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second, of national taxation, or of taxation by the United States in general. Of the two the latter is by far the greatest; for when taxation-as in the case of the tariff on the import of specific articles, or through the increased cost of transportation through the watering of railroad stocks, or by the use of a vicious currency-is levied upon products which, in the nature of raw material, passes through successive stages of transformation or elaboration before it comes to the consumer, the tax from the beginning forms an element of the cost, on which a percentage, to represent profit, interest, and risks (usually not less than ten), is levied by each person through whose hands the product passes as dealer or elaborator. It thus admits of demonstration that the $101,000,000 paid on the principal of the public debt during the fiscal year 1869-'70, and supposing the same (as we legitimately may) to have been raised by taxation under the existing tariff, was really and directly increased to at least $150,000,000 before the same was paid by the consumers of the taxed articles, and indirectly to a much larger figure. But of the practical effects of excessive and ill-adjusted taxation, the people of the United States at present need no illustrations. That they have been able to withstand the burden, National and State, imposed upon them for the past ten years, and yet live and prosper, is the most positive proof that can be afforded of the great natural resources and productive powers of the country.

PREVIOUS EFFORTS FOR THE REFORM OF EXISTING SYSTEMS OF LOCAL TAXATION.

In addition to general public discussion, the feeling of the necessity for reform in the existing systems of local taxation, has, moreover, found expression during the last ten years, in the attempt on the part of the Legislatures of at least five different States to provide for the work by the creation of boards or commissions, to whom the whole subject of inquiry and revision was committed, with instructions to report by bill or otherwise.

In this work the State of New York took the lead by the appointment, in 1862, by the Legislature, of a committee on the part of both the Senate and the House, of which Mr. James A. Bell, of the Senate, was chairman, which committee subsequently (February, 1863) presented a report, accompanied by a bill and a digest of the mode and machinery of taxation then existing in the other States of the Union.* The example of

* Report on the State Assessment Laws by the joint Select Committee appointed by the Legislature of 1862. Transmitted Feb. 2, 1863. Albany:

New York was subsequently followed by the States of Pennsylvania, New Jersey,+ and Connecticut, each of which, during the years 1867 and '68, authorised the appointment of commissioners to take into consideration the subject of local taxation, with a view to the revision or amendment of existing laws; and all of which commissions, under instructions, submitted reports to the Legislatures of their respective States during the year succeeding to their appointment.

The State of Illinois during the year 1870 also authorised the State board for the equalisation of taxes to prepare and present an entire new code of the levy and collection of taxes in that State.§

It is also interesting here to note, that it does not appear that the Legislatures of the four States first mentioned, in even a single instance, subsequently paid any attention whatever to the work or recommendations of the commissioners they had thus authorised; a result which, coinciding with the record of a similar recent experience in respect to Congress and the national Government, would appear to indicate the scope and object of all commissions appointed by legislative bodies to independently investigate financial or social questions, to be more properly the collection and intelligent presentation of facts, and the discussion of the practicability and direction of remedial measures, rather than the detailed elaboration of systems, with the expectation that the same are to be immediately invested by the proper authorities with the force of law. And, furthermore, any commission, such as above referred to, which properly discharges the duties assigned to it is likely to occupy advanced positions, and do more than merely reflect to the average of existing public sentiment; and as all experience has

Weed, Parsons, & Co., Printers, 1863.-Digest of Taxation in the States;
under three heads: 1, Mode and Machinery of Taxation; 2, Standard of
Valuation; 3, Property liable to and exempt from Taxation. By Alfred
B. Street. Published under the direction of the Joint Committee of the
New York Legislature appointed to revise the Assessinent Laws. Albany:
Weed, Parsons, & Co., 1863.

*Commonwealth of Pennsylvania. Report of the Auditor-General, Secretary of the Commonwealth, and State Treasurer, on the Tax Laws of the State; made in compliance with the joint resolutions of the Legislature. Approved April 12, 1867.

† Report of the Commissioners to revise the Tax Laws of the State of New Jersey; together with "An Act concerning Taxes." Submitted to the General Assembly January 3, 1868. Charles S. Olden, chairman. Trenton, N.J., 1868.

Report of the Special Commissioners on the subject of Taxation; with Bill in form accompanying. N. H. Morgan, chairman. Printed by order of the Legislature. New Haven, 1868.

§ An Act for the Assessment of Property and the Levy and Collection of Taxes. Prepared by the State Board for the Equalisation of Taxes in Illinois. Submitted to the Legislature January, 1871.

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thus far shown that legislative bodies in the United States rarely, if ever, act in advance of public opinion, it would seem absolutely essential that the material of information should be first afforded to the public, with time for thought and discussion, before reform in the way of legal enactments can be reasonably asked for or expected.

During the year the subject of local taxation has also been brought prominently before the attention of the British public, through two agencies

1. By the creation of a parliamentary commission, consisting of twenty-one members, of which the Right Hon. George J. Goschen, President of the Poor-Law Board, and a member of the cabinet, is chairman; and,

2. By the offer of a prize by one of the leading politicoeconomic societies of Great Britain (the Statistical Society of London), for the preparation of the best essay on the "subject of local taxation," the same to be presented and published early in the year 1871.*

The first report of the parliamentary commission above referred to, which was submitted in July, 1870,† shows, how

* Professor Stanley Jevons, in his address as President of the Economic Section of the British Association for the Advancement of Science, at the annual meeting, September, 1870, thus alludes to the condition of local taxation in the United Kingdom. He says: "I may point to local taxation especially as a subject requiring attention, even more than any branch of the general revenue. Until within the last few years the importance of the local rates was to a great extent overlooked, because there were no adequate accounts of their amounts. The returns recently obtained by the Government are even now far from complete, but it becomes apparent that at least onefourth part of the revenue of the kingdom is raised by these neglected rates and tolls. Their amount is more than equal to the whole of the customs duties, upon the reform of which we have been engaged for thirty years. Nevertheless we continue to allow those rates to be levied substantially according to an act passed in the reign of Elizabeth. The recent partial inquiry by a select committee has chiefly proved the extent and difficulty of the reform which is needed. Whole classes of property which were unrated three centuries ago are unrated now; and it will be a matter of great difficulty to redress in an equitable manner inequalities which have been so long tolerated. The subject is of the more importance because there is sure to be a continuous increase of local taxation. We may hope for a reduction of the general expenditure, and we shall expect rather to reduce than raise the weight of duties. But all the more immediate needs of society,-boards of health, medical officers, public schools, reformations, free libraries, highway boards, main drainage schemes, water supplies, purification of rivers, improved police, better poor-laws, medical service;-these, and a score of other costly reforms, must be supported mainly out of the local rates. Before the difficulties of the subject become even greater than they now are, I think the principles and machinery of local taxation should receive thorough consideration. At present the complexity of the laws relating to poor rates is something quite appalling, and it is the herculean nature of the reform required which perhaps disinclines financial reformers from attacking it."

"Report from the Select Committee on Local Taxation; together with the Proceedings of the Committee, Minutes of Evidence, and Appendix. House of Commons, July 15, 1870."

ever, that no essential change in the existing system of local taxation in Great Britain was contemplated by the British Government; the instructions given to the commission limiting their inquiries to the consideration merely of changes in the detail of assessments, and in the constitution of the bodies to whom the administration of the rates is locally entrusted.*

PRESENT NECESSITY FOR REFORM IN THE EXISTING TAX
SYSTEM OF NEW YORK.

But whatever may have been the reasons which led the Legislature of the State of New York, in 1862, to the conclusion that an inquiry, with a view to the revision of the existing tax system, was then expedient, the reasons which now exist for the authorisation and prosecution of a similar work are far more imperative. In 1862 the aggregate valuation of the property of the State for tax purposes being $1,449,303,948, the aggregate of all taxes was $19,456,288, while the average rate was 1.342. In 1869, however, the aggregate valuation being $1,860,120,770, the aggregate of taxation had risen to $46,161,531, and the average rate to 2.482. In other words, if we take a period of ten years, viz., from 1860 to 1869 inclusive, we find that, while the valuation of the property of the State for tax purposes has increased during that time, but 30.3 per cent, the aggregate of the sums raised by taxation has increased during the same period 140 per cent, and the average rate 85 per cent. Or, to state the case differently, the aggregate taxation of the State, from 1845 to the present time, has increased from about three-fourths of one per cent upon the dollar of valuation, representing a tax of $4,170,524, to one and three-tenths in 1860, representing a tax of $18,956,024, and two and four-tenths in 1869, representing a tax of $46,161,531. Estimated per capita, the aggregate of State taxation, which in 1860 was 4.88 cents, has since increased until it is now (1870) equivalent to $11.55 for each man, woman, and child that make up the entire population of the State.

Within the last few years, moreover, such changes have been made in the tax systems of several of the States contiguous to

"Ordered: That a select committee be appointed to inquire and report whether it be expedient that the charges now locally imposed on the occupiers of ratable property should be divided between the owners and occupiers, and what changes in the constitution of the local bodies now administrating rates should follow such division.

"Ordered: That it be an instruction to the committee to inquire further into the proper classification of rates, with a view to determine their proper incidence upon the owners or occupiers of such ratable property.-House of Commons, Feb. 21, 1870."

New York, either by special enactments, variations in the methods of valuation and assessing of property, or a diminished necessity for the raising of revenue, as to place New York relatively at great disadvantage, and urgently call for the adoption of measures on the part of the State, which will at once prevent the arrest of its development and the deviation of its legitimate capital, population, and enterprise.

Thus, for example, the Legislature of the State of New Jersey, during the year 1869, exempted, in certain of the counties and cities of that State which lie contiguous to New York, all mortgages from taxation, by a provision of law which reads as follows:-" And all mortgages upon estates, chattels, or personal property, taxable by law, within said counties of Hudson, Union, Essex, and the city of Brunswick, Middlesex county, and the county of Passaic, except the townships of West Milford, Pompton, and Wayne, for State, county, township, and city purposes, shall be exempt from taxation, when in the hands of any inhabitant, corporation, or association, residing or located in said counties or cities." Approved April 2, 1869; Laws of

New Jersey, 1869, page 1225.

It is therefore obvious that the State of New Jersey, by the action of its Legislature, has not only removed, in the districts and cities above specified, all obstacles in the way of the retention within its own borders of so much of the capital of its citizens as tends to investments in bonds and mortgages, but has also offered a strong inducement to the inhabitants of the State of New York, and especially of its great commercial city, to change their residence and become citizens of New Jersey; while New York, on the other hand, by continuing its taxes on bonds and mortgages, in fact reduces the rates of interest on this species of investment to a rate less than that paid by government, and many other securities: and thus limits and obstructs the flow of capital in that channel, which, perhaps, more than any other contributes to small local enterprises, gives employment and homes to the working classes of its population, and augments the amount of visible, tangible property available for taxation for State purposes.

In Pennsylvania, furthermore, another of the States which is especially brought into competition with New York, personal property, under a system of taxation which is in many respects far more liberal than that of any other State in the Union, is either wholly exempt from taxation, or is taxed to so small an extent as, in comparison to New York, to practically amount to exemption; and, although Pennsylvania is guilty of the apparent barbarism and inconsistency of imposing a tax of four cents per ton on the anthracite coal mined and carried by trans

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