Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939 Page: 51 of 263
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it after it was acquired, and rendered him safe in the enjoyment
of these same luxuries.
The general sales tax, on the other hand, is a tax which, in its ultimate
effect, operates principally on the necessities of life. It affords no
option to the consumer, but must be paid if he would subsist. It follows
that under such a tax a far greater proportion of the small wage
earner's income is taken by the government than is exacted from those
with greater incomes. Thus the tax bears heaviest on those who can
least afford it. There is, however, some justification for the selective
I call to your attention a tax system I consider one of the fairest and
most equitable levies that the State could make. I do this not in the
spirit of advocating excessive new taxes, nor for the purpose of raising
an excessive amount of revenue by the State, but only for your deliberate
consideration and legislative action in the event you deem it necessary
to secure additional revenue after passage of or failure to pass the
other tax measures which have been recommended in this message.
The income tax has always received criticism for the reason that a
great number of persons affected thereby are also owners of property
subject to the ad valorem tax; and who are, consequently, called upon
to pay an income tax after they have paid an ad valorem tax upon the
property which was the source of their income. Further, an income
tax has received criticism as an invasion by the State of a domain of
taxation already pre-empted by the Federal Government.
If an income tax is enacted it should begin with comparatively low
brackets bearing an extremely low rate, with a graduated rate upon
each bracket of income in progression. I recommend that you consider
as an ancillary provision in such an income tax a provision to the
effect that the amount of the ad valorem tax paid by an individual
owing an income tax shall be deducted from the amount of the income
tax earned from the property on which the ad valorem tax was paid.
Let us suppose that an owner of an office building in Austin should
have an annual income of $50,000.00 from such building upon which an
income tax of $10,000.00 was payable. Let us assume that that individual
has paid to the State in ad valorem taxes upon his building $8,000.00.
Let us assume that located in one room of that building is a stock
broker whose annual income is likewise $50,000.00. and one who owns
no tangible property other than his office furniture and home equipment.
When called upon to discharge their income tax burden, we should
permit the owner of the building to deduct from the $10,000.00 which
he owes in income taxes, the $8,000.00 which he has paid in the form
of ad valorem taxes, but we should assess and collect against the stock
broker 1009% of the tax on this $10,000.00 income because he has not
in any other way discharged his responsibility to the government.
Objection may be raised to this method of taxation that there will
come years when neither the stock broker nor the owner of a building
will realize any income at all; the rents from the building will be negligible,
and the profit on stocks and bonds will drop to nothing, yet the
tax against the building will be still assessed and collected, while the
broker will pay no tax at all.
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Allred, James V. Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939, book, 1939; (texashistory.unt.edu/ark:/67531/metapth3899/m1/51/: accessed May 26, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .