other forms of taxation be substituted for the general property tax.

281. Separating Sources of Revenue. In our discussion of city government we found that its cost should generally be met by a tax on real estate. This seemed to be true for the reason that this real property receives the benefit of money spent in improving the city; it increases in value whenever work is well done by the city government. What is true of the city in this respect is also largely true of the town and county. The income of local communities is spent for local improvements and so benefits local real estate. Therefore the State government may leave this kind of property free from State taxes. The State may derive its revenue from large business and the large private incomes which rest on this business. To do this the corporations may be taxed in such a way that the officers of the government need not look for the stocks and bonds. The profits of the corporations may be taxed before they are paid out to the stock and bond holders. Such property may also be reached through an inheritance tax. Many of our States now require that all fortunes pay a large per cent into the public treasury when they are inherited. Such a tax can scarcely be avoided, and it does not fall heavily on any class of persons. The worker who earned the wealth is gone and does not need it. Those who are to receive it without earning it simply receive a somewhat smaller heritage. The collection of both income and inheritance taxes might be greatly aided by coöperation between the State and Federal governments, which might prevent the holder of stocks and bonds from escaping taxation by sending them from one State to another.

282. Graduated Taxation. One of the most difficult

problems of government is to apportion taxation justly among the citizens. It is nearly impossible to solve this problem so that all of the citizens will be satisfied. The poor claim that the rich should meet the expenses of government because they can afford it. The rich claim that it is wise to have all people help to pay public expenses because then all will be interested in good government. They claim that those who pay no part of the cost have no real interest in selecting efficient legislators and governors. The present tendency is to make the tax rate on large fortunes a graduated one. This means that an inheritance of twenty thousand dollars may pay at the rate of three per cent while one of a hundred thousand dollars pays at the rate of five per cent. Some of the most radical people demand that the rate on inheritances increase so rapidly, as the size of the fortune increases, that the State will take all of the property above such a fixed amount as, for example, half a million. Such a demand may seem to be more reasonable when we have so organized our government that its income may be more wisely and economically expended than it is

now.

283. Apportioning the Public Income. We have seen that the wise city government surveys its needs once a year and carefully divides the money it has to spend among its departments. This cannot be done by most of our State governments because we have no organization for doing it. The governor has no cabinet; he is not permitted to supervise the making of the budget; he has but little authority over its arrangement. If our State constitutions were more carefully written all of the departments of the State administrations would be organized under a cabinet appointed by the governor, each member of the cabinet being the head

of one department. Such a cabinet could assist the governor in determining the needs of the State and support him in advising the legislature about these needs. The governor could then be held responsible by the people of the State when the public money seemed to be extravagantly spent. But as it is we have no right to find fault with him.

284. Log-Rolling in the Legislature. Instead of a budget made by a governor with a cabinet, most of our State legislatures make a long list of separate appropriations each session. Let us see if we can form in our minds a picture of an assembly of one or two hundred men and women gathered from all parts of a State for the purpose of voting money for public expenses. None of these members is responsible for the general cost of the government. Each is particularly interested in getting some single appropriation through. Suppose you and I are members of this assembly, and suppose we meet outside the legislature and agree together to support each other's appropriation bills. Now let us multiply our agreement many times and we will find all the members ready to vote through the legislature a large number of bills giving money to all kinds of unnecessary things. I am an honest member and so are you; but we think our bills should pass. It is no concern of ours if the taxes must be large; our districts are going to be pleased if we get an appropriation for a new road or a new bridge, and they are going to blame the governor or some one else if the expenses of the State seem to them extravagant and wasteful. This way of appropriating money is called log-rolling. The word comes from the lumber camps where workmen help each other to roll logs so heavy that one man cannot manage them by himself. Is

it wise for our public money to be handled in this way? 285. Hearings on the Budget. When an annual budget is made and printed for distribution among the citizens of the State public hearings on it may be held. Those who wish money spent for any purpose may there meet face to face with those who demand that the taxes be reduced. When they meet, an argument may bring out the facts which the people should know about both the taxes and the expenses. If the governor, who is the single spokesman for the whole State, makes the budget, then he may be held responsible for both the taxes and the expenses. Therefore he will try to keep out of the budget those expenses which he cannot defend as wise; and he will try to keep the whole budget so small that the taxes will not be unreasonably high. After the budget has been made he will require the department heads to spend the money so wisely that the people will see that the taxes were necessary and just.

286. Standardized Accounting. Keeping the public accounts is a complex but important matter. So long as the heads of departments are elected separately they are not apt to meet and agree on a way of keeping the books so that the governor and other people in the State may easily understand where the public money goes. Under a wise organization every department keeps its books and its accounts in exactly the same way. Consequently it is possible for a group of citizens to hire a trained bookkeeper to examine any part of the government at any time and see if it is keeping its promise to be economical and efficient. But in a government which is not well organized the accounts. are so confused that such investigations cannot be made without so much trouble that the citizen is discouraged from attempting them.

SUGGESTIONS AND QUESTIONS

1. Get a copy of the treasurer's report of your State. From this find out the principal ways in which the government gets the money to pay its expenses. Make a list of these and mark with a cross those which you think are the best ways.

What

2. What official has charge of collecting the taxes? other State officials have charge of collecting the State income? 3. Does the governor generally recommend to the legislature what kind of taxes should be collected and how much the State will need? If not, who does decide these things when the legislature meets?

4. If your State has an income tax, is it graduated? If it has an inheritance tax, is this graduated? If it has a general property tax, is it fairly collected? Ask some older person.

5. Does the governor of your State make out the budget of expenditures? Does any one make an annual budget for the State? If not, how does the State government decide for what the money is to be spent? How does the legislature know how much each department really needs for its work?

6. Has your State an officer called auditor or comptroller? If so, what does this officer do? How is he appointed? How is he removed? If he is elected, ask some older friend of yours whether he knows the auditor and whether the auditor has been trained for his task. Ask him why the present auditor was elected.

7. Ask some friend whether there is any log-rolling in your State legislature, and whether he thinks it causes extravagance. If he does think so, ask him whether he thinks matters could be improved if the governor made out a budget for all the State's expenses at one time and asked the legislature to vote on the whole budget at one time.

8. Explain why the governor could not make out the budget very well unless the constitution gave him the power to appoint the heads of departments, and unless the work of the government were carefully divided into a few important departments.