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anything got in return. In the books you will find much discussion, not always of an enlightening sort, as to whether taxes should be regarded as a payment for services rendered by the state; while, in conversation with the average intelligent citizen, you will often find it laid down as a matter of course that taxes are such a payment, rendered in return for the "protection" afforded by the state and not justifiable unless such protection be given. For the discussion of most phases of taxation, it suffices to point out there can be no measure of the services or protection rendered, and that we must perforce, adjust the payments on some other basis. If we could manage our taxes as we manage the allied, yet radically different, charges for postal service or water supply, a multitude of problems would be much simplified. If you refuse to pay your water rate, the city shuts off the water and (if I may use the phrase) washes its hands of you. If you do not put on your postage stamp, your letter does not go. But if you refuse to pay your taxes, the firemen still rush to save your house, the police safeguard your property, the sewers empty your drains, the schools instruct your children. These services continue to be rendered to you, whether you pay or no, not for your special benefit, but because for one reason or another they are deemed to promote the welfare of all.

Evidently, the disposition to evade increases in ratio with the gain to be made. You have all heard the story of the lamented Col. Jim Fisk, to whom it was remarked that his lately deceased father had been ready to tell a lie for nine-pence. "No," said the ingenuous son; "but" (reflectively) "the old man would tell eight for a dollar." I will illustrate the obvious application to our subject by recalling experiences in other parts of the field of taxation. Income taxes, resting on a declaration by the taxpayer, have very different aspects, according to the rate at which they are imposed. A tax of two per cent. on incomes might be collected with reasonable approach to success; but one of twenty per cent. would unfailingly yield a plentiful crop of lies. The

income tax lately adopted in Prussia-in many respects the most perfectly elaborated tax of the kind in any great state -provides in general for a rate of something like three per cent., which may fairly be said to be not so high as to preclude successful administration. It is true that, with the local supplements that may be attached to it and with some other closely connected taxes, the effective rate in Prussia may rise much higher-to six or eight per cent., or even more; and it is still an open question whether, in its total effect, this measure has not overshot the line of safety. In any case, in Prussia, as in other countries whose tax systems are cautiously and deliberately planned, an endeavor at least is made to avoid undue strain on the taxpayer. For this purpose an obvious device is to make the strain not too strong at any one point; to have divers moderate taxes at different points, rather than one heavy tax at a single point; and to avoid, above all, weighty taxes whose amount rests, in the first instance, on a declaration by the taxpayer himself. Let us now turn from these general considerations to the situation in our American states and cities. I will refer, first, to the state of Massachusetts, because there the rates, as American rates go, are not excessive; the administration is generally honest; the appearances at least of conformity to the law are maintained. The average rate of taxation in the state is, roughly, $15 for each $1,000 of property, or one and a half per cent. on the capital value. In the city of Boston the rate is usually $12 or $13 for each $1,000; in other cities it is as high as the average for the state, if not higher. The rate of return on sound securities is not over five per cent., and on well-known securities of unquestioned solidity it is less than four per cent. The state itself sells, at a good premium, bonds yielding but three and a half per cent. It is an easy calculation that the rate of tax on such securities, measured with reference to income, is not less than twenty-five per cent., is commonly as high as thirty per cent., and rises not infrequently to fifty per cent. No sane person, unless bent on an overturn of the entire social order, would

seriously propose a formal income tax at such rates. Yet, by force of tradition, or from whatever cause, the law in Massachusetts calls on the taxpayer to step forth, enumerate in detail his possessions of this sort and be mulcted on a quarter or a third of his income for them.

It is hardly necessary to say that, in fact, nothing of the sort is accomplished. While the more flagrant abuses which appear elsewhere are not met in the staid old commonwealth, this part of the tax system is no more satisfactory there than elsewhere. There is evasion; there is utilization of divers available loopholes of escapes; there is more or less conscious laxness by assessors; there is downright perjury when the screws are put on; and there is notorious failure to reach a tithe of the movable property which is in law subject to taxation. The late Judge John Lowell, who was chairman of a commission of inquiry on which I had the honor of sitting with him, summed up his impressions, at the close of some lively hearings, by remarking that "taxation in Massachusetts was a system of confiscation tempered by favoritism."

In other states the situation is complicated by the effects of other anomalies in the operation of the tax laws, and, as I have just intimated, is sometimes fairly farcical. Intelligent foreigners, desirous of informing themselves as to the working of the fiscal aspects of our democracy, are amazed at the rates of tax which are mentioned to them. "An annual tax of $20 or $30, or even $40, for each $1,000 of capital? Surely not; you must mean $20 or $40 for each $1,000 of income; for such figures per $1,000 of property or capital mean fifty per cent. or more on the presumable income. The American finds himself suspected of the national trick of hoaxing when he repeats that such things really are. He explains, to be sure, that these seemingly unendurable taxes are so only in appearance. On real property, to which mainly they apply, the tax valuation is commonly but onehalf or two-thirds of its salable value; and a tax rate of $20 on the assessed value usually is, in substance, one of perhaps $10, $12 or $14 on the actual value-rates which still seem

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wofully heavy to the European, but which at least are not incredible. As for the causes of these fictitious valuations and rates, our foreigner would need a long string of explanations. The relations of our states to the cities and other local bodies; the practice of apportioning state taxes among these bodies according to the tax valuations of their property; the temptation for each city or town to escape with a small share of the state tax by making its valuations low; then, too, the natural tendency of valuations to sag, by imperceptible stages, as the elected assessors refrain from pressing with judicial inflexibility first on this citizen and then on thatthese factors would need to be descanted on, and another in the story of our fiscal difficulties would need to be opened. We cannot stop to digress so far. Suffice it to bear in mind that the rates at which the authorities demand taxes from many American taxpayers, perhaps from the majority, are, on their face, such as I have mentioned-$20, $30, or even more, on each $1,000 of his possessions.

Observe, now, how such a system bears, almost inevitably, on securities. As to land and buildings, they are brought within limits of comparative moderation by a more or less systematic process of undervaluation. The value of a parcel of realty, always a matter of some uncertainty and never subject to daily record, affords every opportunity for flexible treatment. So, too, the value of a merchant's stock-in-trade, of a manufacturer's machinery, of a farmer's cattle and implements-these are largely matters of estimate and guess, and it is easy to make estimates universally moderate. But on the face of a security specific sums of money are always set forth; and its selling value is commonly a matter of daily and familiar record "on 'change." If enumerated and valued for taxation at all, it cannot well be dealt with otherwise than by assessment at its actual worth. In the City of New York the tax rate is usually about $20 per $1,000 of value, land and buildings being commonly assessed at twothirds or at one-half of their probable market price. Hundreds of millions, very likely thousands of millions, of

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The proportion paid by personal property has decreased steadily every year, until according to the last figures it pays but 9.99 per cent. of the state taxation, over against 90.01 per cent. falling on real estate. In New Jersey, in 1887, in one township the real estate was assessed at $272,232, the personal property at $591. In another the figures were $2,274,900 and $47,150 respectively! In New York the personalty was returned in one town at $5,000, in the adjoining but no more prosperous town at $700,000.

These striking figures become ridiculous when it is remembered that in our modern civilization the value of personal property far exceeds that of real estate as understood by the taxing power. It is true that the legal distinction between real and personal property fluctuates in the various commonwealths; but in the eyes of the assessors real estate generally includes only land and the fixtures thereto, all the other forms of wealth being regarded as personal property. In California, indeed, the constitution of 1879 provides that mortgages of real estate shall be regarded and taxed as realty. The law of Massachusetts and Oregon is similar. But even if mortgages were counted as real estate, and even if (as is nowhere done) other certificates of ownership in realty were also counted as real estate, it would still remain true that personal property constitutes the greater part of the national wealth. For personal property does not denote merely movable objects. It includes money, public obligations, and the vast mass of intangible property represented by securities of corporations, of which only a small portion are certificates of ownership in reality. Above all, personal property includes the entire and ever-increasing annual products of agriculture and industry-the gigantic mass of modern

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