342 THE FISCAL PROBLEM IN MISSOURI 
that income from other intangibles was being reached for 
taxation, such a broadening of the base would involve dis- 
crimination against dividends received from domestic cor- 
porations and foreign corporations doing business within the 
state. 
There is no satisfactory answer to the question concerning 
the changes in income tax rates that would have to be made, 
if all of the additional revenues needed were to be obtained 
from the income tax. This would be particularly true, if it 
were decided to adopt moderately progressive rates on 
personal incomes and a flat rate on income from intangible 
property. The receipts from the income tax vary in accor- 
dance with business conditions, and it is by no means certain 
that a flat rate of 29% in all incomes for 1931 would produce 
twice the amount of revenues obtained in 1928 or 1929, even 
though a centralized system of administration were adopted. 
The best policy would therefore seem to be to obtain a part 
of the increased revenues desired from some tax with a high 
degree of fiscal adequacy and to increase the income tax 
rates moderately. 
Although progressive rates on personal incomes may be 
desirable, it does not follow that Missouri should adopt 
steeply progressive rates. There are no sound reasons why 
corporation income tax rates should be progressive. Natural 
differences in size as between industries tend to make a 
progressive rate schedule inequitable when applied to cor- 
porate income. 
The corporation franchise tax is essentially a tax on assets 
and, disregarding certain technical aspects, it is in effect an 
extra tax on property, including intangible as well as tangible 
property. The continuance of the tax at existing rates seems 
to be justified, primarily because of its fiscal adequacy. 
Since a tax is levied on personal and corporation incomes, 
there does not appear to be any good reason why a general 
sales or turnover tax should be considered. 
A number of states adjoining Missouri tax cigarette sales, 
and almost one third of the states have enacted laws pro- 
viding for tobacco taxes. Regardless of the objections that 
might be raised, a tax on cigarette sales has a degree of fiscal 
adequacy that many other taxes do not possess. One of the