interpreted in the administration of practical justice, we find that equality and uniformity have come to mean little more than this, that taxation shall not be arbitrary, capricious, or plainly unreasonable and that within each class of persons or objects the burden shall be equal. (1) Everywhere the legislature is given a wide latitude in exempting property, so that institutions and industries which are regarded as of peculiar value to the people may be encouraged by freedom from taxation. Almost everywhere, poll taxes which impose an unequal burden upon the poor, liquor licenses which impose unequal obligations upon those who pay them, inheritance and corporation taxes which single out particular classes of society for unusual taxation, are sustained by the courts. Justice in taxation, then, does not require rigid equality or narrow uniformity of treatment. (2) Institutions which are socially harmful may be subject to peculiarly drastic and oppressive taxation; that is to say, justice may take into account sumptuary considerations. (3) Old taxes, which would not be used if they were not already intrenched in the fiscal and social system, are permitted to endure; justice takes cognizance of the fact that, other things being equal, an old tax is a good tax by very reason of its age. (4) Indirect taxes which weigh more heavily upon the poor than the rich show no signs of disappearing; that is to say, justice gives due weight to the productivity of a tax, its cheapness of collection, and convenience of payment, and balances these considerations against factors which we are accustomed to regard as more fundamentally ethical. (5) Taxes may be employed to suppress state banks of issue, protect home manufactures, and in general to accomplish political and social ends other than the mere raising of revenue. Taxation is seldom the best agent of social or political reform. If there is an evil which needs eradication, the best way is to suppress it directly, if possible, rather than discourage it a little by general taxation. But this does not affect the general proposifon that where taxation is an efficient remedy, or the only remedy, lice sanctions its employment. (6) Finally, it is plain that, ver we strive, nothing better than approximate justice can

ecured in taxation. A system that frankly recognizes

this truth and makes for rough justice, by the imposition of taxes which are simple, stable, convenient, inexpensive, and productive, is far better than one which attempts to secure exact jus tice through complex and delicate schemes of taxation which cannot be definitely or efficiently administered.

3. The theory of justice most widely accepted by American courts at the present time is expressed in the maxim that taxes should be proportioned to benefits derived. Like other rules of justice, this maxim contains elements of truth and elements of It is a fairly helpful guide, for instance, in dealing with public revenues other than taxes. Public prices, fees, and special assessments should, as we have seen, be proportioned to benefits, unless there is strong reason for departing from the rule. And in the apportionment of taxation among districts or governmental sections, the rule still retains, and probably always wil retain, a large measure of validity. Taxation, we say, must pertain to the district taxed, meaning by this that under ordinary circumstances it is not wise to tax District A for the benefit of District B; although there are important exceptions to this rule. But in the apportionment of taxes among the individuals of a given district, the rule has little or no place. This conclusion follows, if for no other reason, from our definition of the word "taxes," which we confine to contributions levied without reference to special benefits received, either because no special benefit can be assigned, or because (as in the case of free schools) we specifically desire to lift the cost of the service from the shoulders of some of those who specially benefit by the service. Moreover, in general, it is impracticable to determine what proportion of the general benefits of government accrue to particular individuals.

4. At the present time a great majority of economists agree that taxes should be apportioned according to "faculty" or ability to pay. It must be confessed that the rule is not very satisfactory. No simple measure of ability exists, and many taxes, which under a superficial examination seem to conform to the rule, such as the general property or income tax, are found upon closer examination to violate the rule in many ways.

Despite all these defects, however, the ability principle has elements of great strength. It satisfies our sense of justice, in the first place, when explicit reasons cannot be given for departing from a general rule; and it expresses the ideal towards which we strive in voluntary contributions to the church or other voluntary joint enterprises of a social nature. In the second place, we can frequently ascertain with certainty that the rule is being violated, when we cannot define its meaning positively, and hence it is capable of practical application in a negative way. We may therefore accept the rule in this sense, that unless other treatment is justified by the considerations cited in paragraph 2, above, or by analogous reasons, no tax which is plainly disproportional to the ability of the contributors should be employed.

5. Accepting the ability principle as the best rule for general taxes as distinguished from the specific taxes noted in paragraph 2, we at once encounter the difficult question, how is ability to be measured? Different writers have recommended as the basis or measure of ability, income, outgo or consumption, and property. A little consideration will convince the reader that each of these measures is marked by minor defects. The consumption of the poor, for instance, is out of all proportion to their ability to bear the burdens of the state. Property, on the other hand, differs widely in its productiveness, and, moreover, many persons with a little property have large incomes, and therefore great ability to bear taxation. Incomes, similarly, differ in permanence and security, and equal incomes are called upon to support very unequal numbers of persons. Fortunately, it is not imperative in practice to make a decision between these measures of ability. The necessities of fiscal administration make it imperative in actual practice to employ all three bases of taxation. Property, consumption, and income are all employed in the United States at the present time and will unquestionably continue to be employed for many generations. Progressive Taxation. After we adopt any concrete measure of ability, we soon realize that it is only approximately correct, because we are immediately confronted with the question:

Does ability increase in direct proportion or more rapidly than our measure of ability; in other words, shall taxes be laid in direct proportion to income, property, etc., or shall the rate be increased as the amount of income or property increases? The first method is called proportional taxation, the second progressive or graduated. If the rate diminishes as the income or property increases, we speak of it as regressive taxation; and if the rate increases faster than the income or property, but toward a fixed limit which it can never exceed, it is referred to as degressive taxation. The last kind of rating is of course a special variety of progressive taxation, and usually results from the combination of a nominally proportional rate with the exemption of a fixed sum from all incomes or assessed wealth. The American property tax is in principle a degressive tax, though it is regressive in practical effect.

From the theoretical standpoint our real knowledge upon this subject is exceedingly unsatisfactory. On the whole, the arguments of those who approve progressive taxation are more convincing than those of its opponents, and a majority of economists at the present time agree in asserting that ability increases faster than income, property, or any common measure of ability. If we construe ability as ability to bear sacrifice (as John Stuart Mill and some other authorities do) and confine our attention solely to the consumer, there can be no doubt that progressive taxation is the means by which the least sacrifice will be visited upon the community as a whole. This is a strong argument, because one of the chief immediate effects of taxation is to deprive persons of the necessaries, conveniences, and luxuries of life, while the maxim of the greatest good to the greatest number or as it works out in taxation, the least sacrifice to the least number is one of the most widely accepted rules of social conduct. Surveying the ability theory from the positive standpoint of ability to acquire or produce property, we find the testimony almost universal, that as the fortune or income increases, the ability to earn or produce more increases at an accelerating pace. It is the first thousand that counts," in the language 1 See T. N. Carver, Essays in Social Justice, pp. 401-406.

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of the successful man who is telling the younger generation how he succeeded.

Coming to the more concrete and more practical arguments, we find that the balance of opinion also inclines to the side of those who favor progressive taxation. Let us briefly recapitulate these arguments and attempt to estimate their net resultant. Those who oppose progressive taxation charge that the proposal is socialistic, that it would discourage the accumulation of wealth, that it would not be particularly productive, meaning by this that the element of progressivity adds little to what would be produced by a proportional rate, that it would stimulate fraud and evasion, that it would interfere with the device known as "collection at the source," and that finally the whole principle is arbitrary and capricious in the sense that there is no natural limit to the increase of the rate.

To these charges the defendants of progressive taxation present plans by which collection at the source and progressive rating may be successfully combined in the same system; and reply, further, that terms are immaterial and questions cannot be settled by bandying epithets such as "socialistic," "anarchistic," and the like; that every tax discourages the accumulation of wealth; that whether the tax will be productive or not, it will relieve the poorer classes to the extent that the progressive rates do actually fall upon the rich; that persons capable of evading their obligations to the government will attempt to evade proportional taxes as well as progressive taxes; and that all taxation is more or less arbitrary, resting upon the judgment and common sense of the legislature. The exemptions made in every tax law, the size of a license fee of any kind, the rates of excise and customs duties, are all " arbitrary " and unlimited in the sense that progressive taxation is arbitrary and unlimited. Finally, the defendant of progressive taxation points out that, owing to the great prominence of indirect taxes in our revenue system and the tendency of assessors to assess large properties at a lower proportion of real value than smaller

1 Report from the Select [British] Committee on Income Tax, 1906, pp. iii-vii. Compare also the provisions of the federal income tax.