gains, profits, and income not falling under the foregoing and not returned and paid by virtue of the foregoing shall be assessed by personal return, under rules and regulations to be prescribed by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury.

The provisions of this section relating to the deduction and payment of the tax at the source of income shall only apply to the normal tax hereinbefore imposed upon individuals.

The above is what is called stoppage-atsource, collection-at-source, or payment-atsource tax and appears in only one of the former acts, that of 1894. Corporations were to deduct the tax from dividends and, in the case of public officials, the Government was to deduct the tax from their salaries. See §§ 28, 32, and 33.

The origin of this tax and the experiences of other nations in levying it are set forth in Seligman, 36-38, 90–91, 98, 216, 270-271, 312, 324, 325, 347, 353, 526–527, 659–660. On page 661 he says, "In the United States the arguments

in favor of the stoppage-at-source income tax are far stronger than in Europe, because of the peculiar conditions of American life. In the first place, nowhere is corporate activity so developed, and in no country of the world does the ordinary business of the community assume to so overwhelming an extent the corporate form. Not only is a large part of the intangible wealth of individuals composed of corporate securities, but a very appreciable part of business profits consists of corporate profits. In the second place, in no other important country are investments to so great an extent domestic in character. The one great difficulty in England, as we have learned, is that connected with foreign securities. And in France, where the same difficulty exists, we have learned that the projected control of these foreign investments through the French bankers and agents forms the one difficult and complicated point in the scheme. In the United States, on the other hand, the situation is the reverse. Instead of our capitalists seeking investments abroad, it is the foreign capitalist who purchases American securities. We are, therefore, fortunately exempt from the chief embarrassments which confronts Europe; and there is every likelihood that this situation will not be changed for some time to

come. The arguments that speak in favor of a stoppage-at-source income tax abroad hence apply with redoubled force here. The stoppageat-source scheme lessens, to an enormous extent, the strain on the administration; it works, so far as it is applicable, almost automatically; and, where enforced, it secures to the last penny the income that is rightfully due. Can there really be any doubt as to the preference to be given to the stoppage-at-source income tax over either the lump-sum or the presumptive income tax under American conditions?"

On the other hand this feature of the present bill is the one which has aroused the most hostility and opposition, and it is the one which will doubtless give rise to the most embarrassments.

The writer in the Wall St. Journ. in Art. VI says, "Practically all public utility companies are obliged to make reports to State Boards of Commissioners. All railroads make reports to state boards, as well as to the Interstate Commerce Commission. To comply with the system adopted by the Interstate Commerce Commission and the state boards many railroads had to modify their methods of accounting and of defining the various items of the account.

"There is practical uniformity now, and to

introduce a new system to comply with the requirements of the proposed income tax law would cause endless confusion. The companies would find themselves compelled by law to file two sets of reports with the United States Government - one with the Internal Revenue Department and one with the Interstate Commerce Commission."

The same writer in the Wall St. Journ. in Art. XIV, after discussing at length the duties imposed on guardians and trustees, says, "As to the first sort of stoppage (incomes over $3,000 or $4,000) all vital difficulties would be wiped away if the obligation to make returns on behalf of another could be circumscribed as herein suggested, and if income should be required to be reported at its source, without the physical collection of the tax at the same time. This would eliminate all of the complications relating to deductions, exemptions, and the duplication of returns, while at the same time the Government would be as sure of collecting the full tax as if the tax was actually withheld at the source.'

He further says, speaking of the second sort of stoppage, 1 per cent of all interest on the bonds and debts of corporations, no matter what the amount of income, "Starting with the premise that the chief value in this sort of

stoppage is the information derived therefrom, we suggest two simpler and cheaper methods:

"Either (1) abandon this form of stoppage altogether, and rely on the affidavits of the persons taxed.

"Or (2) require the institution which pays the interest (whether it be the debtor corporation or its paying agent) to retain 1 per cent of each interest payment, and remit it to the collector of the district, together with a statement showing (a) to whom fully registered bond interest was paid, and (b) for what debtor corporation and in what amount all the remainder of such interest instalment was paid. Adequate penalties should also be imposed for failure to comply with these requirements. Free all other persons and institutions from responsibilities in the matter. This method will have these advantages:

"(a) The first corporations, trust companies, or banks paying interest money, and only those, will be burdened with this matter, thus reducing the volume of work immensely.

"(b) The work (on the part of the Department of Internal Revenue) will be much simplified by concentrating all data respecting each debtor corporation upon one collector." See further on this subject Arts. II, III, IV.

The same writer in the Wall St. Journ. in