.
All things considered, the personal income tax structure that seems to me best is a flat-rate tax on income above an exemption, with income defined very broadly and deductions allowed only for strictly defined expenses of earning income. As already suggested in chapter v, I would combine this program with the abolition of the corporate income tax, and with the requirement that corporations be required to attribute their income to stockholders, and that stockholders be required to include such sums on their tax returns. The most important other desirable changes are the elimination of percentage depletion on oil and other raw materials, the elimination of tax exemption of interest on state and local securities, the elimination of special treatment of capital gains, the co-ordination of income, estate, and gift taxes, and the elimination of numerous deductions now allowed.
An exemption, it seems to me, can be a justified degree of graduation (see further discussion in chapter xii). It is very different for 90 per cent of the population to vote taxes on themselves and an exemption for 10 per cent than for 90 per cent to vote punitive taxes on the other 10 per centwhich is in effect what

 
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