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skill and knowledge of gathering statistics. It is no small achievement to bring all the details of an organization like the census office to the highest point of working efficiency. Methods, theoretically perfect, and which would perhaps give accurate results in Connecticut, will fail if applied to Georgia. Questions which seem simplest will prove misleading even to men familiar with the subject. It is as dangerous to ask too much as to ask too little. Trade jealousies will be aroused when least expected, so as to nullify some branches of the inquiry. Hitherto the experience of each successive census has served, in some sort, as a warping port by which to drag the next up to a higher point of excellence. The census of 1880 will be a practical test of an improved method, whose working details must be perfected by experience.

CHARLES F. JOHNSON,

PRINCIPLES OF TAXATION.

THE object of the present article is to consider those features of our plan of taxation which stand in need of such light as may be shed upon them by political economy. Our attention will be confined to those points which seem of most practical importance in the present state of public opinion, and no exhaustive discussion of any special branch will be attempted. We shall begin with some practical hints respecting the objective points at which arguments on this subject are sometimes aimed.

Perhaps the most common error of current thought on the subject consists in considering special kinds of tax as being good or bad in themselves. If the question were tax or no tax, then each system of taxation could be separately disposed of on its own merits. But taxes of some sort must be levied in some way, because the support of government is a necessity. Our conclusions must therefore be drawn by comparing taxes of different kinds, and not by saying that this system is bad or that one good in itself. The only alternative of taxation in itself is borrowing; but this alternative is only temporary, because the money borrowed must eventually be paid by the levying of taxes. Hence it is not at all to the point to prove that any special form of taxation is bad: we may admit at the outset that every possible form is objectionable, without doing away with the necessity of making a "choice of evils."

The first subject which we propose to consider is that of the distribution of the burden under different systems of taxation. In ordinary language, taxes are divided into direct and indirect taxes. Direct taxes are supposed to be those levied on the individual himself, or his property, in such manner that he must personally bear the burden of all he pays. Indirect taxes are those levied on the products he expects to sell to others, and are therefore such, it is supposed, as he may charge to his customers. We frequently hear

it said, in a very general and sweeping way, that whenever goods or services of any sort are taxed, the owner of the goods, or the performer of the services, has only to charge the tax to his customers, and thus free himself of its burden. But the power of doing this is something to be accurately investigated, and not taken for granted in the sweeping form it often assumes.

The question is, Out of whose pocket will any given tax ultimately come, or who will be the real sufferers, not only with respect to the money which they have to pay, but with respect to the relation between their income and the cost of the commodities they have to consume? The total amount of taxes contributed by each individual will comprise not merely the obvious items of money paid to the collector and increased cost of articles necessary to comfort, but also a possible disturbance of the demand for his commodities, or a change in his power of acquiring wealth from his fellow men. In fact, it not infrequently happens that the levying of a tax puts money into the pockets of individuals. A familiar instance of this is seen when a new or increased tax is levied upon goods already in the hands of manufacturers or dealers. In this case, the market value of the goods may be suddenly increased by the whole amount of the tax without any effort whatever on the part of the holders. It is evident, in such a case as this, that the consumers will at first be sufferers without the government gaining anything. I cite this merely as an illustration.

The power of charging a tax to customers will depend upon the nature of the things on which it is levied, or upon the subjects of taxation: a classification of tax-systems with respect to these subjects is therefore necessary. For our present purpose we may divide most of the taxes levied under our system into three distinct classes, namely:

a. Taxes levied on Individuals.

These include not merely poll-taxes, which are now nearly obsolete, but taxes of all sorts which are levied either on special persons or on every one, without respect either to the value of his property or of his income. The distinctive feature of such a tax is, that it is independent of the ability of the payer. The principal taxes of this sort now existing are the licenses required for the practice of particular trades or professions. It will be observed that the license required of a liquor-dealer or tradesman of any sort is not dependent upon the amount of his possessions or upon

his ability, but is demanded of him simply as an individual engaged in a certain business. This is the peculiarity of what we may con

sider a personal tax.

B. Taxes on Production.

These include the excise and customs duties on productions of specified classes which, under our system, form almost the sole revenue of the General Government. Customs duties are included with those on home products because the fact that the production is that of a foreigner makes no difference in the application of the general principles we are to elucidate. The income-tax is to be included under this head, because each man's income is to be regarded as the equivalent of his entire productiveness, whether it is derived from his own powers or from an hereditary capital.

y. Taxes on Accumulated Property.

There is this very important difference between a tax on production and one on accumulation: that the former is paid only once on each dollar of value produced, whereas, under the latter, every dollar saved has to make an annual contribution to the public treasury. No matter how large a percentage we levy on production, it can be borne, because the producer will always have the balance free from all future taxation so long as he chooses to keep it. But if the tax on accumulated capital should exceed the rate of profit to be derived from its use, there would be no object whatever in saving it, since the proceeds of everything one saved would have to be given up to the Government.

Taxes of each class are to be subdivided according as they are levied; firstly, on sums total expressed in money without respect to the particular things produced or possessed; or, secondly, on specially designated products. Among taxes on production an excise and customs duty is levied on special products-as tea, liquor, or tobacco. Such a duty, levied on the total product without respect to the things produced, would be in effect the equivalent of an income-tax. Again, we must distinguish taxes levied on special kinds of property, as real estate, bonds, or moneys, from those levied on the sum total of one's possessions without respect to the form in which those possessions are held. Thus, all three of the classes we have described may be divided into two orders: the one being those of which the subjects are sums total; the other those of which the subjects are specially designated persons or products. This double

classification will be made more clear by presenting it in a tabular form.

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The reason of the distinction between orders A and B in all classes of taxes, is that when taxes are levied on totals of any kind, as in order A, they can not be lawfully evaded; while, when levied on especial productions or especial kinds of property, as in order B, it may be possible for one to confine himself to the production of untaxed articles or to put his wealth into an untaxed shape. For instance:

A tax on all males over twenty-one years of age can not be evaded. But a tax on liquor-sellers can be evaded by the liquor-seller giving up his occupation. A duty on imported cloth can be evaded by ceasing to import it, and one on native cloth by the manufacturer engaging in some other pursuit. But a tax on gross or net profits can not be evaded by a mere change of pursuit. A tax on carriages can be evaded by putting money in something else than carriages, but, where gross capital is taxed, a mere change of investment will not bring relief.

In our consideration we shall begin with taxes levied on designated things (order B), because the effects of such taxes can be most readily traced. Let us suppose a certain commodity, no matter what, which we may call C. In an untaxed society a certain quantity of C will be produced and sold in a year. Let us call Q this quantity and P the price per unit of quantity, so that P is the untaxed price. The total value of the product will then be QXP. Now, suppose a tax to be levied on C. The common impression is, that the manufacturers of C will simply add the tax to the price P,

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