return of any protection as compensation, is, it would seem, an arbitrary exaction on property, and not "due process of law"; and also not giving that full faith to the public acts and judicial proceedings of other States required by a previous clause of the Constitution. It must, however, be stated, that by many this reasoning is not regarded as conclusive; and more especially is this the case in Massachusetts, which taxes her citizens in respect to visible, tangible property, acknowledged to be within the territory and jurisdiction of other States. In the recent report made by the commission appointed by the legislature of Massachusetts to inquire into the expediency of revising the tax-laws of that State, the commissioners at the outset evidently felt impressed with a feeling that they must vindicate the practice of their State in this particular, and that unless they succeeded in doing so, the whole theory of arbitrary, infinitesimal taxation, of whose continuance they are advocates, might be seriously broken in upon. They accordingly set about it in the following amusing manner. With the Declaration of Independence before them, maintaining it to be in the nature of a self-evident truth, that "all men are endowed by their Creator with certain inalienable rights"; and "that among these are life, liberty, and the pursuit of happiness," the commissioners gravely announce that "the individual person" (in Massachusetts) "has no inalienable rights except that to his own righteousness."* They next

* That Massachusetts assessors in practice really act on the theory of Massachusetts State Tax Commissioners, that a man in Massachusetts has no inalienable rights except "to his own righteousness," has found a striking illustration in a communication recently made to the Boston public by one of its leading capitalists. In this the writer makes known the following extraordinary facts. In 1872-3, the writer (Nathan Mathews) purchased a large amount of mortgages of an incorporated company, known as the "Water Power Company," supposed at the time to be a good investment. In 1873 the company failed, and put off their creditors with mortgage bonds in exchange for their notes, but it was necessary, in order to make this arrangement work, for Mr. Mathews, who was a heavy indorser of these notes, to give new notes and the bonds as a collateral for them. No interest is now paid on the mortgage bonds, and the property is taxed three times. First, the lands are taxed for more than they will sell for; second, the creditors are taxed on the mortgage of the property; and Mr. Mathews, who only passed over the bonds to these creditors as collateral, is taxed as the owner of them. In view of such a state of things, it may not be impertinent to suggest, that stimulus to any other kind of righteousness than that of self-righteousness is not as great in Massachusetts as would seem to be desirable.

scout the existence of any theory-expressed or impliedof contract between the State and the citizen, "whereby the subject is bound to render some service to the State, as a recompense for the service which the State has rendered to him"; when the Constitution of Massachusetts, which may be supposed to have been also before them, recognizes this contract in the following explicit language: The legislature shall have power "to impose and levy proportional and reasonable taxes upon all the inhabitants of, and estates lying within the Commonwealth, for the support of the government of said Commonwealth, and the protection and preservation of the subjects thereof." The ground having been thus cleared of obstructions, the commissioners next advance to what in their opinion is the true theory of taxation, namely, that "a man is taxed not to pay the State for its expense in protecting him, and not in any respect as a recompense to the State for any service in his behalf, but because his original relations to society require it." It is somewhat difficult to consider such reasoning from any other standpoint than the ridiculous; but as the original relations of man to society are unquestionably the relations which come into existence when society is incipient or in process of formation, when the law of might is the law of right, and everybody gets what he can and keeps what he gets, it may be remarked that the Massachusetts commissioners have at least been logical and consistent in making the reference they have made for the origin of such an arbitrary system as they advocate. Laying aside, however, all subtleties of reasoning, all appeals to court decisions, and all reference to the "original relations" of society, the plain, simple questions which it is desirable under this head to bring before the public are: "Is it consistent with the principles of equity? Is it conducive to public morality? Is it worthy of a high civilization for a State or a community to tax directly or indirectly property not within their territory or jurisdiction, and which their laws are unable to reach or protect?" And when the public have been induced to give them intelligent consideration, there can be no question that a further long stride in tax reform will be made most speedily.

Finally, as a further precedent to radical reforms in local NO. 251.

VOL. CXXIII.

26

taxation through popular action, there must be a larger popular comprehension of the principle, that in order to burden equitably and uniformly all persons and property, it is not necessary to tax primarily all persons and property within the taxing district. The experience of Philadelphia, Montreal, England, and France, where personal property is excluded from taxation, and the burden of the expenses of the State is made to fall primarily and almost exclusively upon realty, is an absolute demonstration, "that any complicated and inquisitorial system of separate taxation of goods and chattels is wholly unnecessary, an obstruction to trade, an injury to production, an unnecessary invasion of the privacy of human affairs, and a self-torment inflicted on land itself." The Massachusetts Commissioners, however, in their recent report, before referred to, contend that the doctrine that taxes tend "to equate and diffuse themselves," "is condemned by facts and justified by no sound economical theory "; and that on the contrary "the tendency of taxes is, that they must be paid by the actual persons upon whom they are levied," at the same time quoting from British writers to prove that the incidence of British taxation falls with crushing severity upon the poor, and prophesying that the same result will follow the adoption in this country of the simple system recommended by the New York Commissioners. But the reasoning of the Massachusetts Commissioners confutes itself. For if taxes do not diffuse themselves, and "stay where they are laid," how can the poor be crushed, and made to bear "disproportionate burdens" under a system like that of Great Britain, which taxes directly no actual necessary of life, nor indeed any article of consumption with the exception of tea, coffee, spirits, beer, and tobacco, which exempts all incomes under £100 ($500); and finally all houses renting for less than £20 ($100) per annum, an estimated exemption (from imperial taxation) of six-sevenths of all the dwellings in the kingdom? What, furthermore, do such reasonings and assumptions as those of the Massachusetts Commissioners on the subject of the diffusion of taxes amount to, in view of the most significant fact, that in

*For local taxation, houses are made subject to assessment in Great Britain; the poor-rate being imposed on houses of £6 rental and upwards.

Philadelphia, containing over fifty thousand small houses built under the auspices of loan and building fund associations, and mainly owned by their occupants; where the infinitesimal system of taxation is not recognized, where real-estate is almost the only thing subject to primary assessment, and where the current rate of taxation for the present year (1876) is in excess of two per cent (2.15) on a basis approximating market value, there is little or no complaint against the method of taxation, but only against the amount; while the contentment and general prosperity of the poorer and middle classes are admitted to be greater than in any other city of the country?*

Another illustration to the same effect and equally striking is found in the fact, that during the past year, the city of Montreal revised its system of taxation, and as preliminary to doing so, submitted to popular judgment through an official circular, prepared in the Auditor's Office, five different statements, showing in what manner the annually required municipal revenue might be raised by various forms of taxation; but in all of these the only items of personal property, which it was even suggested should be made subject to direct assessment, were the items of pleasure horses and carriages.†

The features of the proposed revision were in the direction of further simplification, making the system to consist mainly of a taxation of one and a quarter per cent on all real property; an annual tax (to be called a business tax) on all trades, manufactories, occupations, professions, etc., not exceeding seven and a half per cent on the annual value

*In 1874 the real estate of Philadelphia was assessed at $539,003,602, claimed to be full valuation. The personal property of the city subject to taxation for city purposes in 1875 was returned at a valuation of $9,464,873; and includes horses, carriages, furniture, and gold and silver watches.

†The system of taxation in force in Montreal previous to the revision of 1875 was as follows:

Special taxes on insurance, telegraph, ferry, and street railway companies, and on inn-keepers, billiard-tables, theatres, breweries, banks, brokers, etc.

Licenses on grocers, butchers, exhibitions, dogs, etc.

(rental) of the premises occupied; and an annual tax on pedlers, inn-keepers, theatres, ferries, street railways, and the owners of horses, vehicles, dogs, etc.; insurance and gas companies and banks; the proposed annual tax cn the latter to be not in excess of four hundred dollars on every bank with a paid-up capital of one million or less, and increasing gradually for banks with capital in excess of one million.

In considering this question of the diffusion of taxation it is essential to correct reasoning that the distinction between taxation and spoliation be kept clearly in view. That only is entitled to be called a tax-law which levies uniformly upon all the subjects of taxation; which does not of itself exempt any part of the property of the same class which is selected to bear the primary burden of taxation, or by its imperfections to any extent permit such exemptions. Such taxes if not so excessive as to become a prohibition on the use of the thing taxed, become a part of the cost of all production, distribution, and consumption, and diffuse and equate themselves by natural laws in the same manner and in the same minute degree as rents, wages, cost of material, waste, and all other elements that constitute the expenses of production. "We produce to consume, and consume to produce, and the cost of consumption, including taxes, enters into the cost of production, and the cost of production, including taxes, enters into the cost of consumption, and thus taxes uniformly levied on all things of the same class, by the laws of competition, supply, and demand, and the all-pervading mediums of labor, will be distributed, percussed, and repercussed to a remote degree, until they finally fall upon every person, not in proportion to his consumption of a given article, but in proportion to his aggregate consumption. Mr. Astor bears no greater burden of taxation (and cannot be made to bear more by any laws which can properly be termed tax-laws) than the proportion which his aggregate individual consumption bears to the aggregate consumption of all others in his circuit of immediate competition. As to Mr. Astor's other taxes he is a mere tax-collector, or conduit, conducting taxes from his tenants or borrowers to the State or city treasury. A whiskey distiller is a tax-conduit or tax-collector, and sells more taxes than the original cost of whiskey;