burdens, but "the demoralization of the public conscience by the frequent administration of oaths, so often taken only to be disregarded, is an evil of the greatest magnitude. Almost any change would seem to be an improvement." 1

There is probably not a State in the Union of which the same thing might not be said. In Ohio, for instance, the Governor remarks in a special message of April 1887: "The great majority of the personal property of this State is not returned, but entirely and fraudulently withheld from taxation. The idea seems largely to prevail that there is injustice and inequality in taxation, and that there is no harm in cheating the State, although to do so a false return must be made and perjury committed. This offence against the State and good morals is too frequently committed by men of wealth and reputed high character, and of corresponding position in society." In New York the Governor said (Annual Message of 1886): "For years the State assessors have directed public attention to the fact that the personalty of the tax-payers was escaping assessment, yet there has been a shrinkage from 1871 to 1884 of $107,184,371 (£21,436,874)." That is to say, notwithstanding the immense increase of personal property in New York during these thirteen years, personal property stood assessed at £21,000,000 less in 1884 than in 1871.

I have dwelt upon these facts, not only because they illustrate the difficulties inherent in a property tax, but also because they help to explain the occasional bitterness of feeling among the American farmers as well as the masses against capitalists, much of whose accumulated wealth escapes taxation, while the farmer who owns his land, as well as the working man who puts his savings into the house he lives in, is assessed and taxed upon this visible property. We may, in fact, say of most States, that under the present system of taxation the larger is the city the smaller is the proportion of personalty reached by taxation

Commission, Mr. Richard T. Ely, in which a great deal of instructive evidence as to the failure in various States of the efforts made to tax intangible property has been diligently collected and set forth (Baltimore, 1888).

1 Judge Foster, in the case of Kirtland v. Hotchkiss, 42 Conn. Rep., p. 449. So Mr. David A. Wells, in his report as Special Tax Commissioner to the New York Legislature, says: "Oaths as a matter of restraint or as a guarantee of truth in respect to official statements have in great measure ceased to be effectual; or in other words, perjury, direct or constructive, has become so common as to almost cease to occasion notice. This is the all but unanimous testimony of officials who have of late had extensive experience in the administration of both the national and State revenue laws."

(since concealment is easier in large communities), and the richer a man is the smaller in proportion to his property is the contribution he pays to the State. Add to this that the rich man bears less, in proportion to his income, of the burden of indirect taxation, since the protective tariff raises the price not merely of luxuries but of all commodities, except some kinds of food.1

Besides the property tax, which is the main source of revenue, the States often levy taxes on particular trades or occupations, sometimes in the form of a licence tax, taxes on franchises enjoyed by a corporation, taxes on railroad stock, or (in a few

1 An experienced Massachusetts publicist writes to me apropos of the passage in the text: "If one State compels a man to make a full declaration of his personal property for taxation and another does not there will be a tendency for capital to flow from the former to the latter. In Vermont, for instance, a law has been passed requiring every person under penalty to make sworn returns of his moveable property, and the result is that capital seems to be leaving that State.

"In New York the law taxes personal property, but if a person makes no return the assessors are instructed to doom' him according to the best of their knowledge and belief; and the amount becomes a matter of 'trade.' Returns are practically made only by trustees and corporations, not by capitalists. It is a case of bad law tempered by violation.

"In Massachusetts the practice in each town depends mainly upon the assessors. In Boston the chief office having resolved to let no one escape, has for twenty years gone on increasing the assessment each year till the victim makes a return. At first, men had some scruple about leaving the city before 1st May (the date of residence when taxes are assessed), but these were soon overcome, and now nearly all the capitalists have country places where they retire at a still inclement season, and are received with open arms by the local assessors, who accept just what they choose to pay, while their political influence, their taxes, and their public donations are lost to the city. Occasionally the assessors in a country town take it into their heads to apply the screw after the fashion of the city authority, and then there is a fine turmoil. As the rich men generally live in one quarter of the (country) town, the next step is to apply to the legislature to get the town divided, and the vicinity of Boston is thus being gradually cut up into small pieces."

2 North Carolina empowers its legislature to tax all trades, professions, and franchises. Arkansas in 1868 (Article x. § 17) directed its general assembly to "tax all privileges, pursuits, and occupations that are of no real use to society," adding that all others shall be exempt. But having apparently found it hard to determine which occupations are useless, she dropped the direction in her Constitution of 1874, and now merely empowers the taxation of "hawkers, pedlers, ferries, exhibitions, and privileges."

The persons or things on whom licence taxes or occupation taxes may be imposed are the following, some being mentioned in one State Constitution, some in another-Pedlers, hawkers, auctioneers, brokers, pawnbrokers, merchants, commission merchants, "persons selling by sample," showmen, jugglers, innkeepers, toll bridges, ferries, telegraphs, express agents (i.e. parcels' delivery), grocery keepers, liquor dealers, insurance, vendors of patents, persons or corporations using franchises or privileges, banks, railroads, destructive domestic animals, dealers in "options" or "futures."

States) taxes on collateral inheritances.

Comparatively little resort is had to the so-called "death-duties," i.e. probate, legacy, and succession duties, nor is much use made of an income tax. Five States, however, authorize it. As regards poll taxes there is much variety of practice. Some State Constitutions (e.g. Ohio) forbid such an impost, as "grievous and oppressive"; others direct it to be imposed, and about one half do not mention it. Where it exists, there is sometimes a direction that it shall be applied to schools or some other specified useful purpose, such as poor relief, so as to give the poor, who perhaps pay no other direct tax, a sense of their duty to contribute to public objects, and especially to those in whose benefits they directly share. The amount of a poll tax is always small, $1 or $2: sometimes the payment of it is made a pre-requisite to the exercise of the electoral franchise. It is, I think, never imposed on women or

minors.

In some States "foreign" corporations, i.e. those chartered by or domiciled in another State, are taxed more heavily than domestic corporations. New Hampshire has recently, by taxing "foreign" insurance companies, succeeded in driving them out of its limits.

I have found no instance of a progressive inheritance duty, or of a progressive income tax such as some of the Swiss cantons have imposed. California, however, in her Constitution of 1879 (see Appendix to this volume) has attempted to tax the same property twice over.

There is always a desire to hit companies, especially banks 1 and railroads. The newer Constitutions often direct the legislature to see that such undertakings are duly taxed, sometimes forbidding it ever to deprive itself of the power of taxing any corporation, doubtless from the fear that these powerful bodies may purchase from a pliant legislature exemption from civic burdens.

III. In most States, certain descriptions of property are exempted from taxation, as for instance, the buildings or other property of the State, or of any local community, burying grounds, schools and universities, educational, charitable, scientific, literary, or agricultural institutions or societies, public libraries, churches and other buildings or property used for religious purposes, cemeteries, household furniture, farming imBanks were an

1 As to banks, see Ohio Constitution of 1851, Article xii. § 3. object of as much popular dislike then as railroads are now.

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plements, deposits in savings banks. Often too it is provided that the owner of personal property below a certain figure shall not pay taxes on it, and occasionally ministers of religion are allowed a certain sum (as for instance in New York, $1500) free from taxation.

No State can tax any bonds, debt certificates, or other securities issued by, or under the authority of, the Federal government, including the circulating notes commonly called "greenbacks." This has been held to be the law on the construction of the Federal Constitution, and has been so declared in a statute of Congress. It introduces an element of great difficulty into State taxation, because persons desiring to escape taxation are apt to turn their property into these exempted forms just before they make their tax returns.

IV. Some of the State taxes, such, for instance, as licence taxes, or a tax on corporations, are directly levied by and paid to the State officials. But others, and particularly the property tax, which forms so large a source of revenue, are collected by the local authorities. The State having determined what income it needs, apportions this sum among the counties, or in New England, sometimes directly among the towns, in proportion to their paying capacity, that is, to the value of the property situate within them. So similarly the counties apportion not only what they have to pay to the State, but also the sum they have to raise for county purposes, among the cities and townships within their area, in proportion to the value of their taxable property. Thus, when the township or city authorities assess and collect taxes from the individual citizen, they collect at one and the same time three distinct sets of taxes, the State tax, the county tax, and the city or township tax. Retaining the latter for local purposes,2 they hand on the two former to the county authorities, who in turn retain the county tax, handing on to the State what it requires. Thus trouble and expense are saved in the process of collecting, and the citizen sees in one tax-paper all he has to pay.

V. Some States, taught by their sad experience of reckless legislatures, limit by their Constitutions the amount of taxation

1 As ascertained by the assessors and board of equalization.

2 Sometimes, however, the town or township in its corporate capacity pays the State its share of the State tax, instead of collecting it specifically from individual citizens,

Thus

which may be raised for State purposes in any one year. Texas in 1876 forbade the State property tax to exceed one half per cent on the valuation (exclusive of the sum needed to pay interest on the State debt), and has since reduced the percentage to 35.1 A similar provision exists in Missouri, and in four other Southern or Western States. We shall see presently that this method of restriction has been more extensively applied to cities and other subordinate communities. Sometimes we find directions that no greater revenue shall be raised than the current needs of the State require, a rule which Congress would have done well to observe, seeing that a surplus revenue invites extravagant and reckless expenditure and gives opportunity for legislative jobbery.2

It may be thought that the self-interest of the people is sufficient to secure economy and limit taxation. But, apart from the danger of a corrupt legislature, it is often remarked that as in many States a large proportion of the voters do not pay State taxes, the power of imposing burdens lies largely in the hands of persons who have no direct interest, and suppose themselves to have no interest at all, in keeping down taxes which they do not pay. So far, however, as State finance is concerned, this has been no serious source of mischief, and more must be attributed to the absence of efficient control over expenditure, and to the fact that (as in Congress) the committee which reports on appropriations of the revenue is distinct from that which deals with the raising of revenue by taxation.

Another illustration of the tendency to restrict the improvidence of representatives is furnished by the prohibitions in many Constitutions to pass bills appropriating moneys to any private individual or corporation, or to authorize the payment of claims against the State arising under any contract not strictly and legally binding, or to release the claims which the State may have against railroads or other corporations. One feels, in reading these multiform provisions, as if the legislature was a rabbit

1 In spite of this Texas had in March 1888 a surplus of $2,000,000 in her State treasury, so that the Governor was obliged to summon the legislature in extra session to dispose of this surplus and prevent the growth of another.

2 Sir T. More in his Utopia mentions with approval a law of the Macarians forbidding the king to have ever more than £1000 in the public treasury.

3 Mr. Ford says (Citizens' Manual) that it is estimated that only eight per cent of the whole population of the United States pay State taxes. Of course, a much larger percentage of the voters pay, they being nearly one-fourth of the whole.