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
