The article presents information on the fact that the Sixteenth Amendment 1913 was formulated to delegate power to the U.S. federal government to levy a tax on the income of natural persons. An income tax on corporations had been effective four years before the amendment. It was decided as early as 1904 that an excise tax could be measured by gross income and a corporate income tax was construed to be an excise tax for the privilege of doing business as a corporate entity. Whatever might have been the intent of the amendment or the popular belief, the income tax has not developed into a personal tax in a strict sense either in law or in other respects. The present Federal income tax is unique in the sense that it cannot be classed with any other known form. From a legal standpoint the tax does not follow the person. From an economic standpoint it does not fall on persons in proportion to their respective economic circumstances. It is neither legally nor otherwise a personal tax based on ability to pay.

The article focuses on some unsettled problems of income. Much has been written about income for tax purposes. Some writers have been concerned with concepts and definitions; some have been devoted to the more detailed problems of measurement. A study of the concepts and definitions shows a great variety of opinions among writers from such important countries as the U.S., England, France, Germany and Italy. Concepts of taxable income, which have been presented often come from writers in political economy who have in view some special social or national fiscal policy. The concept sometimes has an ethical flavor other than the capacity of the individual to pay. Types of definition vary greatly in fundamental content. At one extreme is the idea that income is determined by the disposition made of the form in which it is embodied while at the other extreme is the idea that there is income only after there has been ample deduction for both consumption and capital maintenance. Concepts applied vary with expediency social and political ends, or other consideration not based on individual capacity. There is often unfair discrimination as between individuals whose composite respective income situations might in fact be similar.

Reviews the book "Managerial Economics," by Joel Dean.