As the law now stands, rentals of an excessive and unreasonable amount are often deducted; and the gain to the revenue in the city of New York alone, from the repeal of that part of the act authorizing the deduction of rentals, would, in the opinion of revenue officials, amount to over two millions of dollars per an num. In view of the necessity for the speedy removal of other forms of taxes which tend to check the development of the industry of the country, the commission would recommend no further change for the present in respect to the income tax. The total receipts from this source since and including 1863 are as follows: Fiscal year 1863.... Fiscal year 1865.... $455,741 26 14,919,279 58 20,567,350 26 It should, however, be observed that the tax on the incomes of 1862, assessed in 1863, is mainly included in the receipts of the fiscal year 1864, less than half a million of dollars having been collected in 1863; and the receipts for 1865 consist almost entirely of the tax assessed in 1864 upon the income of 1863. The receipts, therefore, from the income tax assessed in 1865 do not appear in the report of the Commissioner for that year, made November 30, 1865. By a report, however, of the Commissioner to the Revenue Commission it appears that the total receipts from the tax upon incomes from July 1 to December 1, 1865, were $54,549,128. A small part of the income tax of 1864, assessed in 1865, was collected prior to July 1, but how much cannot readily be determined; and a small part, moreover, remained uncollected on December 1, 1865. The additional collections made or to be made since that period will, in the opinion of the Commissioner, further augment the receipts for the income tax of 1864 to at least fifty-eight millions of dollars. For the future, with the changes above recommended, the commission believe that the government may safely rely on an annual revenue from this source of about fifty millions of dollars. Banks. From the excise on banks and railroads the amount received during the fiscal year 1865 was $13,579,594, and the commission assume the collection of a similar amount for the immediate future. Petroleum.-The receipts from refined petroleum and coal oil since 1863 have been as follows: 1863.... 1864.. 1865. $649,962 09 2,255,328 80 2,047,212 77 For the first quarter of the fiscal year ending June 30, 1865, the internal revenue receipts from the tax on refined petroleum and coal oil were $302,411 63; for the corresponding quarter of 1866 the receipts were $810,056 09, showing a gain of $507,644 46. The tax upon petroleum was ten cents per gallon, and upon oil distilled from coal exclusively, eight cents, until June 30, 1864, after which the rates were twenty and fifteen cents respectively. By the amended act of March 3, 1865, a duty was imposed of ONE DOLLAR on each barrel of crude petroleum of forty-five gallons. The amount received from the time the tax went into effect until the close of the fiscal year ending June 30, 1865, was $229,546 10. For reasons which will be found in detail in the Special Report (No. 7) on this subject, the commission recommend that the tax as thus imposed on crude petroleum be repealed, and that the rates of tax on refined coal oil, petroleum, naphtha, benzole, &c., be retained as at present, They are also of the opinion that when the uses of all the elements of petroleum and of the distillates of oil-yielding coal and shale have been more fully developed, it will be possible for the government to derive a much larger revenue from these articles, with a much lower rate of excise than is now imposed. For the next fiscal year the commission believe that a revenue in excess of $3,000,000 may be relied on from refined coal oil and petroleum. Naval stores.-Under the present excise law a tax of twenty-four cents per gallon is imposed upon spirits of turpentine, and six per cent. ad ralorem on Owing to the fact that the principal portion of these productions are manufactured in sections of the country over which the revenue laws have not until recently been enforced, the revenue derived from the same has been inconsiderable; that from spirits of turpentine for the fiscal year 1865 having been but $8,461 48. It is represented to the commission that the tax as at present imposed upon rosin and distilled turpentine is unequal and oppressive; but as the supply of these articles from the United States to a great extent controls the prices of the world, they are of the opinion that the tax on spirits of turpentine and rosin should not be wholly remitted, and that no drawback on their export to foreign countries be allowed. The product of turpentine distilled in 1860 was returned by the census as 12,174,851 gallons, and of rosin at 1,126,569 barrels. At the present rate of twenty-four cents per gallon the turpentine product of 1860 would yield a revenue of about three millions of dollars, ($2,921,964;) and assuming the valuation of the rosin product of 1860 to be at least two dollars per barrel, the revenue from this source, at six per cent. ad valorem, would yield over $135,000. It is evident, therefore, that the revenue from these products, in view of the large domestic and foreign demand, is likely to be very considerable, and will fall in part upon the foreign consumer. For the future the commission estimate the revenue from these articles at two millions of dollars. Licenses. The receipts from licenses for the several years during which the internal revenue system has been in operation have been as follows: 163.... 1564... 1565... $6.824,178 42 7,145,388 71 12,613,478 67 With the extension of the revenue laws over a large section of our country where they were before inoperative, and as the result of some changes which the commission will recommend hereafter in regard to the levying and collecting of the excise upon clothing and other articles of wearing apparel, the amount likely to be received from this source will undoubtedly be much augmented; and the commission assume fifteen millions of dollars as the receipts for the fiscal year ending June 30, 1867. The receipts of revenue in Great Britain during the year 1865 from the same source were £2,159,804, ($10,799,020.) Stamps-No part of the revenue is probably collected so easily, with such small expense, and with comparatively so little fraud, and which in the future. can be augmented so readily without detriment to the industry of the country, as that derivable from stamps. The following are the receipts which have hitherto accrued from this source: Fiscal year 1563. Fiscal year 1865... $4.140,175 29 5,894.945 14 11,162,392 14 Our adhesive revenue stamps now embrace eight different classes or sizes, and thirty-two denominations, varying from one cent to two hundred dollars. They are engraved on steel, in an elaborate manner, and are believed to possess every guarantee against counterfeiting which the best skill and knowledge can afford. To this security are to be added the safeguards of gumming, and especially perforation-processes necessary to perfect every stamp, and requiring costly and peculiar machinery. Thus the revenue stamps test the counterfeiter's skill quite as effectually as the engraved currency, while little or no facilities whatever of utterance are afforded him; their use, furthermore, is specific, and their value bears no comparison with the gains which may be made by a fraudulent issue of the national currency. These statements find practical exemplification in the fact that we have yet to hear of the first successful counterfeit of an adhe sive revenue stamp. The rapid increase in the revenue receipts from stamps is owing in a considerable degree to the recent requirements of law, whereby receipts of money (over twenty dollars) and of property, matches, photographs, &c., are required to be stamped; but at the same time the natural advance in business throughout the country, the greater familiarity of the people with the law, and its more rigid enforcement by the government, have powerfully contributed to swell the receipts from this source. Of the stamps thus far consumed, it appears, from a report made to the commission by the government contractors for the manufacture of stamps, that sixsevenths of the entire consumption consist of the two-cent bank-check and receipt stamps, the various proprietary stamps, and of the one-cent stamps required to be affixed to matches. The most important results in this department of the revenue, therefore, flow from the smallest stamp taxes universally diffused. Thus one-third of the revenue received from stamps in the fiscal year 1865 were derived from the three items of "bank-check," " receipt," and "match" stamps; and from the first two, (bank-check and receipt stamps,) the receipts for the fiscal year 1865 averaged about $200,000 per month. Considering the small actual tax imposed on each bunch of matches-one cent and the insignificance of the business, as contrasted with many others, this product of industry probably affords the largest comparative revenue accruing under the excise. The law, as at present happily framed, imposes a penalty on the manufacturer of matches, as well as upon the retailer, who sells them without the requisite stamps affixed; so that the public are thus, as it were, constituted a general corps of detectives; while the amount of gain likely to accrue to the retailer from the evasion of the law is too small, in any one instance, to tempt to the commission of fraud. As has already been stated, the quantity of matches manufactured in anticipation of the tax (which took effect August 1, 1864) was so large, that up to the present time, (January, 1866,) the government has failed to derive from this article its legitimate revenue. For the fiscal year 1865, the revenue received from matches was probably about one million of dollars; but since then, as the stock manufactured in anticipation of the tax has diminished by consumption, the business of the match manufacturer, and consequently the revenue to the government, have correspondingly increased. This rapidity of increase is strikingly exemplified by reference to the following return, made to the commission, of the stamps (of one cent denomination) purchased by one of the leading match manufacturers of the country. Thus, for the five months from January, 1865, to May inclusive, the number used monthly was 660,000; in June and July, 1,155,000 each; in August and September 1,760,000 each; and in each of the months of October and November 2,090,000, making an increase from May to October of 1,430,000, or over 216 per cent. in five months. Dur Previous to September 1, 1864, it was the custom of match manufacturers to put about fifty matches in a bunch; but since that date, in order to reduce the tax, they have caused each package to contain one hundred. The adoption of this method, therefore, practically reduces the tax one-half. ing the last six months the manufacturer referred to purchased no less than 10,895,000 one-cent stamps, which were affixed to the same number of bunches of matches, and paid the government for the same a tax of $108,950 ! From the returns submitted to the commission, of the match manufacture of the United States, it appears that there are now in the country about fifty large establishments, and that from the present demand for the consumption of matches they anticipate it will require for the next fiscal year a production of 2,400,000 gross, or 345,600,000 bunches, which will yield a revenue of $3,456,000. The revenue derived from the stamp excise in Great Britain for the year ending March 31, 1865, was £9,531,947, ($47,655,735.) This, however, ineludes legacy and succession duties, the taxes on insurance, gold and silver plate, and on newspapers, which, under the United States excise system, are included in other departments. Excluding the receipts from these sources, the amount returned from stamps under the British excise was £3,531,717, (817,658,585,) showing an excess of more than six millions of dollars as compared with the receipts from the same source in the United States for the last fiscal year. The commission, however, from such examination as they have been able to give to the subject, are inclined to the opinion that the capacity of this source of revenue in the United States will prove very much greater than the results of the experience of Great Britain. In proof of this they have but to call attention to the facts before cited in reference to matches. Another illustration to the same effect may also be found in playing cards. In Great Britain the amount received in the year ending March 31, 1865, from a stamp duty of three pence (six cents) per pack on cards was £8,801, ($44,005,) indicating a manufacture of 704,080 packs. In 1860 the average number of packs of cards manufactured in the United States was believed to be in excess of six hundred gross per week, or about four and a half millions of packs per This, with a stamp duty corresponding with that levied in Great Britain, would have yielded a revenue of $269,568. The high prices of paper, colors, and other materials have considerably reduced the demand for cards within the last four years; but it is the opinion of a committee of card manufacturers, as presented to the commission, that, with a uniform stamp tax of five cents per pack, an annual revenue of at least two hundred thousand dollars may be derived from this source.* With this and some other amendments relating to proprietary medicines, and similar stamped articles, the commission are of the opinion that a revenue of at least twenty millions of dollars may be hereafter collected from stamps. Legacy and succession duties.-When it is considered that the entire property of the country probably changes hands once in thirty-two years, (the lifetime of a generation,) it is evident that a small rate of tax, in the form of legacy and succession duties, must be productive of a large revenue. As such taxes, moreover, unless excessive, have little influence in checking the development of industry, their adoption and enforcement as a part of the present revenue policy of the country is to be strongly recommended. Thus far-by reason, probably, of some imperfections-the law relative to this subject in the United States has been practically a dead letter, as is proved by the very inconsiderable_amount (8546,703) which accrued from it during the last fiscal year. From the corresponding fiscal year the amount received from the same source in Great Britain was £2,337,994, ($11,689,970.) From returns made to the commission it appears that a single playing-card manufacturer in New York city paid for stamps in the year 1865 on the product of his manufacture $41,731 10. Of these stamps two-thirds were of the two-cent and four-cent denomination. The number of packs returned as manufactured by this firm in 1862 was one and a half million, (1,500.000) During the last fiscal year, owing mainly to the high price of paper, the manufacture and sale of playing cards has probably diminished to the extent of fifty per cent. The commission submit the form of a bill intended to render the execution of the present law more effectual, and they are of the opinion that, with its adop tion, or by the enactment of some equivalent provisions, a revenue of at least three millions of dollars may be secured from this source. By an estimate made for the commission by a gentleman connected with the surrogate's office of the city of New York, the amount of property annually passing in that city by will or inheritance by kin is about thirty one millions of dollars, which, if assessed at the present lowest rate of legacy duty, one per cent., would have yielded an amount in excess of one-half the receipts from this source for the whole country during the last fiscal year.* Tax on gross receipts. From gross receipts the revenue for the fiscal year 1865 was $9,697,866. Under this head are included, mainly, the taxes levied on transportation and intercommunication; and as the majority of them, railroads excepted, yield but inconsiderable amounts, and are in opposition to the general system of revenue which the commission recommend, sound policy requires that they should be repealed as soon as practicable. Thus the receipts from bridges and toll-gates for the fiscal year 1865 was $75,269; from canals, $92,421; from ferries, $126,133; from stage-coaches, wagons, &c., $469,188; and from railroads, $5,917,293. Under this head are also included telegraph and express companies, the former of which pay five per cent., and the latter but three per cent., on the gross amount of their receipts. For this discrimination the commission can see no good reason. Express companies, as at present constituted, are, for the most part, monopolies, and the average rate of profits paid by them is believed to far exceed the ratio of profits in almost any legitimate business. The commission, therefore, recommend that the tax on the gross receipts of telegraph and express companies be equalized, and are inclined to the opinion that the tax on receipts of express companies might be well advanced to a higher figure than five per cent. An increased revenue from such an advanced rate will compensate in some degree for any reductions that may be made on the taxes now levied on bridges, toll-roads, ferries, ships, &c. The revenue receipts from telegraph companies, for the fiscal year 1865, were $215,050 62; and from express companies $529,275 89. Under the present law (section 120) the dividends and interest upon the bonds of certain corporations therein enumerated are made liable to the income tax, which is payable by the proper officer of such corporations. The commission are unable to discover any valid reason why the moderate dividends of banks and railroad companies should be thus taxed, while the larger profits of express companies, manufacturing and other corporations, are omitted. As these returns are invariably made by an officer who has no pecuniary interest therein, it is believed that they are uniformly more nearly correct than the average returns of income made by individuals; and they, therefore, recommend an amendment of the law, which will include in the provisions of the above section all important incorporated companies for whatever purpose organized. The commission assume that the revenue derivable from gross receipts for the fiscal year ending June 30, 1867, will continue as at present, about $9,000,000. Tax on sales.-Under this head are included the sales by auction, by merchandise, stock and gold brokers, &c.—the whole affording a net revenue of $4,062,243 54. The present rate of tax upon the sales of stock-brokers is one-twentieth of one per cent., or five dollars on the sale of ten thousand dollars of the par value The value of the whole real estate and personal property in the United States in 1860 was upwards of sixteen thousand millions of dollars, (16,159,000,000.) Allowing thirty-two years as the lifetime of a generation, and assuming the legacy and succession duty at an average of one per cent., the receipts from this source should yield annually five millions of dollars. |