spreads the tax in a still wider diffusion, the important question arises whether this diffusion is an equal and a just one. It only needs to be closely contemplated to be seen that such a diffusion of taxes might include a very unequal distribution of burdens. If the land in question lie in some crowded locality, specially advantageous for business or dwellings, there would be two classes from whom the owner' of the land might probably exact his increasing tax in an increasing rental. The prosperous merchant might perhaps be willing to pay the larger rent, though whether he could reimburse himself by a larger price upon his goods would depend upon other conditions, and would be by no means certain. The poor daylaborer, also, obliged to live near the business centers where work abounds, might also be forced to pay this additional burden; but that he could relieve himself by demanding a corresponding addition to his wages would not at all follow. It would be at least as possible, and, in fact, more likely that the addition to his rent would be followed by a decrease of his previous comforts. But the class able to migrate would be likely to go where they could find cheaper rents, or would be only prevented from doing so by the landlord assuming for himself the burden of the additional tax, or laying it upon others instead of upon them. There would be no equality in the diffusion. But, added to this, there is another point to be noticed. In this shifting of burdens there is not apt to be an exact equivalence. It is quite likely that the party rolling off the burden will seek to transfer to another a little more than has been laid upon himself. It is natural for him to try to make a profit in the exchange. Thus when the United States government laid a tax of one-eighth of a cent upon each passenger carried in street cars, the proprietors simply added one cent to the fare of cach passenger, from which they paid to the government oneeighth and retained seven-eighths themselves. This was, to be sure, a shifting and diffusing of the tax, but with results to those on whom the burden ultimately fell, of which they could properly complain. This illustrates what is likely to be true in all such cases. The burden grows by the shifting. If the landlord is able to increase his rents in order to release himself of some heavier tax upon his land, the increase of the rent is likely to be more than the increase of the tax; and if his tenant is a merchant, or a manufacturer, who endeavors to roll off his burdens upon his customers by charging a heavier price for his goods, his increasing prices are likely to be greater than his increasing rental, and thus the more perfectly the taxes diffuse themselves by this shifting process, the less is the diffusion to be desired. Still farther, it can hardly be doubted that in this shifting process a disproportionate burden always falls upon the poor. They have no such resources for "shifting" that the wealthier classes possess, and the burdens which have come to settle upon them with this accumulated pressure they are without any means to alleviate. The whole system of the New York commissioners hinges upon this theory of the natural and equable diffusion of all taxes, and ceases to swing if this hinge be wanting. But as the system has so many advocates urging it with vigor and with much plausibility of statement, we deem it our duty to give in detail the results we have reached from a careful examination of its several positions, and the conclusions which appear from a patient and extended calculation into which we have entered, and which show what would be the effects of its practical application. A prominent argument urged in favor of the exemption of personal property from taxation, is, that real estate derives its sole value from the amount of personal property expended upon it, and the demand of personal property to possess and use it. Thus the taxation of all land values is a virtual taxing of personal property, upon which, therefore, there should be imposed no other tax. But not only is the general position here assumed unsound, but, even if it were correct, the inference derived from it is fallacious. The value of real estate, like all other value, is the product of labor, and is exactly measured by the amount of labor which it represents. That which costs no labor may be very desirable and useful,-like the air or sunshine,—but it has no value; i. e., it cannot be exchanged for anything,-no one will give anything for it, since every one has all that he needs without any effort. But the value of wealth is seen in the efforts necessary to produce it. Without labor there never could be any wealth. In this respect there is no distinction between real estate and personal property. Both are equally, and in the same way, the product of labor. The reason why a good farm or garden, in the neighborhood of a good market, is more valuable than the same sort of land farther off, or why a lot in a crowded city is worth more than one in the open country, is not because the market-farm is better stocked with personal property, nor because a larger amount of personal property surrounds and presses to occupy the city lot, but because in each case the location is a saving. of labor,-in other words, because the advantages which the location gives could only be gained in another less valuable location by an exactly corresponding amount of labor. A city lot is valuable, one is apt to say, according to the number of inhabitants in the city, or the amount of business done there; but all this means that its value consists in its capacity to save labor; i. e., its value is exactly measured by the amount of labor which would elsewhere be necessary to gain the same advantages. The position, therefore, that real estate derives its sole value from the amount of personal property expended on it, is not sound. ... But, if it were correct, the inference derived from it is fallacious. For, if personal property confers value upon real estate, this is surely not its sole function. Personal property may have a value quite independent of the real estate which it may occupy, and may, therefore, be taxed for this value without any double taxation. Double relation of the citizen to national and state govern. ment considered. Hoyt. v. the of New York. Parker Mills v. Commissioners of New York. We give full weight to the difficulties in this matter which rise from the double relation of the citizen to the national and state governments; but we are not willing to exaggerate them, and we cannot allow that the different states are thereby estopped from taxing personal property to anything like the degree which the New York commissioners claim. Whatever decision the supreme judicial tribunal of the nation shall lay upon Massachusetts, this Commonwealth will not be slow to accept. Massachusetts has always rendered prompt obedience to the constitution and laws of the nation, as But Massaexpounded by the highest national court. chusetts is not bound to accept the decisions of the courts of other states where they conflict with the judgments of her own courts, neither need she change her long established revenue system to accord with a verdict, not yet pronounced, of the supreme court of the United States. The power of the legislature and the executive 23 N. York, 240. Officers of some of the states of our Union has been restrained by the action of their own courts, which have 23 N. York, 242. declared that certain classes of personal property, which have been assessed in Massachusetts from its earliest history, cannot in those states be legally taxed. It might be profitable to place against these decisions, those of the tribunals of our own Commonwealth, sustaining assessments similar in character, were it not for the fact that however we may differ from the declared opinions of the San Francisco highest courts of New York or California, it is the undoubted right of the citizens of those, or any other state, to live under such administration of government as best meets their wishes. If the organic laws of the several states were identical, it would be strange if, with nearly forty independent courts, the decisions upon any given point were uniform. But with constitutions and laws framed to suit the views and interests of the several sovereignties, it is remarkable that, on a subject so important as taxation, the decisions of so many states should be in substantial accord. Savings and Loan Co. D 46 California, change our sys of United States The points thus far covered by the judicial decisions Unnecessary to of the United States, which limit the legislative action tem on account of the different states, we have already noted, and it decisions. does not seem to us either necessary or wise that our own tax system, in so far as we still judge it to be sound in principle, and still find it to be satisfactory in its workings, should be now changed in order to accommodate itself to decisions of the supreme court of the United States, which, even if some anticipato them as probable, have not yet been actually given. When the action of the United States, or any of our sister states, makes a change in our system necessary, we may safely leave to the people and legislators, at the time, the performance of the duty which would then be laid upon them. Recent decisions would seem to indicate that the United States supreme court has found the limitations of its own rule, and that the states, within the restrictions now laid upon them, will be permitted to frame such assessment laws as best subserve their interests. In deciding the case of Lane County v. Oregon, Chief 7 Wallace, p. 77. Justice Chase declared that, "In respect to property, business, and persons within their respective limits, the power of taxation of the states remained. and remains entire. It is, indeed, a concurrent power, and, in the case of a tax upon the same subject by both governments," the claim of the United States as the supreme authority must be preferred; but with this qualification, it is absolute. The extent to which it shall be exercised, and the mode in which it shall be exercised, are all equally within the discretion of the legislatures to which the states commit the exercise of the power. That discretion is restrained only by the will of the people, expressed in the state constitutions, or through elections, and by the condition that it must not be so used as to burden or embarrass the operations of the national government. There is nothing in the constitution which contemplates or authorizes any direct abridgment of this power by national legislation. To the extent just indicated, it is just as complete in the states as the like power, within the limits of the constitution, is complete in Congress." |