EE

 

 

mr

  

Sec. 12] EARNINGS AND INCOME 251

which it will yield $100 a year; and from the third, $200
a year for 6 years' and nothing thereafter. The burden
of the three taxes on these three brothers will under these
conditions be exactly equal, when the three are compared
by means of their present values. Each brother could
“compound” for his taxes (that is, could pay a fixed sum
in advance in lieu of the annual sums) at the same cost,
namely, $1000; for $1000 is the sum in present cash which
is equivalent respectively to $50 a year forever; to $100 a
year beginning 14 years hence; and to $200 a year for 6
years. But turning now to the spurious interpretation of
income as the value of uses plus the accumulation of capital,
 or the value of uses less the depreciation of capital, we
find that the three brothers would be very unequally taxed.
The first would, as before, pay $50 a year indefinitely.
But the second who “saves” for 14 years, will be compelled

SecoND BROTHER

 

 

 

 

 

 

 

 

 

 

| CcapIT SO-CALLED TAX TRUE 4 TAX
Ba AL | “INCOME” THEREON | INCOME | THEREON
At beginning . . | $10,000
In 1year . . .| 10,500 $500 | $50.00 | mil nil
In 2years : . . 11,025 525 52.50 nil nil
In" 3years. . 11,576 551 55.10 nil nil
In"dyears’. . J | 12,155 579 57.90 | nil nil
In Byears .. . +} 12,763 608 60.80 nil nil
In 6years . . . | 13401 638 63.80 | nil nil
In 7 years . . . 14,071 670 67.00 nil nil
In Syeams’. . 14,775 704 70.40 | nil nil
In 9years . . .| 15513 738 73.80 | mil nil
Inl0years:.. ... . 16,289 776 77.60 nil nil
Inlivesrs . .. . 17,103 816 81.60 nil nil
Inl2years . . . 17,959 856 85.60 nil nil
In13 years .. . . 18,856 897 89.70 nil nil
Inldyears oo. 19,799 943 94.30 nil nil
In 14} years. . . 20,000 nil nil
Thereafter . . . 20,000 1000 100.00 | $1000 | $100

 

4 ___
1 Or, to be exact, $200 a year for 5 years and $180 in the last year,
inasmuch as the capital will be exhausted in a little less than 6 years.