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I
THE UNIVERSITY OF NORTH CAROLINA
The news in this publica
tion is released for the press on
receipt.
NEWS LETTER
Published weekly by thf
University of North Carolins
for its Bureau of Elxteasion.
MARCH 9, 1921
CHAPEL rm.i^ N. C.
VOL, VH, NO. 16
Sditorial Board t Bn O. Branson, L, R. Wilson, E. W. Knight, D. D. Carroll, J. B. Bullitt.
Entered as second-class matter NoTember 14, 1914, at the Post-office at Chapel HHl- N« C., ander the act of August 24, '!-i
INCOME TAXES $56,000,000
Last week’s issue carried a study of
the wealth of the state as revealed by
the grand total of all taxes paid in North
Carolina into the federal treasury during
the year ending June 30, 1920—a hun
dred sixty-three million dollars in round
numbers. Less than seven million dol
lars were the total tax receipts of the
state treasury in 1920.
This week we have a look into the
wealth of North Carolina in 1918 as re
vealed by a recent bulletin of the Inter
nal Revenue Service on Statistics of In
come.
And, mind you, we are now consider
ing income taxes alone —not tobacco
stamp taxes nor any other kind of fed
eral taxes whatsoever.
Our income taxes were barely a third
of all the taxes we paid into the federal
treasury in 1918. Personal income taxes
were barely more than one-twentieth of
this grand total; they were less than
one-tenth of the income tax total. Nine-
tenths of our federal income taxes were
paid by our forty-two hundred corpora
tions.
Manifestly, then, the wealth of the
state cannot be gauged by analyzing
personal income taxes alone.
Rich in 1918
Do the federal income facts of 1918
indicate that North Carolina was poor
two years ago? This is the main inquiry
at present. j
Two preliminary statements are ne- j
cessary. |
First. The bulk of the wealth of the
United States is concentrated (1) in the
Great Industrial Area east of the Mis
sissippi river and north of the Ohio and
the Potomac—around three-fourths of
it all belongs to these seventeen states, !
and mainly to twelve of them; and (2)
in four industrial commonwealths west ■
of the Mississippi—Missouri, California, !
Minnesota, and Washington. The lar-,
gest totals belong to fifteen of these j
states—New York, Illinois, Pennsylva
nia, Ohia, Massachusetts, Missouri,
Michigan, New Jersey, California, Min
nesota, Cennecticut, Wisconsin, Indiana,
Washington, and Maryland. A state j
that ranks alongside any one of these j
fifteen states in any detail of wealth is j
getting into rich company. It is proper |
to keep this fundamental fact in mind
in discussing the wealth and rank of j
North Carolina in gross incomes, net j
taxable incomes, and taxes actually paid
on incomes.
Second. Gross incomes under the
federal law are not the incomes of all
the people, but only the incomes of rel
atively a few people in every state—the
incomes that overtop certain exemption
limits. Thus, in North Carolina they
cover in 1918 the incomes of only 21,738
individuals and 4,212 corporations. Net
taxable incomes are what is left of re
ported gross incomes when all legal ex
emptions, allowances, and reductions
have been written off. They represent
the legal surpluses on which the federal
Government levies taxes. Thus our
gross personal income of 103 million dol
lars in 1918 was reduced to 90 millions
of taxable income, and our gross corpo
ration income of 879 millions was reduced
to 107 millions of taxable income. More
than eight thousand of the reported per
sonal incomes in North Carolina were
reduced to zero in this way, and only
13,611 individuals actually paid personal
income taxes to the federal Government.
In the same way a fifth of all our cor
porations fell out, and only 3,362 corpo
rations actually paid income taxes to
the Government.
With these things said, what do the
statistics ofiincome show concerning our
wealth in 1918?
Our Gross Income
They show first of all a gross income,
personal and corporate, close to a billion
dollars—exactly $982,684,756. Personal
incomes were around one-ninth of this
great total and corporate incomes around
eight-ninths of it. Thirty-two states
made a better showing than North Ca
rolina in gross personal incomes, but
only eighteen states stood ahead of us
in gross corporation incomes. Twelve
of these eighteen states were in the
Great Industrial Area; only two were
in the South, Texas and Virginia. Vir
ginia ran ahead of us by 66 millions and
Texas by 656 millions; the first because
of the war industries in and around New
port News, Petersburg, and Richmond,
and the second because of oil field dis
coveries and activities within her bor
ders. But in total gross incomes, per
sonal and corporate, North Carolina
stood among the first twenty-one states
of the Union.
Our Net Taxable Income
Nearly two hundred million dollars—
exactly $196,776,988—was our net tax
able income in 1918. Around ninety
millions were personal incomes and one
hundred seven millions were corporation
incomes. And once more thirty-two
states made a better showing than North
Carolina in net personal incomes, but
also once more the loss was more than
recovered in net corporation incomes.
Only fifteen states stood ahead of us in
corporation net incomes, and ten of
these were in the Great Industrial Area,
two in the Middle West—Missouri and
Minnesota, two in the South—Virginia
and Texas, and one in the Far West—
California.
Total Income Taxes Paid
The total of federal income taxes ac
tually paid in North Carolina in 1918
was $56,253,100.' Here we moved up
among the first twelve states of the
Union, and well ahead of every other
southern state—ahead of Texas by more
than two hundred thousand dollar's, a-
head of Virginia by thirty-seven million
dollars.
Our Excess Profits Taxes
The explanation is simple. Our tre
mendous rise in rank in total income
taxes paid is explained by the volume
of taxes paid by our corporations on ex
cess profits. They paid a little more
than forty-four millions on excess
profits alone. Only ten states in the
Union paid more. Our taxes on ex
cess profits were heavy because the vol
ume of these profits was larger in North
Carolina than in thirty-seven other states
of the Union. No state in the South
came anywhere near us in the volume
of excess profits. We ran ahead of Tex
as in this particular by twenty-one mil
lions and Virginia by twenty-three mil
lions.
This detail exhibits the fact that the
World War made North Carolina rich—
not our corporations alone, but our farm
ers, foresters, and wage earners alike,
richer than they ever were before in all
the history of the state.
A state that can afford to surrender
forty-four millions of taxes on excess
profits has broken at last into the com
pany of wealthy states. It belongs,
indeed, among the eleven wealthiest
states in the United States in this par
ticular.
These eleven states ranked as follows
in excess profits taxes paid in 1918:
1. New York $635,547,519
2. Pennsylvania 309,089,821
3. Massachusetts 229,493,766
4. Ohio 219,859,566
6. Illinois 215,810,261
6. Michigan 118,332,316
7. Missouri 84,412,911
8. Wisconsin 56,084,521
9. Connecticut 53,443,796
10. California 63,086,034
11. North Carolina 44,016,680
And, mind you, these figures are not
excess profits, but taxes paid on excess
profits—the excess profits of a single
year.
Our Rank in Detail
In brief, the Statistics of Income
show that North Carolina stood eleventh
in excess profts among the states of the
Union in 1918; twelfth in total federal
income taxes paid; si^eebth in net tax
able incomes of corporations; nineteenth
in gross incomes of corporations; twenty-
first in total gross incomes personal and
corporate; and twenty-third in personal
incomes both gross and net. We fell
behind in personal incomes, but in cor
poration incomes we more than made up
the loss. We were rich in 1918 and still
richer in 1920.
How can North Carolina be called poor
when in 1920 we paid three percent of
all the federal taxes of the entire United
States, four and a third percent of all
the taxes paid in the eight foremost
states, and twelve percent of all the
federal taxes paid in the thirty-one
states outside the Great Industrial Area?
How can North Carolina be called
A CITIZEN’S CREED
I believe that education is the
strong defense of a free nation, and
that ignorance is a curse to any
people.
I believe that the free public-
school system of the United States is
the best guarantee of the rights
vouchsafed to us by the constitution.
I believe, further, that the public
schools of the land are the cradle qf
our democracy, and that in the class
rooms and upon the playgrounds,
where the sons and daughters of the
street sweeper and the railroad
magnate, of day labor and multimil
lionaire meet upon an equal footing
and stand upon their own individual
merits, the lessons of democracy
and fraternity are best taught.
I believe that the hope of America
is in her youth, that the battle ground
of the world is the heart of the child,
and that Government fails at its
source when it ceases to make ample
provision for the development and
nurture of its future citizens.—F. L.
Shaw, Superintendent of Public In
struction of South Dakota.
COUNTRY HOME CONVENIENCES
LETTER SERIES No. 43
A NEW FARM HELP
poor when the total gross incomes of a
handful of her people was right around
a billion dollars and their net taxable
incomes right around 200 million dollars!
When her total farm product— crop,
livestock, woodlot, and forest—is well
over a half billion dollars a year even in
these days of low prices?
Holding down Our Wealth
With a gross average income from all
sources of more than one and a half
billion dollars a year, our wealth-pro
ducing power is clearly enormous. In
view of which, it is pertinent to ask
whether our wealth-retaining power is
equally great. It is a fundamental prob
lem that the farifiers, traders, and
bankers, the preachers, teachers, and
statesmen of North Carolina ought long
ago to have been working at hammer-
and-tongs. It is not a question to be
idly asked for obstructive purposes; it
is a problem to be solved for creative
ends in commonwealth building.
The two great sources of primary
wealth in North Carolina are manufac
ture and agriculture, in the order named.
It is a new order of precedence and it
has been established within the last five
years.
What are the factors involved in the
retention of industrial wealth? Every
mill and factory owner in the state can
answer this question. And the more
they know about it the faster they move
toward the head of the class. They have
pretty nearly solved this problem, with
credit to themselves and profit to the
state.
But have our farmers unriddled this
riddle? Apparently not.
Nobody in North Carolina has ever
spelled at the farmers’ end of this prob
lem any better than Mr. J. A. Capps,
in his chapter of the Year-Book of the
North Carolina Club at the University
in 1916-17. Indeed, this entire Year-
Book is devoted to the subjectof Wealth-
Production and Wealth-Retention in
North Carolina. If anybody has any
prizes to award, let him hurry to hunt
up the fifteen students who produced
this volume at the University four years
ago.
Who Pays Income Taxes?
Here is another important inquiry.
And Mr. H. B. Cooper, of Henderson, a
research student at the University, has
been working at it ever since the 1918
bulletin on Federal Incomes reached the
seminar library of Rural Social Science.
A clear answer is found in the table
showing, by classes, the personal in
come tax payers of North Carolina. It
will be found elsewhere in this issue.
And the answer is—Not the poor, nor
even the well-to-do in any large num
ber.
Among all our two ond a half million
people only 21,738 reported net taxable
incomes beyond one thousand dollars
for single persons and two thousand
dollars for heads of families, and more
than a third of these, or 8,127, fell out
of the ranks because exemptions, al
lowances, and reductions whittled down
their taxable surpluses to zero.
Our seven richest men paid around a
fourth of the entire state total. Their
taxes were $1,317,717 in all, the state
total being $5,675,001.
Our eighty-five richest men, with net
LET ELECTRICITY DO IT
Another force of nature is being slow
ly adapted to the needs of the farmer.
It is electricity.
In any plan of electrical installation
the source of power is the greatest
problem. The best means of supply is,
of course, dependent upon conditions.
A private plant of a capacity suffi
cient for farm needs will cost upward
of $500 and its upkeep will average
$100 a year.
With the extension of electricity to
the small country towns, more and
more farmers are finding themselves
within reasonable distance of a supply
of electricity that is cheap and reliable.
As a general thing the yearly cost of
power company service will not equal
the interest on and depreciation of the
private plant.
Does Many Odd Jobs
Illumination is the main reason for
electricity but not the only one. In the
home it heats the iron, runs the wash
ing machine, the vacuum cleaner,' the
sewing machine, the meat and coffee
grinders, the sausage machine, the
bread mixer, the fireless cooker, the
water heater, and the percolator. Its
use outside of the house, around the
barns and sheds and in the tool shop is
even wider.
In wiring a house there is a common
tendency to install too few sockets. As
the family comes to realize the useful
ness of electricity their need for it will
increase. So each big room and every
hall in the house should have at least
two outlets, one in the ceiling for light
and the other a floor socket, down near
the floor for various appliances. Two
or more switches for every room will
promote economy in the use of electri
city.
Pilot Bulb a Saving
It is convenient to have the lights in
the upstairs hall or in the cellar so ar
ranged that they can be turned on from
the first floor. For these lights a pilot
switch has been invented which con
tains a small pilot bulb. When the
switch is turned on the light goes on.
This is not only handy for out-of-sight
bulbs but also for such devices as the
electric iron and percolator and toaster.
In the cellar only small consumption
lamps of 10 or 16 watts need be used
except around a work bench or some
such place. One bulb over the stairway
will reduce the danger of accidents. In
the pantry one bulb, and it is sufficient
to set it high up in the middle of the
ceiling. In the kitchen one main light and
one over the sink or any other well
used place will do. One main light and
a double socket droplight over the iron
ing board will serve for the laundry.
The bath room calls for one main light
and one on each side of the looking
glass so that a man can conveniently
shave at night.
The Best Hired Man
Electricity on the farm will, in time,
prove itself to be the best hired man
the farmer can possibly get. It will
work 24 hours a day, seven days a week
and 52 weeks a year without a murmur
and with never a thought of striking
for higher wages.—The Kansas Indus
trialist.
incomes beyond fifty thousand dollars
each, paid more than half of the entire
state total. Their taxes were $2,908,269
in all.
A full four-fifths of the entire state
total was paid by 1,078 men with net
incomes beyond ten thousand dollars
each. The taxes they paid amounted all
told to $4,447,225.
The small taxpayers, only 12,633 in
number, paid all together $1,127,786.
In other words, our seven richest men
paid more federal taxes on personal in
come than our 12,633 small taxpayers
paid all put together.
It is the rich that pay income taxes—
no doubt about that.
And let it be said to the honor of the
rich in North Carolina that they have
carried the long end of federal taxes
without a whimper.
Perhaps it is because they know bet
ter than the rest of us that the best
state to live in is the state that is most
willing to convert its wealth into com
monwealth culture and character.
Most of the opposition to tax reforms
and state enterprises is offered by the
very people who, if they only knew it,
would reap the largest benefit.—E. C.
Branson.
A UNION OF SCHOOLS
The action of the Beaufort county
Board of Education in consolidating a
rural school near Newport with the
Newport school no doubt was wise and
will prove to be so in the fullness of
time. Wherever conditions will permit
its being done, the one teacher schools
should be converted into two or three
teacher schoolsand suitable buildings
provided. The larger schools possess a
number of advantages which must be
apparent to any one who thinks about
the matter.
The consolidation of schools must de
pend very largely though upon the sort
of roads that a community has. If the
roads are full of mud holes and practi
cally impassable in bad weather, then
it will not be practicable to bring the
children any considerable distance to
the school.
It can be seen then that good roads .
are an adjunct and a very important
one at that to our school educational
system. We must have good schools
so that the children may be educated
and we must have good roads so that
our country children can get to the
schools. The development of roads and
schools in North Carolina must go along
together and both are in great need of
improvement.—Beaufort News.
FEDERAL PERSONAL INCOME TAXPAYERS
In North Carolina, by Classes, in 1918
Reproduced from Statistics of Income, Internal Revenue Bureau, 1920.
Reported Incomes
Income Classes
Total Net Incomes
Taxes Paid
3896
..$1000 to $ 2000.
..$ 6,492,465
. .. $ 63,163
9670
.. 2000 to
3000.
. .23,809,180
122,636
3134
.. 3000 to
4000.
. 10,903,934
182,215
1732
.. 4000 to
6000.
.. 7,768,106
184,686
769
.. 5000 to
6000.
.. 4,191,212
122,287
521
.. 6000 to
7000.
.. 3,368,216
113,737
426
.. 7000 to
8000.
.. 3,239,317
118,262
293
... 8000 to
9000.
.. 2,483,716
110,629
220
.. 9000 to
10000.
.. 2,093,007
100,251
150
.. 10000 to
11000.
.. 1,575,283
97,002
122
.. 11000 to
12000.
.. 1,399,923
93,123
97
.. 12000 to
13000.
.. 1,214,892
77,640
70
. 13000 to
14000.
.. 942,361
63,433
71
.. 14000 to
16000.
.. 1,028,767
66,791
217
.. 16000 to
20000..
... 3,781,116
292,836
Ill
.. 20000 to
26000
.. 2,444,908..
209,763
65 ...
.. 25000 to
30000.
.. 1,483,836
136,693
64
.. 30000 to
40000.
. 2,282,531
268,668
36
.. 40000 to
50000.
.. 1,609,227
.... 234,026
18
... 50000 to
60000.
... 962,382
166,560
13
.. 60000 to
70000..
.... 831,983
172,071'
11
.. 70000 to
80000.
... 810,654
163,776
13
.. 80000 to
90000.
... 1,099,627..
303,671
9
.. 90000 to
100000.
.. 852,654
252,076
14
..100000 to
160000.
.. 1,640,680
542,399
7
..150000 to 1000000.
... 2,638,947
1,317,717
21,738
$89,748,811
$5,675,001
Note that 8,127 of the reported incomes were reduced to zero, in taxable
surpluses; and that the five and a half millions of federal taxes actually paid
were paid by 13,611 people in North Carolina.
ill IS