personalty as well as realty.1 But he failed ignobly; for, at the close of the seventeenth century, the great work of Boisguillebert is full of bitter complaint and lamentation.2 And when the attempt was made in the eighteenth century to supplement the taille by the dixièmes and vingtièmes, like the tenths or fifteenths of old in England, the new tax again became practically a land tax. The development was inevitable, and it resulted in the total abolition of the general property taxes during the Revolution. In Germany, the mediaval assessment lists to be filled out by the taxpayer bear a striking resemblance to those still used in some of the American commonwealths. But there, as here, it became continually more difficult to reach personal property. In Prussia (Brandenburg) this was true already at an early period.5 In Bavaria as well as in Austria the nobility and the richer commercial class succeeded at the end of the sixteenth century in shoving the main burdens on the shoulders of the rural population. And in the other German states the equal property tax remained so only in name. In Switzerland, indeed, the property tax, like so many other mediæval customs, has been in part retained to this day. But its nature has been materially changed, in that it has become a progressive tax and that an attempt has 1 Sully ordered the officials to assess contributors “à raison de leurs facultés, quelque part qu'elles soient, meubles ou immeubles, héritages nobles ou roturiers, trafic et industrie." Cf. Clamageran, Histoire de l'impôt, II, 359. 2 "Il n'y a pas le tiers de la France qui y contribue, n'y ayant que les plus faibles, et les plus misérables; en sorte qu'elles les ruinent absolument." Le Détail de la France, chap. iii. 3 "Dans la pratique, l'élément foncier prédominait presque exclusivement." Stourm, Les finances de l'ancien régime et de la révolution, I, 240. See also Necker, De l'administration des finances de la France, I, 159. The account given by Adam Smith, Wealth of Nations, book v, chap. ii, is not perfectly exact. For a typical list of 1531, see Bielfeld, Geschichte des magdeburgischen Steuerwesens von der Reformationszeit, pp. 19-23. * Schmoller, Die Epochen der preussischen Finanzpolitik, pp. 42, 49. Cf. Schmoller, Studien über die wirthschaftliche Politik Friedrichs des Grossen, in his Jahrbücher, VIII, 38, for Brandenburg; VIII, 1011, X, 330 and X, 350 for Magdeburg. Hoffmann, Geschichte der directen Steuern in Baiern, p. 70. 7 Wagner, Finanzwissenschaft, III, 62, 77, 80. been made to remedy its defects by joining to it an income tax. Even thus much hardship and inequality ensue.1 In Italy the development of the property tax can be clearly studied in Florentine history. The estimo, at first assessed with comparative equality, soon became honeycombed with abuses. Personalty slipped out of the lists, the rich bankers entirely escaped, and the whole load of taxation fell with crushing force on the small owners, populo minuto. Hundreds were completely ruined and compelled to seek refuge in exile. The discontent became so loud that after threats of revolution and disorder the estimo was finally supplanted in 1427 by the new tax, catasto, to be levied on the personalty of traders and bankers as well as on realty. Machiavelli gives us an interesting account of the opposition of the nobles, who were at the same time the great financiers. But the new general property tax went the way of its predecessors. When we read of the subterfuges and evasions, of the strenuous efforts on the part of the state to compel the listing of personalty and of the dismal failure of the attempts, we seem to be reading the reports of American commonwealth assessors or comptrollers for 1889. The history was precisely the same. In 1431 only fifty-two persons paid the tax on trade capital, although the amount of such capital must have been immense. And in 1495 the tax was made in name, what it had long been in fact, a tax on immovables only. Personalty, as such, was henceforth legally exempt. The general property tax had again become a land tax. Throughout all Europe the local property tax has become a tax on real estate. In England the whole system of local taxation is based on the poor rate, according to the statute of 1601 which mentioned as liable to the tax not only occupiers of lands, 1 A complete collection of all the cantonal tax laws can be found in Böhmert, Arbeiterverhältnisse und Fabrikeinrichtungen der Schweiz, I, 128–200. Cf. also Cohn in POLITICAL SCIENCE QUARTERLY, IV, I (March, 1889), p. 50. 2 Cf. Léon Say, Les solutions démocratiques de la question des impôts, I, 209 et seq., especially pp. 222, 229. He gives no references. For a full history, see Baer, Il catasto fiorentino nel secolo XV; Nuova Antologia, vol. 17 (1871). 3 History of Florence, IV, 14 (vol. i, p. 181 of Detmold's translation).. 4 Canestrini, L'imposta sulla richezza mobile ed immobile, I, 108, 115, 321, etc. houses, etc., but every inhabitant, parson and vicar. The general rule adopted was that all personal property liable must be "local, visible and productive of a profit";1 so that, even from the first, intangible personalty was shut out. The liability of stock in trade, at first generally disputed, was finally affirmed by Lord Kenyon in 1795. The results were doubly disastrous. For the early success of the experiment led the justices of the peace to begin that most unjust and improvident method of poor relief known as the allowance system. And secondly, the practice of rating stock in trade, which was confined to the old clothing district in the South and West of England, resulted in the rapid decline of the ancient staple trade and a transfer of the business to Yorkshire, where personalty was not assessed. The law of 1840, which is re-enacted yearly, finally exempted all personalty from taxation; but it was powerless to bring the trade back to its old channels. For the last fifty years the local property tax in England has been legally, as well as actually, a tax on productive real estate alone.2 History thus everywhere teaches the same lesson. As soon as the idea of direct taxation has forced itself into recognition, it assumes the practical shape of the land tax, soon developed into the general property tax. The general property tax long remains the index of ability to pay. But as soon as the mass of property splits up and differentiates, the property tax becomes an anachronism. The various kinds of personalty inevitably escape, and finally the general property tax completes the circle of its development and reverts to its original form of the real-property tax. The property tax in the United States is precisely identical. It is not an American invention, 1 Report of the Poor Law Commissioners on Local Taxation, 1843; Accounts and Papers, IX, 18. 2 Thorold Rogers, Local Taxation, especially in English Cities and Towns, p. 16. Cf. also Noble, Local Taxation, p. 58; Palgrave, Local Taxation in Great Britain, p. 78; Goschen, Reports and Speeches on Local Taxation, p. 50; Phillips, Local Taxation in England and Wales, in Probyn's Local Government and Taxation in the United Kingdom, p. 502; and especially Bilinski, Die Gemeindebesteuerung und deren Reform, pp. 35 et seq. See also Hedley, Observations on the Incidence of Local Taxation (1884), who opposes the exemption of stock in trade and the recent attempts to get machinery exempted from ratability. but a relic of medievalism. In substance, although not in name, it has gone through every possible phase of its development. Any attempt to escape the shocking evils of the present by making it a general property tax in fact as well as in name is foredoomed to failure. The general property tax is impossible in any complicated social organism. Medieval methods cannot succeed amid modern facts. IV. Theory of the Property Tax. While it is generally confessed that the property tax in the United States is a failure, it is sometimes contended that if thoroughly executed it would be a just tax. The theory of the general property tax, as set forth in almost all our state constitutions, is held to be correct in principle. Is this true? In the first place we must disabuse ourselves of the idea that property, as such, owes any duty to pay taxes. The state has direct relations not with property, but with persons. It is the individual who, from the very fact of his existence within the state, is under definite obligations towards the state, of which the very first is to protect and support the state. For the state indeed can exist without the particular individual, but the individual cannot exist without the state. The individual must support the state, not because the state protects him, but because his life is possible only within the state — unless indeed he prefer stateless savagery. Every civilized community professes to tax the individual according to his faculty, his ability to pay. His ability may indeed be measured by his property or by any other standard. But in the last instance it is the individual who is taxable. It is he who owes the duty. But is property the true test of ability? In primitive communities to a certain extent it is. Every freeman is a proprietor. All are supported by the produce of the land. The comparative equality of wealth gives a comparative equality of opportunity. The finer differences in ability to pay are not yet recognized. In the early stage of society property is indeed a rough test of ability. But a change soon sets in. As society differentiates, classes arise who support themselves not from their property, but from their earnings. Manifestly he who earns a salary cannot be declared entirely devoid of ability to pay, as compared with one who receives the same amount as interest on a principal, or as profits on property. Moreover the productiveness of property becomes a controlling element in calculating the owner's ability. Of two factory owners, one may be running full time and making large profits; the other may be compelled to keep his factory closed, earning nothing. Of two landowners, one may employ improved processes and enjoy a large product; the other, although on equally valuable land, may suffer climatic reverses and produce far less. Of two capitalists, one may invest his property so as to obtain large proceeds; the other may put an equal amount into an enterprise which yields very little. It is plainly incorrect to say that the ability in these cases varies with the property. The test of ability is shifted from property to product, proceeds or earnings. The truth of this principle is faintly recognized in the legislation of all countries one step removed from the primitive tax system. It can be seen in some of the medieval town taxes, where the earnings of the artisans and tradesmen were taxable, as evidences of ability or faculty, side by side with the taxation of property owners. It can be seen in various attempts of mediaval states to tax the proceeds or rents of land, the salaries of officials and the product of individual exertion. In like manner it can be seen in the early legislation of the American colonies. The tax law of 1634 in Massachusetts Bay provided for the assessment of each man according to his estate and with consideration of all other his abilityes whatsoever." 1 But the measure of ability still was property, as appears from the provision of 1635 that "all men shall be rated for their whole abilitie, wheresoever it lies."2 By 1646, however, the glimmering of the new idea is seen; for the law now provides not only for rating of all "estates, both real and personal" but also for 1 Colonial Records of Massachusetts Bay (Shurtleff's ed., 1853), I, 120. |