LOCAL TAXATION.

ALBANY, February, 1871.

SIR, The undersigned members of the commission appointed by the Governor of the State of New York, under the provisions of a joint resolution of the Legislature, passed April 26th, 1870, have the honour to submit the following report:

ORGANISATION OF THE COMMISSION.

The following are the provisions of the joint resolution above referred to, constituting the commission :

STATE OF NEW YORK,

IN ASSEMBLY-ALBANY, April 9th, 1870. Resolved (if the Senate concur), That the Governor designate and appoint three suitable persons to revise the laws for the assessment and collection of taxes, and whose duty it shall be to report to the next Legislature, within ten days after the commencement of the session. By order.

C. W. ARMSTRONG, Clerk.

Concurred in without amendment.

IN SENATE-April 26th, 1870.

HIRAM CALKINS, Clerk.

The commission thus authorised, became fully organised in October, 1870, by the appointment of the following members : DAVID A. WELLS, EDWIN DODGE, and GEORGE W. Cuyler, and has since then been actively engaged in the discharge of the duties assigned it.

CONDITIONS PRECEDENT TO THE INVESTIGATION.

Previous to the war, or at a date not far antecedent to that period, the United States was in the anomalous position of a great nation, composed of numerous separate States, which,

both collectively and individually, were not only practically free from debt, but in which, moreover, the small burden of taxation made necessary to meet the cost of a simple and economical administration of public affairs, was levied on a people whose increase in wealth and numbers was rapid and continuous without precedent. Under such circumstances, it was not to be wondered that the matter of taxation, or the taking of private property for public uses, the greatest and most important function, except the control of the person and the taking of life, which the State can exercise, was regarded as a matter of comparatively little importance; and that the systems for raising revenue in the different States, and by the national government, grew up under the force of accident and circumstance, rather than as the result of consideration and inquiry.

In short, the people paid what was necessary out of their abundance, and, in the case of the general government, paid only indirectly; and were too busy in developing the country and increasing their individual possessions to take much, if any, interest in the subject. Hence the crudities, irregularities, and absurdities which characterise the existing systems of the United States for the raising of the public revenues, and which, to the student of political economy and finance in the old world, who has not fully recognised the conditions of our previous national growth and development, seem so utterly surprising, and so inconsistent with the general intelligence and practical character of the American people. Hence, the United States, at this period of its history, repeats the experience of all other new states and communities in respect to matters of finance ;* originating theories and adopt

* It is a curious and interesting fact, first pointed out by William M. Gouge (Fiscal History of Texas, Phil. 1852), that Texas, during her brief existence as a republic (when she was, in truth, an American State, but without the Union, and as such free from the restraints imposed by the United States Constitution), originated and repeated nearly all the fiscal faults which had previously characterised the financial history of older and more important nationalities;-such as unlimited paper money, irredeemable currency, export duties, high ad valorem tariffs, tonnage taxes, banking on the basis of land, foreign loans, repudiation. It is also certain that the United States can not claim the honour of originating the brilliant and philosophical idea, "that a national debt is a national blessing," as is shown by the following extract from a report of a committee of the Texas Congress (Mr. Chenoweth, Chairman), submitted December 16, 1837, which reads as follows: 'An outstanding national debt may, in many respects, be looked upon as beneficial, by a community isolated and independent as Texas, if the creditors, as such, can afford us substantial patronage. And, until we stand immutable among the nations of the earth, your committee would advise that the pecuniary interests of our creditors will excite for us the sympathies and protection of mankind." One lesson which Texas derived from her fiscal experimentation and bankruptcy may be inferred from the following provision of her Constitution as a State, adopted August, 1845: "In no case shall the Legislature have power to issue treasury notes,' or

ing practices that find their only parallel in the records of the Middle Ages. Hence, the recent sober maintenance of a proposition that a "national debt is a national blessing;" or those other correlative absurdities, now made the basis of the national financial policy, that the prosperity of the country may be enhanced by the maintenance of excessive taxation, or what is the same thing, of excessive deprivation; or that national growth may be best promoted by the continuance of a general and not exceptional system of taxing the many with special reference to the interest of a few.

But, with a change in the condition of State and local affairs, growing out of increased taxation, through the increase of public expenditures, the aggregate of taxation of the State of New York, for example, having increased three-fold from 1850 to 1860, or from $6,312,787 to $18,956,024, public attention, before dormant and indifferent, had begun, even previous to the war, to be awakened to the subject of a reform in the matter of local taxation; and since the war and its involved expenditures has added to the difficulties of the situation, the former feeling that some better system of raising State revenues, both as respects law and administration, than any now existing was needed, has become much more general and intensified.

THE RECENT INCREASE OF TAXATION.

It is a digression at this point, altogether pertinent to our subject, and one always of importance to the public, to briefly call attention to the facts respecting the increase of taxation which the nation during the last ten years has authorised and experienced. Previous to 1861, the annual revenues of the national government derived from taxation had never exceeded $75,000,000, but since then they have risen in one year to an aggregate of over $550,000,000; and, for the last fiscal year, were in excess of 400,000,000.

In the State of New York the aggregate of taxation has advanced from $20,402,276 in 1861 to $50,328,684 in 1870. In Massachusetts, during the period, 1861 to 1869, from $7,600,000 to $21,921,569, and in Ohio, from $11,071,000 to $22,232,877. In all history there is probably no precedent for so rapid an increase of public burdens within so limited a period, and the extent of increase may be further illustrated

paper of any description, intended to circulate as money ;" and from the following act of her first Legislature, after admission to the Union as a State: No person or persons within the State shall issue any bill, promissory note, check, or other paper to circulate as money."

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by the circumstance, that the aggregate of local taxation in one of the States of the Union, is at present greater per capita than that of any other civilised community in existence.

COMPARATIVE TAXATION OF NEW YORK AND OTHER STATES.

The following is an approximate exhibit of the extent of local taxation in New York, as compared with that of some other States and municipalities:

New York. Taking the State of New York as a whole, and assuming the population (census of 1870) at 4,364,375, and the aggregate of taxation (Comptroller's Report of 1871) at $50,328,684, the taxation per capita would be $11.55. Deducting alike the population and taxation of the city and county of New York from the population and aggregate taxation of the State, the per capita taxation of the State would be $7.54.

Massachusetts.-Population (census 1870) 1,457,351; aggregate taxation (report Secretary of State 1870), $21,922,569; taxation per capita, $14.35.

Ohio. Population (census 1870), 2,662,214; aggregate taxation, 1869, $22,232,877; taxation per capita, $8.72.

Vermont.-Population (census 1870), 330,552; aggregate taxation, 1870 (State, county, and school taxes official, town taxes estimated), $1,750,000; taxation per capita, $5.29.

AGGREGATE TAXATION OF THE UNITED STATES.

The above States of New York, Massachusetts, Ohio, and Vermont are the only ones from which the commissioners have been able to obtain the annual aggregate of taxation. They, however, undoubtedly represent the extremes and the mean of the per capita taxation of the different States, and afford data also for approximately estimating the aggregate annual taxation, national and state, of the whole country.

The revenues of the Federal Government for the fiscal year ending June 30th, 1870 (all of which, with the exception of a few millions, were derived from direct or indirect taxes), were $411,255,477. If we take the per capita rate of local taxation in New York as representing the average rate of all the States, then the aggregate taxation of the whole country for the year 1870 (the population assumed at 39,000,000) would have been $851,705,000. If the per capita rate of Ohio is taken as the average local rate of the States, the aggregate would be $751,335,000; and if of Vermont, $627,535,000.

The aggregate per capita taxation of the whole country, according to these different estimates, would therefore be

$21.83, $19.26 and $16.09 respectively; the last figures representing probably the minimum, and indicating a larger per capita taxation than any modern nation has ever before been subjected to, continuously, in time of peace.

COMPARATIVE TAXATION OF MUNICIPALITIES.

City of New York.-Population (census of 1870), 927,436; aggregate taxation, State, city, and county, 1870, $25,403,859; special taxes for local improvements (estimated) $2,000,000; total aggregate, $27,403,859; rate, 2.27; taxation, per capita, $29.54.*

Brooklyn.-Population (census of 1870), 296,300; aggregate taxation 1870, $7,897,538; rate, 3.87; taxation, per capita, $19.02.

Rochester.-Population, 63,424; aggregate taxation, State, county, and city (1869-'70), $752,223; rate, 6.70; taxation for local improvements (estimated), $200,000; total, $952,223; taxation, per capita, State, county, and city, $12.05; state, county, city, and local, $15.25.

Albany.-Population, 69,482; aggregate taxation, $1,397,780.50; rate, 4.57; taxation, per capita, $20.12.

Montreal.-Population, 150,000 (estimated); aggregate city receipts, 1870, $783,644; taxation, per capita, $5.23.

Troy.-Population (census 1870), 46,428; aggregate taxation, State, county, and city, $835,879; rate, 4.30 to 5.24; taxation, per capita, $18.

Boston.-Population (census of 1870), 250,701 ; aggregate of taxation, 1870, $9,050,420; rate, 1.53; taxation, per capita, $36.10.

Philadelphia.-Population (census 1870), 657,179; aggregate taxation (1870-'71), $9,026,753; rate, 1.80, 1.20, 90; taxation, per capita, $13.73.

Cincinnati. Population (census 1870), 218,900; aggregate taxation (1869), $4,199,413; rate, 3.19; taxation, per capita, $19.00.

*In all of the cities of which the statistics of taxation are here given, there are taxes additional to those levied by the State, city, and county, on account of local expenditures; such as the widening of streets, construction of sewers, etc. These taxes are assessed upon the localities which are deemed to have been benefited, and do not appear in its general statements which are accessible to the public and published by the States. In the case of the cities of New York, Rochester, Buffalo, Chicago, Montreal, Boston, and the other cities of Massachusetts, given in the above table, the aggregate of taxes presented is believed to include all assessments; in the case of the other cities, some small addition to the aggregates and per capita's here presented must be allowed for.