441. Cash registers, linotype and all typesetting machines. 457. Coffee.

545. Meats: Fresh beef, veal, mutton, lamb and pork. 644. Wheat, wheat flour, semolina, and other wheat products.

650. Wool of the sheep, hair of the camel, and other like animals.

Section II.

A. Subdivision 1. That there shall be levied, assessed, collected and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States, whether residing at home or abroad, and to every person residing in the United States, though not a citizen thereof, a tax of 1 per centum per annum upon such income, except as hereinafter provided.

Subdivision 2. In addition to the income tax provided under this section (herein referred to as the normal income tax) there shall be levied, assessed, and collected upon the net income of every individual an additional income tax (herein referred to as the additional tax) of 1 per centum per annum upon the amount by which the total net income exceeds $20,000, and does not exceed $50,000, and 2 per centum per annum upon the amount by which the total net income exceeds $50,000, and does not exceed $75,000, 3 per centum per annum upon the amount by which the total net income exceeds $75,000, and does not exceed $100,000, 4 per centum per annum upon the amount by which the total net income exceeds $100,000, and does not exceed $250,000, 5 per centum per annum upon the amount by which the total net income exceeds $250,000, and does not exceed $500,000, and 6 per centum per annum upon the amount by which the total net income exceeds $500,000.

B... That in computing net income for the purpose of the normal tax there shall be allowed as deductions: First,

the necessary expenses actually paid in carrying on any business, not including personal, living, or family expenses; second, all interest paid within the year by a taxable person on indebtedness; third, all national, State, county, school, and municipal taxes paid within the year, not including those assessed against local benefits fifth, debts due to the taxpayer actually ascertained to be worthless and charged off within the year seventh, the amount received as

dividends upon the stock or from the net earnings of any corporation, joint stock company, association, or insurance company which is taxable upon its net income as hereinafter provided; eighth, the amount of income, the tax upon which has been paid or withheld for payment at the source of the income, under the provisions of this section.

That in computing net income under this section there shall be excluded the interest upon the obligations of a State or any political subdivision thereof, and upon the obligations of the United States or its possessions; also the compensation of the present President of the United States during the term for which he has been elected, and of the judges of the supreme and inferior courts of the United States now in office, and the compensation of all officers and employees of a State or any political subdivision thereof except when such compensation is paid by the United States Government.

C. That there shall be deducted from the amount of the net income of each of said persons, ascertained as provided herein, the sum of $3,000, plus $1,000, additional if the person making the return be a married man with a wife living with him, or plus the sum of $1,000 additional if the person making the return be a married woman with a husband living with her; but in no event shall this additional exemption of $1,000 be deducted by both a husband and a wife; Provided, That only one deduction of $4,000 shall be made from the aggregate income of both husband and wife when living together.

G. (a) That the normal tax hereinbefore imposed upon individuals likewise shall be levied, assessed, and paid annu

ally upon the entire net income arising or accruing from all sources during the preceding calendar year to every corporation, joint stock company or association, and every insurance company, organized in the United States no matter how created or organized, not including partnerships; but if organized, authorized, or existing under the laws of any foreign country, then upon the amount of net income accruing from business transacted and capital invested within the United States during such year.

84. COLLECTION OF THE REVENUE.

The following description of the method of collecting the federal revenue is taken from Professor D. R. Dewey's "Financial History of the United States":

The collection of the revenue is divided between two branches of the treasury department-one for customs duties, and the other for internal revenue taxes. The internal revenue service is organized into a separate bureau under a commissioner of internal revenue, but the local customs officials report directly to the secretary of the treasury. The country is divided into 121 customs districts, in each of which there is at least one port of entry, where are stationed the principal officer of the district, the collector of customs, assisted by subordinate grades of officials, appraisers, including in a few offices, a naval officer and surveyors, and in all offices inspectors, special agents, etc. If commercial needs demand it, other ports of delivery are designated within the district, and at these subordinate officials are stationed. The largest port of entry is New York City, through which flows two-thirds of the whole foreign commerce of the United States. More than 5,000 persons are employed in the collection of the customs duties; and the annual expense of collecting this class of revenue is about 4 per cent. of the receipts. Inasmuch as foreign commerce has now become insignificant in many of the ports which were important a century ago when the districting was established, the expense of administration might

be reduced if the customs districts were organized according to existing commercial conditions. In many of the districts the cost of collection exceeds the revenue collected; at such places subordinate officers might well perform all the duties required; but any attempt to deprive a State of an established administrative district with its attendant political prerogatives strikes against local opposition, which is instantly reflected in Congress.

The method of entering an importation of foreign goods, including the appraisement and payment of duties, has gone through many variations, but is now briefly as follows: The initial step is the authentication of an invoice of the goods by the American consular officer in the district from which the foreign goods are exported to this country; the certificate must state the market or wholesale price in the country of export; and the consular authentication is made in triplicate, one for the shipper to be used in making entry at the American port, one is transmitted to the collector of the port of entry, and the other is filed in the consul's office. The invoice is more than a formal declaration of value; it must contain a description of the merchandise, with its cost, discounts, charges, etc. Armed with this certificate, upon arrival of the goods, the importer makes an entry; he submits a description with the rates of duty which he considers applicable and pays into the custom house the gross amount thus computed; an immediate delivery of the goods is then granted, the government retaining one package in every ten as a sample. These packages are sent to the public stores or appraisers' warehouses for examination; if the appraisement does not agree with the valuation made, a re-settlement is ordered, and if the proper valuation has not been declared by the importer, whether through ignorance or fault, severe penalties may be incurred. An excessive valuation by the shipper is never lowered, but an undervaluation is punished under the present law by the imposition of an additional duty of one per cent. upon the appraised value for each one per cent. that the appraisers' value exceeds that declared in the entry. Oppor

tunity is given to the importer who does not wish to use his goods at once, to deposit them under bond in a warehouse for not more than three years, and to defer the payment of the duties until withdrawal.

The principal difficulty in the administration of the customs for many years lay in the persistent practice of undervaluation. Some of the efforts to check this evil have already been discussed, but the difficulty long remained and has not yet entirely disappeared. The trouble was aggravated by the habit of consigning goods by foreign firms to agents in America, so that the buyer and the seller were practically the same, and could agree on any valuation that pleased them. In 1885 Secretary Manning asserted that very extensive frauds were due to this agency system; a foreign manufacturer would refuse to sell goods to other buyers, and then insist that no manufactured articles similar to those consigned to this country were sold in his market, and hence that there could be no market value at that place in the sense intended by law. Repeated decisions of the courts adverse to such juggling with the plain intent of the law did not put an end to frauds.

Ingenious methods have been devised to evade the customs; for example, when coverings came in free, articles of small value were enclosed in valuable coverings; sugar was artificially colored so as to imitate standards which entered at lower rates of duty. One method was that of fictitious invoice; articles were shipped by an agent of the American buyer in Paris to his agent in New York with a fictitious and fraudulent invoice; the buyer often persuading himself that he, as a passive recipient, was free from wrong or illegal behavior. Even among honest merchants, the administration of the tariff since the Civil War has been puzzling, because of the increasing complexity in the schedules and consequent inequalities in classification and valuation. Where no open fraud was intended, there was great opportunity for entries which would defeat the express purpose of the tariff acts, especially in the confusion created by the varying classification between "worsted" and "woollens," goods which as far as