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[No. 39.]


FEBRUARY 16, 1871.





ALBANY, February 16th, 1871.

To the Legislature :

A joint resolution was passed by the Legislature, at its last session, authorising me to appoint three commissioners “ to revise the laws for the assessment and collection of taxes." I appointed David A. Wells, Edwin Dodge, and George W. Cuyler; and I now transmit their report. This report was not completed in time to allow such an examination of it, on my part, as would enable me to form an opinion of the expediency of adopting the recommendations made. It is apparent, however, that the report contains a great amount of information and of argument which will afford most valuable aid to the Legislature and the people in coming to an intelligent judgment upon the questions involved. No subject is more important than this one to the interests of the people, and consequently none is more worthy of your attention.


The tax system prevalent in the other States is, in its main features, the same as in our own; and the information furnished in this report will be very valuable, not only to the people of our own State, but to the country at large. It is right that New York, the State foremost in population and wealth, should take the lead in investigating this great question, and in adopting such improvements as are shown to be valuable.

The interests of the people require a method of taxation at once equitable, effective, and free from unnecessary oppression; one which will yield the requisite revenue while subjecting them as little as possible to inquisitorial vexation, and which shall be attended with the least expense for official services, and afford the fewest temptations to fraud, concealment, or evasion.

If the commissioners have succeeded in devising such a system, it should be adopted as early as possible. In view of the importance of the subject to the general welfare, I earnestly commend the report to your immediate and careful consideration.

Unless otherwise instructed by the Legislature, the commissioners will deem themselves authorised to go on and complete their work by preparing and submitting such laws as they think necessary to the carrying out of their views.


NOTE BY THE CHAIRMAN OF THE BOARD OF COMMISSIONERS. — The edition of this Report published under the authority of the Legislature of New York was, to a certain exent, imperfect, both in respect to some omissions and a lack of clearness in the statement of certain propositions. In the present edition these imperfections, so far as discovered, have been corrected, and the Report in every-way made more clearly expressive of the arguments and conclusions of the Commissioners.



ALBANY, February, 1871.


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 :


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.


IN SENATE—April 26th, 1870. Concurred in without amendment.

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. in

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 amung the nations of the earth, your committee would advise that the pecuniary interests of our creditors will ex.cite 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, 1815 : “In no case shall the Legislature bave 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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