The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

i i i il eh i { $11 i 402 _ NATURE OF CAPITAL AND INCOME first half year, there is left $908.67, which has impaired his capital by $91.33. This being reinvested and yielding in- terest, would make a total combined fund of $1000 as before. At the end of the second half year, in like manner, the original security is worth $815.52, but to this must be added the capital invested last year, $91.33, and also the investment this year, $93.15, making a total again of $1000; and so on for each year. If, then, as in England, the tax is paid on the interest annually (second column), no injustice is done, providing the items in the fourth column are actually reinvested each year, and that the interest on such reinvestment in some other form is used as income. In other words, each reinvestment is not ae- cumulated at compound interest, but made a separate fund yielding perpetual interest which is converted into enjoyable income as fast as it is received. In this case the man will be re- ceiving, from the given security and the others created out of his reinvestments, a uniform net income of $20 a year, and will maintain his capital at $1000. Consequently the ex- emption of “impairment of capital” works no ultimate injustice, since ultimately there is no such impairment. But as, practically, we can never know to what extent the “impairments” are actually reinvested, the justification of tax- ing the sums in the first column instead of those in the third is entirely on grounds of expediency. Theoretically, the actual income from this particular form of capital as represented in the third column should be taxed, and afterward whatever is reinvested in some other form should earn remission of taxes. This method, while impracticable in such detailed application, might with advantage be applied to the taxation of an individ- ual’s income as a whole. After all the individual components are combined —all the income elements, large or small, and all the outgo elements, including reinvestments—there will be a resultant net income for the individual which, and which alone, should be taxed. A system which would accomplish this would tax, to this individual, any net impairment of his capital, for such impairment would mean large income; but, on the other hand, if he were not depleting but laying up capital, it would exempt the increase, for such increase would not be part

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