Regarding the assessment of the additional tax not much need be said in the way of explanation. It is, in theory at least, a comparatively simple matter. There is no attempt here to make any application of the principle of collection at the source. The tax is all levied directly upon the recipients of the individual incomes, and the assessment is based upon the taxpayer's declaration, which for the purposes of this tax must cover the "entire net income from all sources, corporate or otherwise." The tax is thus largely distinct from the normal income tax as regards both the method of assessment and the rates. It is, however, to be administered through the same machinery, and no doubt to some extent the information obtained as to the sources of income in connection with the assessment of the normal tax will prove useful as a check upon the returns of income required for assessment of the additional tax. Every person whose income exceeds $20,000 will be subject to both taxes, the normal and the additional, but presumably will be required to make only one declaration. For the purposes of the additional tax he will be required to declare his income from all sources, and therefore any relief from the obligation of making a complete revelation of income which may be secured to him through the application of the principle of assessment at the source in connection with the normal tax will be entirely sacrificed.
The administration of a direct personal income tax—using that term to describe a tax levied directly on individual incomes—is a comparatively simple matter, however ineffective it may prove to be in reaching the income subject to it. Under this method of taxation it is easy to exempt a minimum, to apply progression in the rates, or to make any other adjustments that may be deemed equitable with reference either to the size or character of the income or to the circumstances of the taxpayer. But as soon as we depart from this simple method and resort to taxation at the source, we encounter difficulties in varying the rates, allowing exemptions, or making any similar adjustments. In the English income tax, these difficulties are squarely met and surmounted. As previously explained, that tax is in the first instance levied indiscriminately on all accessible sources of income and the adjustments are effected by refunding the tax collected at the source so far as may be necessary. No provision is made for forestalling the deduction of the tax, and no returns are required of the names and addresses of persons to whom payments of incomes are made. The exemption, however, is small ($800), and the abatements extend only to incomes below $3,500. Above that point the entire income is taxable.
A tax which provides for the exemption of $3,000 or $4,000 from every individual income places a formidable barrier in the way of a thoroughgoing application of assessment at the source. It is evident that with a universal exemption as high as this, a very large amount of tax withheld and collected at the source would ultimately have to be refunded. The law as enacted indicates an intention to secure in part the advantage of assessment at the source and at the same time avoid in part the attendant disadvantage of having to refund the tax. The measure might be characterized as one which as regards the "normal tax" applies the principle of assessment at the source to corporate income completely and to other income in spots. The "additional tax" is simply the direct personal tax. The normal tax will doubtless be successful in reaching the large amount of income earned or created by enterprises conducted under the corporate form of organization, much of which would probably escape assessment under a direct personal income tax. But beyond this it is questionable whether the method of assessment at the source as here applied will be of sufficient advantage to justify the administrative complications which it involves.
It seems useless, however, as well as unwise, to venture any predictions as to how successful the tax will be in reaching the income subject to it or how well it will work in actual practise. The law will doubtless require amendment in many particulars, even if it does not need to be radically revised. That the income tax in some form will be perpetuated as a permanent part of our system of national finance may safely be predicted. Properly adjusted and wisely administered, it should greatly strengthen the financial resources of the Government, make possible a closer adjustment of revenue to expenditure, and secure a more equitable distribution of the burden of taxation.
THE SECOND BALKAN WAR
GREECE AND SERVIA CRUSH THE AMBITIONS OF BULGARIA
A.D. 1913
PROF. STEPHEN P. DUGGAN
CAPT. A.H. TRAPMANN
The crushing defeat of Turkey by the Balkan States during the winter of 1912-13 had been accomplished mainly by Bulgaria. The Bulgarians were therefore eager to assert themselves as the chief Balkan State, the Power which was to take the place of Turkey as ruler of the "Near East." Naturally this roused the antagonism not only of Bulgaria's recent allies, Greece and Servia, but also of the other neighboring State, Roumania. Bulgaria hoped to meet and crush her two allies before Roumania could join them. Thus she deliberately precipitated a war which resulted in her utter defeat. From this contest Greece has emerged as the chief State of the eastern Mediterranean, a growing Power which at last bears some resemblance to the classic Greece of ancient times.
To understand this war, it should be realized that the Bulgars are really an Asiatic race, who broke into Europe as the Hungarians had done before them, and as the Turks did afterward. Hence their kinship with European races or manners is really slight, though they have something of Slavic or Russian blood. The Servians are near akin to the Russians. The Roumanians trace their ancestry proudly, if somewhat dubiously, back to the old Roman colonists of the days of Rome's world empire. The Greeks are really the most ancient dwellers in the region; and to their pride of race was now added a furious eagerness to prove their military power. This had been much scorned after their ineffective war against Turkey in 1897, and they had found no opportunity to give decisive proof of their strength during the war of 1912.
To Professor Duggan's account of the causes and results of the war, which appeared originally in the Political Science Quarterly, we append the picture of its most striking incidents by Captain Trapmann, who was with the Greek army through its brief but brilliant campaign.
PROF. STEPHEN P. DUGGAN
When the secret treaty of alliance of March, 1912, between Bulgaria and Servia against Turkey was signed, a division of the territory that might possibly fall to the allies was agreed upon. Neither Bulgaria nor Servia has ever published the treaty in full, but from the denunciations and recriminations indulged in by the parliaments of both, we know in general what the division was to be. The river Maritza, it was hoped, would become the western boundary of Turkey, and a line running from a point just east of Kumanova to the head of Lake Ochrida was to divide the conquered territory between Servia and Bulgaria. This would give Monastir, Prilip, Ochrida, and Veles to the Bulgarians—a great concession on the part of Servia. Certain other disputed towns were to be left to the arbitrament of the Czar of Russia. The chief aim to be attained by this division was that Servia should obtain a seaboard upon the Adriatic Sea, and Bulgaria upon the Aegean. Incidentally Bulgaria would obtain western Thrace and the greater part of Macedonia, and Servia would secure the greater part of Albania.
These calculations had been entirely upset by the course of events. Bulgaria's share had been considerably increased by the unexpected conquest of eastern Thrace, including Adrianople, whereas Servia's portion had been greatly diminished by the creation of an independent Albania out of her share. Moreover, M. Pashitch, the Servian prime minister, maintained that whereas by the preliminary treaty Bulgaria was to send detachments to assist the Servian armies operating in the Vardar valley, the reverse had been found necessary and Adrianople had only been taken with the help of 60,000 Servians and by means of the Servian siege guns. Equity demanded that the new conditions which had arisen and which had entirely altered the situation should be given consideration and that Bulgaria should not expect the preliminary agreement to be carried out. Now, from the outbreak of hostilities Bulgaria's foreign affairs, in which King Ferdinand was supposed to be supreme, were really controlled by the prime minister, Dr. Daneff. He proved to be the evil genius of his country; for his arrogant, unyielding attitude upon every disputed point, not only with the enemy, but with the allies and with the Powers, destroyed all kindly feeling for Bulgaria, and left her friendless in her hour of need. Dr. Daneff's answer to the Servian contention was that Bulgaria bore the brunt of the fight; that, had she not kept the main Turkish force occupied, Servia and Greece would have been crushed; that a treaty is a treaty, and that the additional gain of eastern Thrace in no way invalidated the old agreement.