Carl Menger on Wieser’s Austrian Personal Income Tax Study

Carl Menger’s review, published on 4 January 1902, assesses Friedrich von Wieser’s investigation of Austria’s new personal income tax. It moves from the fiscal puzzle prompting the study to Wieser’s comparative method, then to methodological reservations and an affirmative judgment of its reform significance.

The Austrian tax, effective from 1898 and modeled substantially on Prussia’s income tax, attracted attention because it was introduced alongside already burdensome taxes on yields. Menger emphasizes the combination of an income tax progressing to 5 percent with yield-tax rates reaching 24 percent of net returns. Austrian receipts met the government’s cautious forecasts, yet fell strikingly short of those from the analogous Prussian levy. The question was therefore not why official expectations had been disappointed, but why the two systems produced such different results.

Menger locates Wieser’s contribution in his refusal to infer causes directly from aggregate receipts:

Er hat sich nicht da- mit begnügt, die Gesamtgebnisse der österreichischen und preußischen Einkommensteuer miteinander zu vergleichen und daraus etwa allgemeine Schlüsse zu ziehen.

English translation: He has not contented himself with comparing the overall results of the Austrian and the Prussian income tax with one another and drawing from this, say, general conclusions.

Wieser first attempts to identify and eliminate computationally the effects of differences in the taxes themselves. This is intended to distinguish among three explanations: Austria’s lower taxable capacity, deficiencies in implementation, and weaker tax morale. His comparisons address both the population as a whole and particular groups. Menger praises this analytical discrimination without reporting a definitive resolution of the competing explanations.

His endorsement nevertheless turns on the adequacy of the comparison. Alongside noting that Wieser’s underlying principles had been challenged, he identifies an omitted interaction:

Ref. selbst hätte gewünscht, daß die Wirkungen der concurrie- renden Ertragssteuersysteme mehr Beachtung gefunden hätten.

English translation: The reviewer himself would have wished that the effects of the competing yield-tax systems had received more attention.

The income tax cannot be evaluated independently of the yield taxes operating beside it. Menger also proposes comparing Prussia’s initial results with Austria’s first two assessment years, suggesting that the stage of implementation matters to the interpretation of receipts. Despite these reservations, he ranks Wieser’s study, especially its reform proposals, alongside Robert Meyer’s publication as an exceptionally valuable contribution to Austrian tax legislation and practice. The review’s central conceptual move is to treat revenue differences as a problem requiring institutional and temporal controls, not as self-evident evidence of national differences in wealth or fiscal conduct.