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Rh purposes, (1) upon counties, (2) upon cities, boroughs and incorporate villages, and (3) in nearly all the states, though in widely varying degrees, upon the primary geographical divisions of counties, such as the “town” of New England and the “township” of the Middle and Western states.

The revenues of the several states, and of minor governmental areas within them, are mainly derived from a general property tax, laid directly upon realty and personalty. More than 82% of the tax revenues of state and local governments were thus derived in 1902. The average real rate of assessment was $0.72 in 1880 and $0.74 in 1902. The details of this system, which has no other refuge in the civilized world save partially in Switzerland, are remarkable for a most extraordinary diversity in the manner of collection, which practically becomes, however, self-assessment, and an equally extraordinary and general evidence of the crudity and inadequacy of the system, which has been the target of state tax reports throughout the Union for half a century. Nevertheless, only recently have other sources of revenue been largely developed, and the general property tax to a degree abandoned. Thus an inheritance tax was first adopted by Pennsylvania in 1826, yet sixty years later only two states were taxing collateral inheritances. In 1907 there were 34 such, and 19 of these were taxing direct inheritances as well. This is a modern democratic tax, and there are similar tendencies in other taxes. Business taxes are fast increasing, and many special property taxes, these two classes yielding in 1902 7.24% of state and local revenues. The taxation of corporations is recent and rapidly increasing. The same is true of habitation taxes. A beginning has been made with income taxes. Finally, the strain upon municipal finances incident to a realization of civic improvements has called attention to intangible wealth: street railways are no longer taxed as scrap iron but as working systems, with due attention to their franchises; and there is a beginning of the doctrine that the increase in value of unimproved realty constitutes income that should be taxed. The same conditions have made of importance general theories, such as the single tax theory of Henry George, for taxing landed values. All these tendencies, although strongest in municipal finances, are general.

Restrictions upon the taxing power, and unwise classifications of property for taxation purposes, embodied without good understanding in state constitutions, have been a primary obstacle to the development of sound systems of taxation in the several states. A lack of interstate comity, and double taxation of certain classes of property, have also offered difficulties. The progress toward better conditions has, however, been in late years rapid.

A similar restriction placed by the Constitution (art. 1, § 2) upon the power of the Federal government to lay “direct taxes” has been interpreted by the Supreme Court, by a bare majority, in such a way as to make very difficult, if not impossible, the imposition of an income tax (although, it may be added, such taxes had been unanimously held constitutional by the court in earlier decisions, which rested in turn upon interpretations of the constitutional provision just referred to given by the court when it counted among its members justices who had been members of the convention that framed the constitution).

The entire Federal system is the result, partly of constitutional provisions, partly of experience. The Federal authority naturally resorted first to customs duties upon foreign commerce, because in this field it had exclusive authority. It adopted next excise duties on articles produced or consumed within the country, notably liquors and tobacco. These two species of indirect taxes have from the beginning been the main sources of national revenue. At three periods, namely 1800-1802, 1814-1817 and 1863-1871, direct taxes have contributed considerable amounts to the revenue. These taxes included in the last period—that of the Civil War—income and legacy taxes, taxes on commercial transactions, and taxes on persons and property. At times also the proceeds of the sales of public lands have formed an important element of the receipts of government, although it has been the accepted policy to sell such lands to actual settlers at rates so low as to be inconsistent with the object or attainment (relatively) of revenue. Indeed, under the homestead law, large portions of the public domain have been given away to settlers (see ), while even larger amounts have been alienated in aid of schools, public improvements, &c., so that the portion sold has not been a third of the total amount alienated. It is possible, however, that the growing consciousness of the necessity of conserving the national resources may lead to a much greater income in the future from the small amounts still remaining in the hands of the national government. In 1908 there still remained unappropriated and unsurveyed, according to the General Land Office, 754,895,296 acres. Of these, 387,000,000 acres were still open to entry, but most of this vast extent consisted, in the opinion of the National Conservation Commission of 1908, of lands either arid or otherwise unsuited for settlement. There were also, in July 1908, about 235,000,000 acres of national forests, parks and other reservations for public use.

Customs duties have been found to be in general the most cheaply collected, the least conspicuous, and least annoying of all taxes. They have, however, never been a stable source of revenue, even during periods when the tariff was constant; and compared with the steady returns shown by the selected articles of the British tariff

list this instability has been most extraordinary. Very often their income has been far above the amount needed for all disbursements of the government. In times of war they have of course fallen to a minimum. Thus, in the period 1791 to 1811 their ratio to total government expenditure ranged from 41.6 to 189.6%; during the years 1812-1817, from 17.2 in 1814, when war finances reached their weakest point, to 131.4% in 1817, showing how rapid was their response under the return of peace; in the period 1817-1859 from 29.9% in the crisis year of 1837 to 158.9%; in the period 1860-1869 from 6.5% in 1865, when the government's bonds fell in price to $50.93 per hundred and the war policy of loans was most desperate, to 84.1%; in the years 1870-1893 from 51.4 to 85%; and, finally, in the years 1893-1909, from 36.9% (in 1898) to 52.7%.

Of the total imports of 1909 47.4%, of a value of $699,799,771, entered duty free. More than half of these were crude materials for manufactures. The total imports per capita and the duty collected upon them per capita have been as follows since 1885, taking every fifth year: 1885—$10.32 and $3.17; 1890—$12.35 and $3.62; 1895—$10.61 and $2.17; 1900—$10.88 and $3.01; 1905—$13.08 and $3.11; 1908—$13.57 and $3.24.

The attempts of the Federalist party to create a system of internal taxation was a leading cause of its downfall. During the years in which it was in power little more than a tenth of the national revenue was derived from excises, yet they became a national political issue, and the Whisky Rebellion shows how little they were fitted to the nation at that time. The excise system disappeared with the incoming of the Democratic party in 1801. As a temporary necessity such taxes were again resorted to during the war of 1812, and again during the Civil War. In the latter period the excise proved of great richness, and quickly responsive in its returns; whereas the customs were inelastic so long as the war continued. After the war a system of internal revenue was therefore continued.

Of recent years the growing stringency of both national and local finances by enormously increased disbursements has made important the question of the relation of national with state and local taxation. The customs revenue, in its form of high protection, has always had against it a strong free trade sentiment, generally unorganized, and this seems to be rowing. The internal revenue is affected by the remarkable spread of the prohibition movement. A considerable and growing public sentiment in favour of the use of the taxing power for the regulation of wealth taken from society demands the introduction into the Federal system of income and inheritance taxes. The last—inasmuch as an income tax that is constitutional can perhaps not be framed—is the only promising source that can give the addition to the Federal revenues that must be needed in case the customs or the excise revenues are reduced.

From 1860 to 1870 the population increased 22.6%, and the net ordinary expenditures of government, not including payments on the national debt, rose 173%; from 1870 to 1900 the corresponding figures (using the official estimated population) were 129% and 408%. The aggregate net ordinary receipts into the United States treasury, from 1791 to the 30th of June 1885, were as follows, in millions of dollars: from customs, 5642; from internal revenue, 3449; from direct taxes, 28; from public lands, 241; from miscellaneous sources, 578; total, 9938. The corresponding figures for the years from 1886 to the 30th of June 1909 were as follows, respectively: 5403; 4618; 0.142; 121; 969.

The expenditures of the government increased steadily per capita up to the opening of the Civil War. The ease with which money was acquired in the war period, the acquiescence of the people, and the influences of extravagance and corruption engendered by the war, opened, at the return of peace, a period of extravagant expenditure that has continued with progressive increase down to the present. A phenomenal growth of both customs and excise revenue has made such expenditures easy. From 1791 to 1886 the aggregate net ordinary expenditures of the government—these expenditures being exclusive of payments on account of principal and interest of the public debt—were as follows, in millions of dollars: for the army, 4563; navy, 1106; military pensions, 900; miscellaneous, 2168; total 8737. The corresponding figures for the period 1887 (June 30) to 1908 (June 30) were: 2003; 1219; 2884; 2790; total 8896.

The average yearly ordinary receipts of the decade 1900-1909, distributed by source, was as follows: from customs, $280,728,741.30; from excise, $257,477,356.45; from miscellaneous sources, $48,736,721.89; total ordinary revenue, $586,942,919.64 or $7.11 per capita; revenue from sale of Panama bonds, $8,730,959.48; from premiums exclusive of Panama bonds, $397,894.20. The average yearly disbursements during the decade, distributed according to object, were as follows: for civil list and miscellaneous objects, $143,697,123.09; army, $130,416,902.62; navy, $96,722,000.90; military pensions, $144,856,529.16; Indians, $12,966,563.00; on account of debt, $25,632,072.60; total, $586,942,920.

In 1909 the ordinary receipts were $637,773,165, or $7.17 per capita; and the ordinary disbursements $670,507,889, or $7.54 per capita. The revenues of all the states, counties, cities and other local governments, plus those of the national government, aggregated in 1879 only $584,980,614.

Since 1870 the national census office has determined several times the aggregate indebtedness of the national, state and other local