ABSTRACT
Responsibility for redeeming the loans raised during the depression to finance the schemes of public works and consumers' subsidies, would probably fall mainly on the income taxes. This redemption could be carried out by maintaining the Income Tax and Sur-Tax at a sufficiently high and unchanged level throughout the course of the trade cycle, so that the budget surpluses of good years would make up for the deficits of the bad. If an income tax is progressive, a person whose income fluctuates pays a higher rate of taxation than that corresponding to his average size of income. If the income tax is progressive in amount, being higher on each additional increment of income which is earned, then the curve of marginal rate of the tax will be upward-sloping. Under a progressive income tax, a person whose income fluctuates, pays income tax at a higher average rate than he would have done had his income been of constant size.
