such a valuation would probably be very considerably under the truth.

But that these estimates, indefinite and general as they must necessarily be, are really much less than the valuation of personal property likely to be attained to under the system of the commissioners, will appear evident from the following considerations:

Thus, an estimate given to the commissioners by persons whose judgment is to be relied on, is to the effect, that the present annual rental of the buildings of the compactly built wards of New York city, is considerable in excess of $100,000,000. Three times this amount would be $300,000,000. If we add to this the capital, surplus and undivided profits of the national banks and other moneyed corporations of the city-less real estate- estimated at $150,000,000, we shall have a valuation representing personal property of $450,000,000, as compared with a present personal property valuation of $306,000,000.

The assesment roll of New York city would then substantially stand as follows:

Real estate, on the assumption that the present valuation is not in excess of fifty per cent of true value

Shares of moneyed corporations..
Building occupancy valuation.

Total

$1,500,000,000 00

150,000,000 00 300,000,000 00

$1,950,000,000 00

A tax of one and a half per cent on this valuation would produce $28,250,000. If to this we add licenses for the sale of liquors at retail, $2,250,000, the total income of the city at the above rate of taxation, would be $31,500,000; or ten and a half millions more than would be requisite to meet the interest on the existing debt, and provide for all other reasonable expenditures.

·

But great as would be the gain in valuation here, the gain in other parts of the State would undoubtedly be in much larger proportions. Thus, taking Brooklyn for example, we find the value of the dwellings in that city, according to the census of 1865, returned at $120,000,000; the annual rental of which, at ten per cent (a low rate to cover insurance, repairs and taxes), would be $12,000,000; three times which would be $36,000,000. If we add to this the amount on which the corporations of the city of Brooklyn were assessed for 1870, $7,956,820, we have the total of $43,956,820, as compared with a present valuation of personal property for the whole city of $17,559,980, showing a gain of $25,396,840. And this result, it must be

remembered, is predicated on the rentals of dwellings alone, thus making it evident that where the rentals of buildings, other than dwelling are also included, the valuation will be still further increased.

It seems evident, therefore, that by the proposed system, the valuation of the property of the State of New York can be largely, as well as equitably, increased, and made, without difficulty, to approximate to its fair and just basis; thus affording all the revenue that may be needed at an average rate of taxation much less than the rate now prevailing.

LIMITATION OF THE RATE OF TAX UNDER THE NEW SYSTEM.

The commissioners, in this connection, would especially direct attention to the fact, that by the twenty-third section of the fourth article of the code presented, they have provided, "that the board of supervisors of no county shall levy a tax without special authority of the legislature, on any town, to exceed one per cent, nor in any ward, or city, to exceed two per cent on the total valuations of the assessment roll thereof."*

The reason of the introduction of this limitation, is in part to help insure conformity to the law on the part of assessors in respect to valuations, and more especially, because the commissioners are certain, that under the proposed system no higher rate of taxation can be required, except as the result of indefensible extravagance, or extraordinary contingencies, for which last, relief by the legislature is provided. The commissioners further estimate, that under their proposed system, the rate of State taxation (now about seven mills) will fall below three mills; and that in the larger cities, the most extravagant administration could not carry the aggregate of State, county, and city taxation above one and a half per cent. The proposed increase of valuation under the new system, coupled with the tax for occupancy as a substitute for personal property, will, therefore, be more than compensated for by a reduction of rates.

GENERAL ADVANTAGES OF THE PROPOSED SYSTEM.

The general advantages of the system proposed by the commissioners over the system now existing may be briefly summed up as follows: By making the standard of valuation and assessment, that which is

*"And no contract, obligation or liability, nor any number of contracts, obligations or liabilities, shall be entered into, made, or incurred by any town, ward or city, or by the constituted authorities thereof, which, in the aggregate, shall exceed, in any year, the amount that may be realized by taxes at the limitation of rate defined in this section, after deducting from said taxes the amount of the liability of the town, ward or city, in each year, for maturing interest or principal of bonded indebtedness, and for the State and county tax."

certain, visible and tangible, and disregarding that which is invisible, incorporeal and intangible, the incentive and opportunity for fraud, evasion and perjury would all, or in a great degree, be removed; the tax gatherer brought in communication with the smallest number of individuals; all personal inquisition, exposure of property, and necessity for oaths avoided; production of every kind, agricultural, mining and manufacturing, placed upon the most favorable conditions; shipping fostered; trade and commerce left untrammeled; while all the numberless vexatious and difficult questions, which are sure in the future to grow out of the conflict of laws and the sovereignty of States respecting the situs of certain descriptions of personal property, would be transferred to such other communities as desire to enjoy them. The proposed plan, furthermore, will not permit the dishonest tax-payer (under oath) to arbitrarily assess other persons by the under valuation of his own property, or, on the other hand, compel the honest tax-payer to either criminate or over-burden himself; or permit assessors to assess in an arbitrary manner any one, inasmuch as all the proceedings must be according to a uniform law and on the basis of such testimony as is admissible in any court of law in a country where property can only be taken by well known and established rules of evidence.

In the plan proposed by the commissioners there is nothing arbitrary; the relations between the burdens upon city and country property are equitably adjusted; no class of property, under its operations, would be driven from the State, while residents and non-residents would be placed on an equality, inasmuch as both would be assessed on one and the same indicia of personal property, namely, the rental value of the premises occupied; instead of as now taxing the former doing business in the State and exempting the latter, under circumstances similar in every respect, with the single exception of residence.*

*The commissioners in this report, as will be noticed, have often quoted and referred to Adam Smith in support of the views by them presented; but they think they are even warranted in going further, and in claiming that this acknowledged authority, throughout all civilized countries, is in fact the real author of the proposed plan of taxing rentals, or rental values, as a substitute and an equivalent for direct taxes on personal property. Thus, an examination of his chapter, "taxes on rents of houses," will show, that he has not only fully set forth the views expressed by the commissioners, but has also anticipated their reasoning, and combatted all the objections that have been urged against their system. Recommending the tax upon the rent of houses, in addition to the tax upon real estate, which he likewise favors and commends for its certainty and equality, he says: "The quantity of the land any man possesses can never be a secret, and can always be ascertained with great exactness ;" and in urging objections to a tax upon money at interest, he says, "but the whole amount of the capital stock which he possesses is almost always a secret, and can scarce ever be ascertained with tolerable exactness." An inquisition into every man's private circumstances, and an inquisition, which in order to accommodate the tax to them, watched over all the fluctuations of his fortune, would be a source of such continued and endless vexation as no people could support.".

The changes proposed in the law in respect to personal property, are, moreover, by no means radical or violent. There is little of such property, apart from corporations, now subject to assessment; and the new system is certain to be more productive of revenue. If any little inequalities may arise from the change (and some must arise from any modification of tax laws), they will be but trifling compared to the inequalities that daily arise from the attempts to administer and carry out the existing system.

Again, under such a simple and liberal, though at the same time just and inflexible system of taxation as the commission propose, New York, instead of comparatively retrograding, as she has done within the last ten years, would be more than ever the Empire State of the Union. Could all foreign commerce be specially admitted into New York free of every tax, duty and restriction, none could doubt that the impetus which would be at once given to the growth and prosperity of the State would be something marvelous. But to do this, is not permitted under the Constitution of the United States to any State; but it is permitted to New York to place herself, if she will, in exactly similar relations to the domestic commerce, trade and manufacturing industry of the country, which exceed in importance and value its whole foreign commerce, in the ratio of at least fifteen to one. And this position in view of the tax legislation of all the other States, with the exception of Pennsylvania,* the commissioners claim New York will assume upon the adoption of their proposed new system; and they do not think, furthermore, that they are guilty of any unwarrantable extravagance in predicting, that if their views are recognized and adopted, the resulting prosperity of the State during the next decade, will be no ways inferior to that which attended the construction and opening of the Erie canal. And with this prosperity would come another result, which would be no less a matter of congratulation, namely, that all the present vexations, inequalities, inquisitions, selfexculpating oaths, and natural depravity supremacy of taxation would vanish, and be hereafter known only as subjects of ridicule and disagreeable tradition, ranking in importance and similarity in history, with the legislation and inquisition against witches.

* As to the policy of a tax on mercantile business in a city contending with rival cities for a fair share of the trade of the country, we cannot see any benefits to be expected from it. If we can make this city the great market of the nation, heavier taxes than those now imposed on real estate could be borne with less discomfort than the present rate, and wise legislation can do much to this end, but in the opinion of the committee, a city mercantile tax would be a step backward in attaining so desirable a result.-Report Law Committee, Common Council of Philadelphia, Feb. 1871,

DIFFUSION OF TAXES.

One of the greatest obstacles which stands in the way of a reform in the local taxation of the United States, and consequently of the adoption of the views embodied by the commissioners in this report, has been the general acceptance of the theory that in order to tax equitably and uniformly it is necessary to subject all property to assessment, and more especially that the exemption of any form of what is termed money capital" is to grant a favor to those who possess such property and are best able to bear taxation at the expense of the remaining and poorer part of the community.

The commissioners, however, utterly discard this theory (and it is properly termed a theory, for no country or community ever attempted to fully execute it), and hold, in opposition, that equality of taxation consists in a uniform assessment of the same articles or class of property that is subject to taxation; and they further maintain that all taxes equate and diffuse themselves, and that if levied with certainty and uniformity upon tangible property and fixed signs of property, they will, by a diffusion and repercussion, reach and burden all visible, and also all invisible and intangible property, with unerring certainty and equality.*

*

Simplicity in Taxation.-The one principle in taxation which the civilized world, after years of experimenting, has gradually come to accept as fundamental, is to tax but a few things, and then to leave those taxes to diffuse, adjust and apportion themselves by the inflexible laws of trade and political economy.

Great Britain, commencing several hundred years ago with a system which contemplated taxing everything, has gradually reduced her tax list to some six or eight articles or sources under the customs, and to an equally limited number under her excise and local systems; and, with every degree of concentration, the relief experienced by the

* The method in which taxation diffuses itself has been thus illustrated by M. Thiers, in his work 'Rights to Property." "In the same manner," he says, 66 as our senses, deceived by appearances, tell us that it is the sun which moves and not the earth; so a particular tax appears to fall upon one class, and another tax upon another class, when in reality it is not so. The tax really best suited to the poorest member of society is that which is best suited to the general fortune of the State; a fortune which is much more for the possession and enjoyment of the poor man than it is for the rich; a fact of which we are never sufficiently convinced. But of the manner, nevertheless, in which taxes are divided among the different classes of the State, the most certain thing we can say is: That they are divided in proportion to what each man consumes, and for a reason not generally recognized or understood, namely, that taxes are reflected, as it were, to infinity, and from reflection to reflection become eventually an integral part of the prices of things. Hence the greatest purchasers and consumers are everywhere the greatest tax-payers. This is what I call 'diffusion of taxation,' to borrow a term from physical science, which applies the expression 'diffusion of light' to those numberless reflections, in consequence of which the light which has penetrated the slightest aperture spreads itself around in every direction, and in such a manner as to reach all the objects which it renders visible. So a tax which at first sight appears to be paid directly, in reality is only advanced by the individual who is first called upon to pay it."