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inate in the Senate, and any revenue bill whatever may be modified to almost any extent in the Senate. The House Committee of Ways and Means has exclusive control of bills for raising revenue. Since this committee prepares the tax bill for the nation, it is justly regarded as the most important committee in Congress.

When levying taxes for the support of the national government Congress has many sources of revenue upon which it may rely. One of these is the tariff, that is, the customs duties on imports. In normal times the customs tax ordinarily yields nearly half of the national revenue. The customs tax is levied upon several hundred articles, but most of the tariff revenues are collected from manufacturers of wool, cotton, silk, iron, copper and tin, and from sugar, fruit, liquor, wines, cigars, drugs and chemicals. Among the articles admitted free of duty are: coffee, tea, anthracite coal, books over twenty years old, dyewoods and fertilizers.

Federal revenues not raised by duties on foreign goods are for the most part derived from excisestaxes on articles produced in the United Statesfrom an inheritance tax, and from an income tax imposed on individuals and corporations.

We now come to the subject of State finance.

Although they may differ somewhat in detail, the financial systems of the States are quite uniform in their workings. Authority for all public expenditures within each State flows directly or indirectly from its constitution and its legislature. Expenses of the State government are estimated and levied directly by the legislature, and are usually comparatively light. In some States the constitution limits the amount which can be levied in one year.

The heavy expenses of local government are met by taxation imposed by the minor legislative bodies, by the municipal council, or board of county commissioners—a legislative body as far as taxation is concerned-or town-meeting, or the township supervisors or trustees. Cities, counties, and other minor civil divisions are strictly under the control of the State government, and the limits of their power to tax are usually defined by the higher authority. In some States the limitations are fixed by the legislature, in others by the constitution. In about one-third of the States counties are not allowed to tax beyond a certain per cent. of the assessed valuation of property. Municipalities, in the matter of taxation, are often restricted by the terms of their charters. Taking the country over, however, the localities are quite free to tax themselves as they see fit. The most that the legislature or the constitution undertakes to do is to throw around the local taxing power such safeguards as will prevent bankruptcy. Since the greater part of the sum paid for taxes is levied by local authority with the almost direct sanction of the voters themselves, it can almost be said that the people are not taxedfor they really tax themselves.

Very often a legislature makes appropriations in a hap-hazard, extravagant manner, with the result that the finances of the State are in an unsatisfactory con

dition. In order to remedy the evils of indiscriminate and unsystematic action by the legislature, a “budget system” has been proposed. Under this system the Governor submits to the legislature an itemized statement of the needs of all the State departments. This statement, called the “budget” is used as a basis for legislative action when making appropriations. Advocates of the system are in favor of allowing the legislature to reduce an item of the budget, but would withhold from it the power to increase an item. Of course the power of the legislature could not be thus restricted except under the authority of the State Constitution. The budget system is in operation in Great Britain and other foreign countries and a movement for its adoption in the United States is gaining strength. In fact, in several States, the system has already been adopted.

In the State the general property tax is the great source of revenue. This tax reaches all property, real and personal, located within the boundaries of the State. When the owner of property resides outside the State, he does not escape taxation for that reason.

In the payment of the general property tax the taxpayer should bear a burden proportioned to his wealth; all the property of every person should contribute according to its true value. This is a fundamental principle of taxation. In order to realize this principle of equality and justice when levying the general property tax the government must set in motion an elaborate taxing machinery, and must carefully control all the processes of taxation.

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Its officers, called assessors, must discover all the property of every person and place on it a fair valuation. The sum of all the valuations of property thus made in a community is the assessment of the community. The tax rate of the community is found by dividing the expenditures determined upon the assessment. But the community, even if it be a large city, most probably is located in a county in which there are additional expenses of county government. The local division must bear its share of these expenses, and this will increase the rate of the taxpayer. The county rate is found by dividing the county expenditures by the county assessment, which is the sum of the assessments of all the local divisions of the county. Again, the county as a part of the State must contribute its share to the support of the general State government. The State rate is found by dividing the State expenditures by the State assessment (the sum of the county assessments). This rate added to the local and county rates gives the full tax rate of the local taxpayer.

The government must provide agencies for correcting unjust and unfair valuations. Very often there is a local board of equalization, to which taxpayers may appeal when they think they have not been treated fairly by the assessors. Sometimes such complaints are taken to an appeal tax court, or to the board of county commissioners. When the board of equalization or other body to which appeal is made finds that there has been an unjust assessment, it will order a new one made. State boards of equalization

have been established in some instances to correct evils growing out of uneven assessment among localities. Where assessors of one locality place the valuation of property too low and those of other localities name the true valuation the citizens of the latter are obliged to contribute more than their just share to the state expenses.

When the taxpayer fails to pay his tax-bill promptly the property upon which the tax is levied is said to be delinquent, and is liable to be sold to satisfy the claim. If the property sold for taxes should bring more than the amount of the tax the excess is given to the owner. Moreover, the owner usually has the right to buy back his property at the price for which it is sold. This right of redemption, however, continues for only a limited period, usually two years.

State constitutions almost always specify the kinds of property that may be exempt from taxation, and the legislature is usually forbidden to exempt any other kind. A clause from the constitution of Minnesota will illustrate the practice in reference to exemption: “Public burying grounds, public schoolhouses, public hospitals, academies, colleges, universities and all seminaries of learning, all churches, church property used for religious purposes, and houses of worship, institutions of purely public charity, public property used for public purposes, and personal property to an amount not exceeding in value two hundred dollars for each individual, shall by general laws be exempt from taxation.” Many

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