Page:The New International Encyclopædia 1st ed. v. 19.djvu/85

* TAVOY. 61 TAX. 160 miles west by north of Bangkok, on the Tavoy River, 30 miles from its niuuth (Map: Burma, C -t). It is the shipping point for the rice and fruit of the surrounding region, and manufactures earthenware and salt. Tavoj' has been a British possession since 1824. Popula- tion, in lilOl, 22,371. TAVKIS, ta-vres'. A town of Persia. See Tabkiz. TAWING. See Leathee. TAWNY, or TENNE. The term for orange color in heraldry (q.v.). TAX (OF., Fr. taxe, from ML. iaxa, tasca, taxation, ta.x, from Lat. taxare, to touch, rate, appraise, estimate), and Taxation. A tax is a compulsory contribution from private income or wealth to meet the general expenses of govern- ment. The purpose of taxation is primarily the securing of revenue, although it may incidentally subserve political, social, or moral ends. The common element in all forms of taxation is the destination of the revenue derived from them — to cover general expenses of government. This char- acteristic serves to distinguish from taxes such compulsory pajTiients as fees and special assess- ments (q.v.), which are primarily payments to meet costs incurred in affording special public services to the individuals who pay them. Taxation, while it is to-day by far the most important source of public revenue, is of com- paratively recent origin. The medifcval State depended for its revenues largely upon the prod- uct of the public domain. (See Finance.) It was in the cities that taxation first developed. Payment of taxes was generally regarded as pre- requisite to citizenship. With the increase in public needs which accompanied the development of the national State, various forms of indirect taxes — tolls, impost duties — were levied: and with the extension of citizensliip characteristic of the modern State, the duty of paying taxes has become practically universal. The broaden- ing of the functions of the State, noted under Finance, has had the effect of making taxation an increasingly important element in economic life. In general, the higher the social and eco- nomic development of a nation, the heavier is the burden of taxation upon its citizens. Principles of Tax.tion. Writers on finance are accustomed to lay down certain general prin- ciples of justice and of administration to which practical systems should conform. Taxes should be capable of yielding a large revenue: they should be economical, i.e. the cost of collection should not materially increase the burden imposed upon the taxpayer: they should be elastic, capable of responding to a sudden demand for revenue ; they should not impair their source through discour- aging industry. So far as possible, they should be collected in such a way as to cause the tax- payer the least inconvenience: they should be certain, so that each man might know what he might be expected to pay and make provision accordingly. Most important of all, they should be equitably distributed. On what principle the distribution of taxes should be made is a question on which financial theorists are far from an agreement. In the first half of the nineteenth century most writers re- garded a tax as a payment to the State for pro- tection, or for the privilece of securing an in- come under the laws of the State. It followed from this view that taxes should be distributed according to the benefit received, or according to the cost incurred by the State in affording the benefit. Such a principle proved unsatisfactory, since both benefit and cost are indeterminable. In recent years the doctrine which has the widest following teaches that since civilized existence is conditioned by the State, each individual is born with the duty of contributing to the needs of the State in proportion to his ability or faculty. This theory more nearly than' any other corresijonds with public sentiment and with the actual practice of taxation. Proportional, Progressive, and Degressive TaXjVtion. a system of proportional taxation is one in which the contribution from income or wealth remains a constant percentage, whatever the size of the latter may be. It is defended on the ground that it approximates the ideal of taxation according to ability. Progressive taxa- tion, in which the contrilnition increases rela- tively to income or wealtli, may be defended on the same ground, since one who possesses a large income is obviously more able to surrender a cer- tain percentage of it than one who has a small income is to surrender an equal percentage. More often it is advocated as a measure of social equalization. Degressive taxation, in which the contribution diminishes relatively to income or wealth, has no valid defense: it exists only be- cause of the imperfection of the taxing machin- ery, which finds less difficulty in levying upon small aggregates of wealth than upon large. An ideal system of taxation would be a single tax on incomes. Such a tax would have to take account of the necessary expenditures of indi- viduals, since these affect faculty ; it would also take account of the character of income, whether funded or unfunded, since the former, being more certain, places its recipient in a better econom- ic position than the latter. Income taxes, how- ever, have proved practicable to only a limited extent. ( See below. ) A tax on all property would approximate the same end, since the value of property is closely dependent upon the income it yields. This tax was practicable enough when almost all property was tangible and incapable of concealment. It is the most unsatisfactory of systems when, as at present, a vast amount of property consists in intangible personality. For these reasons, a mul- tiple system of taxation, direct and indirect, is necessary to provide satisfactory revenues and to appro.ximate fairness in distribution. Shifting and Incidence op Taxation. The prolilems of taxation are immensely complicated by the fact that a tax may not rest upon the persons who pay it in the first instance, but may be shifted in whole or in part through price changes. A tax upon the output of a factory would naturally result in an equal rise in price. The manufacturer might pay the tax, but its ultimate incidence is upon the consumer. A tax on houses might temporarily be borne by the owner, but in the nature of the case it would ultimately result in higher rents, since it would put a check upon building. A tax on land value, on the other hand, could not be shifted, since it would not affect the amount of land .available for use. and hence could not raise rents. Direct and Indirect Ta.xes. A classification of taxes of much practical importance is that