$13,036,767, while that of personal property decreased from $5,111,554 to $3,866,227.1 In California personal property was assessed in 1872 at 220 millions of dollars, in 1880 at 174 millions, and in 1887 at 164 millions, a net decrease in fifteen years of 56 millions. Real estate increased during the same period from 417 millions to 791 millions.2 Personal property paid 17.31 per cent, real estate 82.69 per cent of the taxes. In Illinois the figures for 1888 are 20.18 per cent and 79.82 per cent respectively. In Cook county (Chicago), out of a total valuation of 210 millions, personal property paid only 14 per cent.3 In New York the figures are as follows: 4

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.5 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.

6

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

1 Tenth Census of the United States, vol. vii, p. 9.

2 Biennial Report of the State Comptroller for 1887-88, p. 135.

8 Biennial Report of the Auditor of Public Accounts, 1888, p. 204.

4 First Annual Report of State Assessors, 1860, p. 13; Report for 1888, p. 13.

5 Report of State Assessors for 1888, p. 5.

• Report of the Comptroller of the State of New Jersey for 1887, pp. 57, 95. 7 Report of State Assessors for 1877, p. 10.

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 realty. Above all, personal property includes the entire and ever-increasing annual products of agriculture and industry — the gigantic mass of modern wealth devoted mainly to consumption, but existing as the stock in trade of individuals.1 Even in our most western commonwealths, where the communities are still mainly agricultural, it is an acknowledged fact that the personalty exceeds the realty. The auditor of Washington tells us that if a true valuation could be reached it is "clear and incontestable that the wealth of the territory in personal property, for the purposes of taxation, would largely predominate over that of real estate." 2 And if this is true of the far West, how much greater must be the relative proportion of personalty in the busy marts of the East.3 Yet the more differentiated the industry and the more predominant the personalty, the less does the latter contribute to the public charges; until in the

1 This element alone is calculated in the tenth census as over 8,000 million dollars, out of an aggregate true valuation of property of 43,000 millions.

2 Report of the Territorial Auditor to the Legislative Assembly, 1887, p. 94. Cf. Biennial Report of the Auditor of Iowa, 1881, p. 8, and that of the Comptroller of Idaho, 1887-88, p. 74, to the same effect.

3 Cf. New York State Assessors' Report for 1880, and Comptroller's Report for 1889, p. 33: "I am sure that the actual value of the personal property legally liable to taxation exceeds that of the real estate."

foremost state of the Union realty pays more than nine-tenths and personalty less than one-tenth.

The taxation of personal property, I repeat, is in inverse ratio to its quantity. The more it increases, the less it pays. The general property tax thus sins against the principle of universality of taxation even more than against the principle of uniformity. In the middle ages whole classes were exempt by express provision of the law; in our time and country whole classes are exempt by the inevitable working of the law. It is the law which is equally at fault in both cases.

3. Incentive to dishonesty. One of the worst features of the general property tax is that any attempt to enforce the taxation. of personalty by more rigid methods results in evasions and deceptions. The property tax necessarily leads to dishonesty, and this for two reasons. In the first place, under our system whole classes of personalty are exempt from state taxation. The most familiar examples are imported merchandise in the original package; United States bonds, notes, checks and certificates; property in transitu; goods produced in another state sent on commission; deposits in savings banks, etc. The temptation for the taxpayer to convert his property temporarily into these classes is generally irresistible. Not only does the law hold out to individuals inducements to practice fraud, but it sustains them in its commission. Secondly, wherever any pretence is made of enforcing the tax on personalty, and especially where the taxpayers are required to fill out under oath detailed blanks covering every item of their property, the inducements to perjury are increased so greatly as to make its practice universal. The honest taxpayer would willingly bear his fair share of the burden; but even he cannot concede his obligation to pay other men's taxes. The only result of more rigid execution of the law is a more systematic and universal system of deception. Official documents tell us that "instead of being a tax upon personal property, it has in effect become a tax upon igno

1 In People ex rel. Ryan, 88 N. Y. 142, the Court of Appeals held that the assessors were bound by a transaction which the court itself declared to be "a device to escape taxation."

rance and honesty. That is to say, its imposition is restricted to those who are not informed of the means of evasion, or, knowing the means, are restricted by a nice sense of honor from resorting to them."1 The tax commission of New Hampshire declares that "the mere failure to enforce the tax is of no importance, in itself considered, in comparison with the mischief wrought in the corrupting and demoralizing influences of such legislation." The Illinois commission asserts that the system is "debauching to the conscience and subversive of the public morals—a school for perjury, promoted by law." The Connecticut commission maintains that the resulting "demoralization of the public conscience is an evil of the greatest magnitude." 4 The West Virginia commission tells us that "the payment of the tax on personalty is almost as voluntary and is considered pretty much in the same light as donations to the neighborhood church or Sunday-school.' And almost every annual report of the state comptrollers and assessors complains bitterly that the assessment of personalty is nothing but an incentive to perjury.6

"5

4 Regressivity. Taxes are progressive when their increase is more than proportional to the increase of the property or income taxed, i.e. when the rate itself increases with the increase of the property. Taxes are regressive when the rate increases as the property or income decreases. The general property tax in its practical effects is regressive. For the tax on personalty is levied practically only on those who already stand on the assessor's book as liable to the tax on realty. Those who own no real estate are not taxed at all; those who possess realty bear the taxes for both. The weight of taxation thus rests on the farmer. In the rural districts the assessors

1 Report of the Commissioners of Taxes and Assessments in the City of New York, 1872, p. 9.

2 Report to the Legislature of Hon. George Y. Sawyer, 1876, p. 16.

* Report of the Revenue Commission, 1886, p. 8.

4 Report of the Special Commission on Taxation, 1887, p. 27. Tax Commission Report, p. 11.

Preliminary Report of the Tax Commission, 1884, p. 10.

Cf. Report of California Board of Equalization, 1885-86, p. 6.

Cf. the New Jersey

add the personalty, which is generally visible and tangible, to the realty and impose the tax on both. We hear a great deal about the decline of farming land. But one of its main causes has been singularly overlooked. It is the overburdening of the agriculturist by the general property tax. What is virtually a real property tax in the remainder of the state becomes a general property tax in the rural regions. The farmer bears not only his share, but also that of the other classes of society. Thus official documents tell us that "the class of property that escapes taxation most, is the class of property that pays the largest dividends." And in general it may be said, with our state auditors, that "the property of the small owner, as a rule, is valued by a far higher standard than that of his wealthy neighbor." 2 Or, as it is put by others:

1

In every portion of the state we find the most unproductive property, and that of the lowest real value, assessed at the highest ratio. The rule holds good that those who have to battle hardest with life for subsistence, are compelled to pay the most onerous taxes on the real value of their property.3

It is no wonder that in their desperation the small farmers should cry out for the equal enforcement of the laws taxing personalty; it is no wonder that they should attempt to stem the current in ignorance of the impossibility of the task. They have forgotten Walpole's saying, that it is safer to tax real than personal estate, because "landed gentlemen are like the flocks upon their plains, who suffer themselves to be shorn without resistance; whereas the trading part of the nation resemble the boar, who will not suffer a bristle to be pluckt from his back without making the whole parish to echo with his complaints." 4

5. Double Taxation.

Double taxation is of two kinds: that

which is prima facie double-double taxation in itself—and

1 Biennial Report of the Auditor of Iowa, 1880-81, p. 6.

2 Biennial Report of the Auditor of Kentucky, 1887, p. iv.

3 Report of the State Assessors of New York, 1873, p. 9. Cf. West Virginia Tax Commission, Preliminary Report, 1884, p. 8; Report of the Comptroller of Tennessee, 1888, p. 16.

4 Cf. Sinclair, History of the Public Revenue, vol. iii, appendix, p. 79.