■ The Prussian income tax had its beginnings in the use of poll and class taxes as far back as 1811. Gradual changes in subsequent fiscal laws have resulted in a use of the income tax as extensive as is found in any country. Before the outbreak of the Great War more than three fourths of the entire revenue came from the income tax, and the success may be attributed partly to the care which has been exercised in formulating the laws, and partly to the respect which the citizenship has had for the mandates of the state. The war, of course, brought some modifications, but the principle of the income tax of pre-war days will likely be continued.

Tax Rate. - The tax rate is kept comparatively low, and an attempt is made at progression, although it is not logically followed throughout the entire schedule of levies. The lowest rate, six marks from incomes between 900 and

1,500 marks, is a little over one half of 1 per cent, while the highest rate, placed upon incomes over 100,000 marks, is about 4 per cent. The exaction of a fixed number of marks from each grade of income makes the tax regressive within the grade - that is, the tax is heavier for incomes just over the lower limit than for incomes just under the upper limit.

1 Seligman, The Income Tax, p. 214.

Exemptions and Abatements. - As in the English income tax, exemptions and abatements are granted. All incomes of less than 900 marks (about $214) are not taxed. It is considered that the property taxes and excise taxes, which are used to supplant the income tax, place a sufficient burden upon the poorer class of citizens. Whenever the income of an individual is less than 3,000 marks, a reduction of 50 marks is allowed for each dependent. The reduction is somewhat different when the income is between 3,000 and 6,500 marks.

If the income does not exceed 9,500 marks, any circumstances which have affected unfavorably the source of income may be taken into consideration by the assessing officials, and deductions be made accordingly. Deductions from income may be made for public, charitable, and religious contributions, interest payments, municipal and local taxes, and payments of various kinds of insurance premiums.

The Prussian law does not attempt to reach as many classes of incomes as does the English system. Incomes derived from undertakings in other German states are not taxed, nor is the pay of many of the military officers. Insurance payments and sinking funds are also exempt. The income tax as described is supplemented by a tax upon wealth, and at times, when the treasury is in need of extra funds, by a supertax upon incomes. The combination of wealth and income taxes is designed to give a system which will impose taxes as nearly as possible according to ability to pay.

Collection of Tax. - No attempt is made to collect the tax at the source, but the amount of income to be taxed is ascertained by a system of declaration and assessment. Information as to the recipients of incomes, and the amounts, is secured by the officials from various sources. On the basis of this information the local officials estimate the amount of incomes of the individuals who will probably be subject to the tax. Every person whose income is more than 3,000 marks is required to make a declaration on special forms which are provided by the officials.

Corporations and other companies are required to make a declaration, and must submit, with the report of income, annual reports, balance sheets, and other data, to be kept on file by the fiscal authorities. Failure to make the declaration by a specified time is punished by the imposition of a fine of 5 per cent of the tax, and if the failure extends to a second specified time, the fine is 25 per cent of the tax. There is, of course, some evasion, but it has not been extensive enough to destroy the importance and approximate justice of the system.