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February 8, 1872.
COMMISSIONERS TO REVISE THE STATUTES RELATIVE
STATE OF NEW YORK:
ALBANY, February 8th, 1872. S To the Legislature :
I transmit, herewith, the draft of a code of laws relating to the assessment of taxes in the State of New York, prepared by the “ Commissioners on Taxation,” under an act of the Legislature, passed May, 1871, together with their report relating to the same.
Having in my annual message urged upon you an early and considerate examination of the system of taxation presented by the commissioners, it is unnecessary for me to do more now than renew that recommendation; and at the same time to express my satisfaction with the labor and care which has manifestly been expended by the commissioners in their conscientious effort to arrive at a uniform, equitable and productive system of tax legislation.
JOHN T. HOFFMAN.
ALBANY, February, 1872. SIR.— In pursuance of an act of the Legislature of the State of New York, passed April 20th, 1870, the undersigned were appointed by the Governor, commissioners “to revise the laws for the assessment and collection of taxes,” and in discharge of their duties, they submitted in February, 1871, a report, embodying a review of the existing system of State or local taxation; an outline of a new system; and reasons in detail, which seemed to the commissioners sufficient to warrant them in recommending such new system to the Legislature and the people of New York for adoption.
As the proposed new system of local taxation involved a radical change in existing laws, the commissioners did not ask or expect any immediate action; but preferred, and with the concurrence of the Executive, recommended that the whole subject should be laid over for at least a year, in order to afford time to the people of the State to consider the nature and the bearing of the facts submitted; and to decide whether they preferred to retain the present systein-annually becoming more ineffective, unjust and unequal —or adopt the system of the commissioners, as likely to prove remedial for defects in existing laws, which have now become a matter of almost general acknowledgment.
In this view the Legislature of 1871 so far concurred, that no official action was taken, further than to order the printing of the report for distribution to the people of the State of New York, and to the Legislatures of other States, from whom application for copies were made,* and to authorize the commissioners to prepare and submit to the Legislature of 1872, a code, framed in accordance with their recommendation. This authorization, passed May, 1871, reads as follows: “And the said commission are directed to report, for the considera
* Besides the edition of the report of the commissioners ordered by the Legislature, two other editions have been printed and issued by private parties; one by Messrs. Harper & Bros., of New York, with notes additional to the official report; and another in England, the last with a preface, under the direction of the Cobden Club, of London, for circulation or gratuitous distribution among the people of Great Britain.
tion of the Legislature, at its next session, a draft of a tax code or law, with estimates of expenses and collection thereunder."
In accordance, therefore, with the instructions given in the act as above quoted, the commissioners have now the honor to submit the draft of a code of laws for the assessment of taxes in the State of New York; meaning thereby State, county, city and town taxes, and would respectfully recommend the same to the Legislature and people of the State of New York for examination and adoption.
But, as prefatory to so doing, they desire again to submit in brief the reasons of their recommendations; an easily understood analysis of the principles upon which the code prepared by them has been founded ; and a prospective exhibit of its method of working; and this more especially, because, notwithstanding the extensive circulation by the Legislature of the former report, it seems certain that à very large portion of the community has, as yet, no clear and definite comprehension of the nature of the reforms proposed by the commissioners, and of the intimate relation which a system of taxation sustains to the growth and development of a State, and to the mutual interests, comfort and happiness of each individual of its population.
THE PROBLEM INVOLVED. The problem involved in any system of taxation is the raising of money from the people or property of a State or community, for defraying the expenditures incident to the maintenance of government, and for the general organization and well-being of society.
The command of revenue being furthermore absolutely essential to the existence of government, the power of every complete sovereignty to compel contributions, or as we term it, "to tax,”* is generally held to be unlimited, and only restricted against abuse by the fundamental structure of the government itself.+
LIMITATIONS OF THE TAXING PROCESS OF THE STATES. The separate States of the Federal union not being, however, absolutely sovereign, are limited in their exercise of the taxing power by certain conditions, expressed or implied in the constitution of the greater sovereignty, namely, that of the United States; as, for example, in respect to agencies or instrumentalities of the Federal government; imported goods in original packages in the hands of the merchant importer; exports to foreign countries; inter-State instruments; goods in transitu, and the like; while, on the other hand, the exercise of the taxing power by the Federal government in respect to distinctively State agencies has been declared by the Federal courts to be inconsistent with the principles upon which the federation of the States has been established.
* A tax is a contribution imposed by government on individuals for the service of the State. It is distinguished from a subsidy as being certain and orderly, which is shown in its derivation from the Greek taxis, ordo, order or arrangement. (Jacob. Law Dic., Bouvier Law Dic.)
+ " The power to tax rests upon necessity, and is inherent in every sovereignty. No constitutional government con exist without it; and no arbitrary government, without regular and steady taxation, could be anything but an oppressive and vexatious despotism, since the only alternative to taxation would be a forced extortion for the needs of government from such persons or objects as the ones in power might select as victims." (Cooley's Constitutional Limitations.)
But above all constitutional or other artificial restrictions, each State or community is virtually under the obligations of a higher law to establish and maintain a tax system within the range of its powers, which will insure justice or equality, certainty, efficiency and economy; for the reason that it is contrary to the material interests of each such State or community, and contrary to the morality of its people, to do otherwise.
(The discussion of the province and scope of taxation in general ; of the limitations of the taxing powers of the Federal and State Governments ; of the effect of the Fourteenth Amendment to the Constitution of the United States in abridging the control of the States over the property of their citizens, and of certain recent legal decisions ; being a separate department of the subject under consideration, and one not more pertinent to New York than to all the other States, has becn transferred to a supplement to this report, to which attention is requested.)
SYSTEM OF LOCAL TAXATION IN NEW YORK COMPARED WITH THE TAX
SYSTEMS OF OTHER STATES. With this brief review of the nature, necessity, and limitation of the powers of taxation as exercised by the States, let us next inquire as to the actual condition of affairs in respect to taxation in the State of New York, and in the other States, so far as the latter furnish experience pertinent and illustrative of the special subject of our inquiry.
And first, we find that the system of taxation existing in New York, in common with most of the other States, has been based and built up on the theory, that the raising of revenue to meet public expenditures, according to the three recognized fundamental conditions of taxation — certainly, justice or equality, and economy — can be best accomplished by subjecting all property, real and personal, within the jurisdiction of the State, to ascertainment, valuation, and