The Old and free from taxation in the hands of all persons; and the laws of trade will regulate his investment as they daily regulate the price of Government bonds, and will bring down his securities to a rate of interest not much above the rate paid by the national government. The exemption applied to United States bonds, which is of no practical benefit to the present purchasers, in consequence of the increased price of the bonds, would be of no benefit if applied to the holder of other securities in an established and permanent system, except in freedom from the uncertainties and irregularities attending the exercise of arbitrary and irregular power. If the exemption is an exemption of everything of the same class, it is perfectly equal and fair, and its effect is diffused and equated; and the tax on another article, taxed in lieu of the exempted class of articles, is likewise equated and diffused, and if invisible and imponderable evidences of debt cannot be taxed equally no injustice will arise if they are all free from primary taxation, and if the taxes of a permanent system are imposed on other things subject to positive and fixed rules of assessment. The daily price of United States bonds, therefore, is a constant lesson, that an exemption of a security from taxation is an exemption of the borrower, and the same law of political economy will rule in respect to both private and public debts. Each State has, therefore, the power to put its borrowers on an equal footing with the general government, and without injustice or inequality toward the borrower or the lender. The first attempt made to tax money at interest was instigated against money lenders because they were Jews; but the Jew was sufficiently shrewd to charge the full tax over to the Christian borrower, including a per centage for annoyance and risk; and now most Christian countries, as the result of early experience, compel or permit the Jew to enter the money market, and submit, without let or hindrance, his transactions to the "higher law" of trade and political economy. But a class yet exists who would persecute a Jew if he is a money lender, and they regret that the good old times of roasting him have passed away. They take delight in applying against him, in taxation, rules of evidence admissible in no court since witches have ceased to be tried and condemned. They sigh at the suggestion that all inquisitions shall be abolished; they consider oaths, the rack, the iron boot, and the thumbscrew, as the visible manifestations of equality. They would tax primarily everything, to the lowest atom first for national purposes, and then for State and local purposes, through separate boards of assessors. They would require every other man to be an assessor or collector, and it is not probable that the work could then be accomplished with accuracy. The average consumption of every inhabitant of this State, annually, is at least $200, or, in the aggregate, $800,000,000; and this immense amount would fail to be taxed if the assessment was made at the end of the year, and not daily, as fast as consumption followed production. All this complicated machinery of infinitesimal taxation and mediæval inquisition is to be brought into requisition for the purpose of taxing money property," which is nothing but a myth. The money lender parts with his property to the borrower, who puts it in the form of new buildings, or other improvements upon which he pays a tax. Is not one assessment on the same property sufficient? But if you insist upon another assessment on the money lender, it requires no prophetic power to predict that he will add the tax in his transactions with the borrower. If a tax of ten per cent. was levied and enforced on every bill of goods, or note given for goods, the tax would be added to the price of goods, and how would this form of tax be different from the tax on the goods? "Money property," except in coin, is imaginary, and cannot exist. There are rights to property of great value. The right to inherit property is valuable; and a mortgage on land is a certificate of right or interest in the property, but it is not the property. Land under lease is as much " money property" as a mortgage on the same land; both will yield an income of money. Labour will command money, and is a valuable power to acquire property, but is not property. If we could make property by making debts, it cannot be doubted that a national debt would be a national blessing. Attacking the bugbear of "money property" is an assault on all property; for " money property" is the mere representative of property. If we tax the representative, the tax must fall upon the thing represented. A traveller in the Okefanokee swamp slaps the mosquitoes off his right cheek only to find that they immediately alight upon his left cheek, and that when he has driven them from thence, they return and alight on his nose, and that all the time he loses blood as a genuine primary or secondary taxpayer. And so it is with taxation. If we live in any country not wholly barbarous, we cannot escape it; and it is the fate of man to bear his proportion of its burdens in proportion to his expense, property, and consumption. The main question of interest and importance in connection with the subject, therefore, is, Shall we have an economical system (and hence a species of labour-saving machine), and a uniform and honest system; or one that is expensive, and encourages dishonesty, and is arbitrary and inquisitorial? In either case the tax collector will act the part of the mosquito, and will get blood from all; but in an honest and economical system he will get no unnecessary blood. Referring to the supplement to this report for a discussion in detail of some other point of importance, the commissioners would next ask attention to the code of laws, prepared in conformity with the instructions of the Legislature, as before cited. SUPPLEMENT. NATURE AND PROVINCE OF TAXATION, AND LIMI- The power of every complete sovereignty over the persons and property of its subjects is unlimited, and in every such sovereignty, therefore, the power to compel contributions for the service of the State, or, as we may term it, “to tax,” must be unrestricted. In the United States, however, the powers of the national government, and the powers of the separate States, are materially limited in many respects. On the one hand, in virtue of an agreement of union accepted by all the States, and known as the Federal Constitution, and on the other, in virtue of certain original powers retained by the States, and not delegated by them, in entering the Federal Union, to any other or higher sovereignty. It is proposed to inquire how far these limitations of sovereignty affect the powers of the national and State governments in respect to taxation? And first, of the limitations on the taxing powers of the States recognised and maintained by the Federal government. The most important of these limitations upon the taxing power of the separate States of the Federal land, is that which excepts and exempts all agencies of the national government, of every name and nature. This limitation, the Federal courts have held, exists by implication, not only in the Constitution of the United States, but in the structure of the national government itself; "for otherwise the States might impose taxation to an extent that might cripple, if not wholly defeat the operations of the national authorities within their proper sphere of action."* *In the celebrated case of McCulloch v. Maryland (4 Wheaton, 431), where the question involved was the right of the State of Maryland to impose taxes upon the operations, within its limits, of the Bank of the United States, created by the authority of Congress, Chief Justice Marshall uses the following language :-"If we apply the principle for which the Exemption of United States Can Congress authorise the States to tax national instrumentalities? In the popular discussions which have occurred during the last few years in reference to the taxing of United States securities, the position has not been unfrequently taken, that it would have been just and expedient on the part of Congress, at the time of the creation of the present national debt, to have allowed the separate States to tax the evidences of such debt (i.e., the bonds) in the possession of their citizens, subject to a limitation that the same should not be taxed at any different rate than other "" moneyed capital." A full consideration of the whole subject will, however, suggest a doubt whether Congress possesses the power to grant any such authorisation, inasmuch as to have done so would have been equivalent to authorising the States to do an act which in itself is unconstitutional, a thing which it is self-evident that Congress cannot do. Thus, "the power to tax," says Chief Justice Marshall, in giving the opinion of the Supreme Court denying the right of Maryland to tax the Bank of the United States, "involves the power to destroy;" and in the case of Weston v. The City of Charleston, the same court, by the same eminent authority, held further, "that if the right to impose a tax exists, it is a right which in its nature acknowledges no limits. It may be carried to any extent within the jurisdiction of the State or corporation which imposes it, which the will of such State or corporation may prescribe." For Congress, therefore, to have authorised the States to tax "national agencies," would have been equivalent to authorising the exercise of a right to destroy, which right, the Supreme Court have held, cannot, from its nature, when once existing, be limited. Another restriction upon the taxing powers of the States, imposed by implication by the Constitution of the United States, and directly by the decision and interpretation of the State of Maryland contends to the Constitution generally, we shall find it capable of changing totally the character of that instrument. We shall find it capable of arresting all the measures of the government, and of prostrating it at the foot of the States. The American people have declared their Constitution, and the laws made in pursuance thereof, to be supreme; but this principle would transfer the supremacy, in fact, to the States. If the States may tax one instrument employed by the government in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax patent rights; they may tax the papers of the custom-house; they may tax judicial process; they may tax all the means employed by the government to an excess which would defeat all the ends of government. This was not intended by the American people. They did not design to make their government dependent on the States." |