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Les diagrammes suivants illustrent la mdthode. 1 « ■ 2 3 4 5 6 it i ••'. [i I. I. \ m THE COST OF TAXATION AN ADDRESS, BY I- ■ k MR. 6HARLES g. STONE. READ BEFORE THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ONTARIO IN St. Geof^ge's Hall, Elm St. Toronto, October 29th, 1896. T THE COST OF TAXATION Charlt's K. Stone, <>ii I lie "("oHt of Taxa- tion," rcMil be foe tho Tnstltuto of Chart i'loil ^L'counijinin in (m. vn-or;;;!' s Hall, on Thursday cvcniiif;. In fuel the paper liiatlc such iin impression on llie ("harlere-l Ar- countanis tliiil it was decided lo meet ay;ai!i in two weeks lor more tlioroujili dis- cussion. Tlie paper reads: It Is in tlie Ix'lief that it is not llie tax aloiu", nor cliielly, hut its elTt-ct upon the live,*, industries and morals of a peoiile wliicli is of piiramount Importance, Unit I Inivo chosen for llie sultject of my p;iper the title of the "Cost of Taxation:" the word "cost" in tliis instance heinj,' intend- ed to crence witli liusiness wliich many forms of taxation involve would alone allord justification for direct- ing tlie attention of ..ccountants to the subject, apiirt from the fact, I believe, tliat in past years (luesiions contained in file examination papers of this institute have Implied that the applicants for its charter have lieeu expected to have given some attention to the study of economics, of which taxation is an important branch. API'KAL TO ACCOTTXTANTS. In so far as Hie question is a fiscal one, there is no class of men to whom, from Its very nature, it can ajipeal with more force lliiin to gentlemen following the i»rofession of accountancy, nor can I think that the public would give greater weight to llie opinions of any body of men on the sult- Ject than to the deliberate expressions of the members of the Institute of Chartered Accountants, to whose individual guidance are entrusted with every confidence some of the most Important branches of their linancial and industrial operations, Al'I'IOAL TO OTHERS. The question of taxation is one of such scope and magnitude that the difficulty in preparing a sliort paper of tills kind con- sists not so niuch in what to say as In what can be eliminated from that which one feels it necessary to say, iind still have each point touched upon, If ever bo lightly, and ti>u<-iied u|ion in such a miinner that any thinking person, even thougli lie iiohl a diverse opinion, shall at least con- cede for each argument a fniindation In rc.Mson: and when we come to consider that every man who works Is .-i taxpayi'r, we must percei\-e tlnil this includes a large cliiss of men, who, believing themselves free, are perfe<'tly careless of tlie whole nijitter. How many young men. for in- stiince, wlio till the numerous l)oarding- liouses of every large city, iind have siic- cessfull.v a\t)ided the small income or sta- tute labor tax, know fliemselves to he tax- payers at all ? And of those who know this, how many have l)een brought to see, tliat in proportion to their earnings and th(> benefits they recei\-e fro;ii gonrnment, they iire among liie heaviest laxpayers and are. UKU'eover. as :i cliiss, among the cliicf suf- ferers from any maladjustment of the social system whi<'li can he trai-ed to the ctTecls of unwise and liUMiuitable tiix:ition, when l)y its instniniciitalily tlie concentration of wealth is fiicilitateil, burdens are imposed and opportunities witliheld. OUKJIN OF TAXATION, I h.irdly consider it iii'cessary, nor is it I'asily iiossiljle in the limited sjiace of u paper of this kind, to dwell upon the origin of taxation, lieciuise sm-ii an emiuiry, car- ried to its logiciil conclusion, would lead us to an investigation info the f>rigin of government. It is sufficient for our pur- pose to i^now tliat we have government !iiid to concede that we are not aware of any means of dispensing witli it, and wherever government exists, it, in the na- ture of things, implies the nec(>ssity of a revenue to provide for the l)enelits of com- munal existeiu'c. WHAT IS TAXATIO.X ? Taxation is the indispensable condition of government, it is the term by which we designate that portion of the product of our industry which we dovott! to a common fund, osleiisibly to provide for such needs as we Iind we liave in c(minioii, Jind which niultlply iis civilization grows more com- plex, advantages to l)e derived from it up- liareiitly enhancing with its growtli; ami it would certainly seem that if equity gov- i>rneil the collection and exiieudilure of this fuiid.it must yield benefit to every member of a comniunity equivalent to h'.s paymenr. It is with mistaken solicitude that we devote almost all our attention to tlio man- ner in which our taxes are <(xpended, neg- lecting almost entirely to appreciate that in an Inequitable system of collection lurks an evil Infinitely more far reaching in its effects upon the Individual and upon Ibe comuiuuity. THK COST OK TAXATION STUDY OF THK I'lUNCirLlOS. The llrst step, however, lownnls ii cor- rect system of liixiilioii Is (he study of the priiieiples on which it depends. Adiini Sinilli \v:is one of llie tlrst to iil- tenipt to fornniliite the t nit lis upon which ti tax system should he huscd. Ills canons of laxaiion were in sultslanc*; convenience, economy, cerlainty and eiin.-ilily, and these I lielie\e have lieeii ;ienei-aily coneiirred In hy Fawc«'ll aiid snliseciuent writers, while their practical application has Itecn no less Ki'uerally ne;:lecied. 'Paves, therefore, would seem to lie },'ood or had. Ill so far as tliey operate for or nualiist the following iiriiiciides: (1) (Jofid when they hear as ll;;litly as |)()ssll)le niioii production, so as to olTer the least discouragement to the growth of the general fund from which they must lie paid and t lie coiiimmiity supportiMl. Had when they unnecessarily hinder the Increase of wealth and comfort anioiij; the people as a \\ hole. C-) ;e as com- pared with his fellows. Had w liei; their tendency is to take from the poverty of the poor and to add to the wealth of the rich, or when they oppress most heavily upon those who derive least benefit from the j^overnmeiil : and also ihe.v are bad as they tempt one class to seek !iii increase of t.ixcs to be imposed upon another class. CJovernment taxaiiou assumes two main forms: 1, din^ct. and 11, Indirect. It exists by two necessar.v acts: 1. the as- sessment of values, and 2. the collection of wealth. Is mainly KuhbMl by two principles: 1. taxation accordiii>r to beneCts; 2. taxation aecordin;; to ability to pa.v, and Is levied ostensibly for two pui'iioses: 1, to provide a revenue for tlie reiinirements of frovern- inent : 2. to iiroteet wav:e-earners. We are I'onsideriiiK the projier me! hod of raising necessar.v revenue; of the various forms in ojieration that will be deem.'d best, which most nccorils with what has lioen laid down as jrood in the jirlneiples Just enunciated. r.KNKUAL INCOME TAX. The first impression of most people jiro- balily favors a K<'n('ral iin-ome tax: a tax from im-omes from earniuu's as well as from invest iiients, and it mav be cited in favor of this that it is in the nature of a direct tax. And (liat if levied exclusively at the sources of Income It may with rea- sonable certainty be made to reach all reiilH, dlvldeuds, corporate payments of In- terests, and perhaps interest upon niort- piues; some incomes from Invested wealth can then be reached, but not all of them. .lohn Stuart Mill says of the Income tax, "that the fairness wliii h belongs to it In principle cannot be made to attach to it ill practice, and tliat it has such ob.jecllons ill practice tliat it slionld be reserved only for special <'nier;:eiicies." ,' levied an Income tax, and Prof. Coldwin Smith is ipioted as say- ing that "there Is no complaint In regard to it," and tin- same authority says: "In France the attemiit to Introduce It utter- ly failed." And just lieie It may be noted that (iermany has an enormous and alnioHl jicrfect military orKanizallon, which in the absence of foreit;ii wars is an excellent factor III suppresslnji complaints. In Filmland the Income tax Is the largest of the Internal taxes, and yields a larK«' revenue, yet the organized opposition to H is strong and active, and at the very lime of Its Introduction It was istl;;niatized by Sir !{(djert Feel as obnoxious and Impilsi- toriai, and a tax which should be reserved for war. TWO on.TixrnoNS. The Income tax Is open to at least two ob,jections : First, that it is extremely dllTlcult to collect fairly, and the manner in which It is repirded and where possible evad(>d is best evidence of this, and Is exemplitied in various citations wliicli have appeared In our own dally papers. That such a system as this works an iii.justicc, puts a pre- mium upon dece|)tlon. and jirompts nn otherwise honorable man to stultlf.v him self by avoldini; his Just share, must i)< apparent. That the system operates to work this injustice Is also apparent from the fact that wliile the ;issessiiiciit of the tinanclal and iirofession.'il classes is l.-irjidy depend- ent upon their lionor. or lack of honor, that of the clerk or mechanic can usually be obtained by application to his emjiloyer. Secondly: Even where the income tax is a graduated tax It has not that fairness which would aiii)ear on its face. It would not be iiossible where the me- thod of collection was by levying on In- comes at their source, and as a conse- (pieiice the number of instances would be greatly increased in which the assessor vvoiild lia\(> to rely upon tli(> word of the taxpayer, and incentive to evasion would thercfoi(> also increase. The Income tax also usually carries with it an exeitiption up to a certain amount and It then comes under the head of taxa- tion accordiiiir to superior ability to )iay. ;uid operates as a fine upon industr.v, thrift and frnuaiity: it is taxinjr the actu- ally and nomliiallv rich for the benefit of the actually and nominally poor, and has no firmer foundation in equity than has a tax which o|ierates in favor of the rich and to the detriment of the poor. Thirdly : I think It can be shown that the income tax if paid at all Is paid out of the savliifTs. and herein tends to undo tlie verv work we are ostensibly trylmr to do throuirh (li(> institution and encouragement of our savlnps bank system. i)e THE COST OF TAXATION two A TAX UPON INMrSTllY, At the coiniiu'iioeiJH'nt of this I.Kiulry intd the Iiicoiiip tax 1 fit«>»I it us licln^ In (he iinture of a direct tnx (one that dltl not admit of boiiiK shifted), and in so far, coin inendnblc. Many cconondsts arc reputed to be In accord as to tlie ;;eneral troth ol this, yet it is not always true. Look at It in the best posslide li^hl we can, iiiaKe all the excuses for It wo can, it is still a tax ui)oii industry, a tlnc In other words on superior ability, and as such reduces wealth by limiting ars to operate in f,i\or of the pro fesslon and tlie cl(>rk as ajialnst tlie mer- chant l>y taxinjr the forniei- upon bis in- come and the latter upon file whole or chief source of his income and each at the same nite, such is not the case, the mer- eliaiit actuall.v transferrliitr it to ills cus- tomers, since it is one of the f.actors wlilcli must determine the price at whidi lie can afTord to sell his pjoods. EXPLANATORY ARGUMENT. At the risk of appearin}; leufithy T would like to enlarge upon this, r'aiiital expects some return wlierever Invested, the lowest price •genernfly accepted for its use Is where the risk of its loss or depreciation Is which can be tax, and none least, wlilcli in this instance I will cite as I'.ritlsh consols, and the lowest return at say, '2 j)er cent.; from these up to inort- piK'cs and similar securities at •> per cent, or 7 per cent., there .ire a liost of In- vt'slnieiits, vlcldin^ various reinrns accord- Inu to tlieir deslr.-ibiiity, llexibility and the (lenient '»f risk accompanying them ; there- fore to atone for the risk of its venture in mercantile pursuits, It follows the re- turn there must be >;reatest. This is true whether the returns from other investments be from 'J per cent, to 7 jier cent., or more or less ; tliere can be no arbiti-ary sum. because when the returns from inveslnieiit in mer- cantile pursuits rtd'nse to yield to c.ipltal sntTi(ienlly more than tlie investments wliich do not jiiirtake (d' file same ele- ment of risk, caidtal witlidraws only to compete witli itself in the safer ti(dd iintll the returns tiiendn are forced down to si'.cii a level !is drives It bjick to lMisliies>» risk (.'1 process hastened by the scarcity due to its temi)orary iibseiicei. for a lower return than it previously received in tlic siinie Held, but still In the sami' ratio to the safer Investments which it previously I'ore, AVIille capital therefore has the poten- tiality to ei'.rn s|)ecific returns foi- its use. accordiii'T to the risk, any tax upon it JicfM as an exiieiise of maint.ainin;; It in its sphere, and must lie of enhanced profits, refunded in the f(U"m ANOTMEIJ I.\K(JIA1JTY. There is an ;il>parenl exception to this wliicli. lio\\e\ei-, is really destroyed by tlie (deiiK^nt of in.iusflc<> under which it would operate, for while taxes upon merchandise and machinery eqmilly distriliuted simply increase the cost of iroods to consumers. It is manifest that where they are unequally dislriltuted i( is impossible foi- the mer- (li.int or miiMiifacturer who is f;ixed lieyond bis .iust sli.are to recover such tax from his ciistomer-^. while his competitor who Is t.'ixed below his share can rei'over from his customers :in lie would ha\e |(,ald under strietly eiiual tax.ation. and actually profits by the ine(iu;ilify of the systi'in. A train, let us tr.v to trace its elTects upon the iiriinitive industries of which farndmr will ser\'e as an ilbisfratioii. The p(i-sfui;il property tax imposes Itself first upon the f.-irnier and sidds to the price he must ol)tain from the factory for his pro- ducts. This tax reliii|)oses Itself in tlw^ fartofy where the farm product is con- \(ited into usable fofin. ;ind ajrain when the flnislHMl article forms jiart of a mer- cliani's stock, which article finally reaches the I'onsiinier with i\\\< t:\x tliree tim(>s im- posed, tojri'ther with tlie usmii rate of nro- tir tlicreoTi. The increase in pric(> resulfliii.' therefrom lessens th(> qujinfifv of farm prodiafs the consumer c.-ui afford to .ac- Muire lessiMis tlio sales of the merchant and his orders from the f.-ictory. tinjilly/ reachlnir the farmer by curt.ailinir the de- mand for his products, forcins: him to con- tent hiiiisidf with less of the products of other Inrlustries and takin-jr one step in the direction of hard times. IT REDT'CES rONST'MPTTON. The personal property tax. In so far as It acts upon production, reduces consump- THK COST OF TAXATION tioii, uikI iiloiiu witli every other tax that ^Iterates in tlic same way Is responsible for its share In I he cause of industrial ile- |'r«ssloiis. ;>iiotlier tiling If there is any elTlcaey in tlu' taxation of foreign prodnets for the enconrajrenM'nt of home imhistry. e\ i-ry cent of Internal taxation thai can be af all his favorite theories of taxation. that the wealth of a eommunily is actually Increas- ed l»v credits. This Is not true: debt can- not inci'case the general slock of we.iltb. although the system of oxtendln;; credit may op<'rate in this direetiitn to Increase wealth credit beln^ itrlmarily the In- Htrnment by which capital Is transf<'rred. for a time, from the liands of men who eaiinot use |( most productively Into the hands of men^ who can. Kvery eredlt nn piles !i debit, one jiives exactly what ihe other fj:ets. and to this extent the property In tlie hands of al debtor really heloiiKs to a cicditor. The records of expe'ience leem with il- lustrations of the utter Imiiosslblllty of e(initablv taxinir weiilth as represented by <'redlts -th(> experience In many eoni- mnidtles l)einir that the assessors eaiinot find r> per cent, of such wealth, while In e\-ery case where an attempt Is made to assess it thei'e is exhittlted a r(>miirkable power of seeretln^r Itself, and it^ is almost ami.slnir to read accounts of how such wealth dlminislies or disappears entlrelr under the influence of n tax. TAUIFI' TAXKS. While all that I hav(> said of the per- sonal i)roiterty tax would argue for its abolition, tl 's is not reeommended solely bcc.'iuse of the facility and i)erslstenry with which It is evaded, but upon the broader ^'rounds that every exemption of personal property would fre(> business to that extent, thereby stimnlatin^r and en- conragint; the prodiietlon iiml distribution of wealth, which wovdd result in more regular employment to the mass(>s at re- munerative wag«'s. In dejiling with th" subject of taxation it is hardly ))ossil)le to omit any reference to the (piestlou of the several customs duties, although f have felt constrained to do so from the fact that T ;im trying to de;il with genera! principles and would prefer to avoid any- thing which might have a tendency to I)ilng the discussion within the domain of l>arty politics. The reasons for maintaining the tariff may be gathered from thi> objections gen- erally urged against its abolition. The first is that their removal would serionslv im- pair, if not ruin, many of our home in- dustries, which are presumed to recpiire their protective feature, ami the second, that tliere Is no other popular way of rais- ing the revenue wliich is yielded bv the tariff. The first is far too complicated and de- licate a question of trade policy to adi.nt of Its discussion here, many of Its ad- herents holding that the tariff is not a tax at nil, but merely a means of fosterlnj; In- dustry, and believe that it should be gratlnally dispensed with ,when no longer needed. IMMUKCT TAXATI«)N. The sccdiid. however. In so far as It In>- plles taxation for revenue pui"poses, Is dls- tlncily \\iihin the scope of our euipiiry. In th<> first pbH'c it is :in indirect tax almost huariably shifted by the tlrst payer from himself to others. William I'll I. in a speech in tlie Itritisli rarliaiiieiii, is rr'purled as ha'.liig said : "To h'vy a direct tax of 7 per cent. Is :\ dangerous experiment in a fr •ountry, iiiid may cxcile resoit. but there Is a me- thod b.v which you can tax the last ran from the bay will not know lli.'it the hai-il times are caused by taxation." Tile very irony of this |ilea for indirect lax.ition tends to emphasize the importance of tax.-ilion as a Labor ipiestlon. When 1. axes are laid indirectly upon consumption, whoever works for a living, whether he own property ov not. is a taxi)ayer, and the stealthy maniK-r in which such taxes iire drawn from the I.iboring classes is largely responsible for the suiiposltion that those classes contrilmte nothing to the snpiiorl of iroveriimenr ami for tlie pro- position sometimes evoked that they should aceordlnirly b(> disfranchised. TAXES rrON TMrORTS. Taxes uiion imi)orts by whomsoever p.-ild lo the Covernment are tinaliy collected through the relailer from tin- consumers who buy the goods, and 11)1011 these con- sumers, though they imiy not be accounted taxpavers. the whole burden finally falls. Not only this, however. The profits of dealers upon the Indirect t.ixes which they piiy in the first instance are plainly n charge upon consumers. THE FINAL riTRCIIASEU PAYS. As each import tax enters Into the cost of ;in article as it awaits the final pur- chaser in a retailing establishnient, the laws of competition permlr Uw merchant to exact from his customers not only the tax, but also the ordinary rate of profit In his line of business upon that tax. Conse- (inently tlie cost of imported commodities lo the' consumers consists not alone in the cost and profits involved in acquiring and delivering the goods, nor even of that .'imount plus the taxes, but of that amount plus the taxes, plus tlie profits upon those taxes. The enormous expense attendant upon the collection of Imiiort duties, all of which must be borne b.v the industries, and the reduction in the ranks of producers conse- quent upon the army of men engaged in operating the system, is in itself a tax by no means Insignificant enough to dis- regard. The inquisitorial nature of the s.vstem. conducing to servility on the part of Im- porters and arrogance of the customs offi- cers, the opportunity it affords for petty s THE COST OF TAXATION tills hum lyramiy or loiriiiilloii on thf l)iirl of the iilTlclals, llu' iiiju.sllct' to tin- poorer dnsst's of ilif lux iK'conlliiy; to wcIkIh mnl men- sure, llle iMIerilllll^'lillt,' oC piillllcs ulili liiislness anil (lie coiislaiil Inlerl'ereiice with |iriMliieiloti anil consiinipiiuM, all ihese are so jienerally eoncedcil as ohJei-iioMs to I lie liiipiirl lax. eonsiilereil suiely as a means of raising: revenue, thai they i I im fur Ihel' mention here. I.NLAM) UKVKM K I'AXKS. The inlanil re\cnue taxes, cojishjeied nier«>ly as a form of taxation, are similar in their operation ami in tlieir effeets. and ill thus elassiii;; tliem I wish lo be elearly understood as ol'leriiiH' here no erltieism upon them ill so far as their purpose is to supervise uiid restrict ihe m.iiiufaeiure. sale and eonsumpiioii of tohaecn iind iiiloxieanis, hut ill so far as lliey are suceessful in they only serve to suhstantiale tin- e lliat a tax upon tiie iieeessaiies of lift crates to reduce the quantity of them whicli a poor man cuu afford to procure. Let mo interpost' Ihe sniiposllion llial a cliaii;;e were ciii'cied in the mt'lliod of col- lectinj,' tlic (iovernmeiii tax on imports. If instead of beiiiK inierceptcd ut Ihe custom house all tlie .irticles iiuporled by our largo retuiliiij; oslalilishmciits wen; delivered to Ihom free of duty, and (Jovernnieiii offi- cers were stalioned at their doors to col- lect from the liiial purchasers as ihey were leaviiij,' the amoiints they now |)ay as part of Ihe price of the j,'oods, how loii;; would it talvo the people to stop tlielr grumbling about liard linios and devote sonic sijjniti- cant atteiitiou t(» ilie.so ta.xos wliicli now Ihey liardly know they arc payiiiK? TAXIOS OX I.MI'ICOVIO.MKNTS. We proceed to consider the taxation of improvemciils upon iaiid-cblelly buildings — a tax wliicli seldom is considered upon its merits because ii is erroneously idcntiliiMl witli tile tax upon the value oi' land, and classilied as real estate. The laxation of iiiii»rovomoiits uiion laud Is in many ways attended with injurv to the public Kood. In the llrsl place 'tills again is an Indiroct tax, shifted in tlie cases of houses, from tlio owners to the users, lessening tlieir ability to acquire the jiroducts of industry, and bearing with more severity upon the poor than upon the rich; shifted al.so in the case of buildings occupied for business purposes, just as are tlie personal property and taritf taxes in tlie increased cost of goods to eonsumers. Most comiuoditi(>s being produced and re- tailed under circumstances of lioeii compe- tition are sold close, consequently the taxa- tion of the factory or store expresses itself in the price of goods more decidedlv than it may appear to upon a mere cursory ex aniimition of the question. That beautiful buildings are a source of constant instruction and delight is evi- denced by tlie pride with which they arc pointed out to visitors in any large' city and the uninitiated would naturally suii- pose their erection was encouraged in every possible manner; but the very rever.se is the case. We fine the man who puts up any liind of a cheap, unpretentious building, and we tine hini heavier when he erects a beautiful structure, and continue to fine liiin every year until it is pulled down or destroyed by fire. A.N UNJUST SYSTi;.M. We line tile mail who builds a verandah to Ills house, who paints and i)eiiuilties an old dwelling and replaeis old windows wllh new plaie glass, or makes any other im provemeiils ilieieio; and wiM'.se tliaii thai, I lie Inslaiiees are uol few when the ex- peiidilure of one or t w o liuiidred dollars in making the front of a iioiise neat and agree- able has been followed by an increase of a thousand dollars or more In the assess- iiieiii. this bringing the lax up to 1- or 1"> per I elil. of tlie actual cost of llie improve- ments, ami this seeming incongruity and injustice is Inherent in the system. 'I'hus the taxation of buildings and iniproveiiicnls upon land is a constant and severe discour ageiiieiii lo the erection of buildings, and particularly to tlie developnieiit of taste ami be.auty in archiieclure. and milllatea ag;llnsl the eoiistanl elilploynielll of all wliose bnsiii"SN it Is, or niiglil be, to design, coiistruei or repair, and to tliat extent its operaiion tends to curtail the demand for the articles which they should consume. :ind is coiisequeiilly relleclcd in every line of luisiiiess wliicli is unnaturally depressed to that extoni. u\i] i:vii,. liuiie recently the I'ditorial colunins of Saturdiiy Niglil drew attciiilou to the evil effects of Hie old. decayed and unhealthy dwellings ill eerlain parts of tlie city. The lax upon iniproxemeiits is not without its resiionsibility for Ibis, because it would line the owners of these rookeries for mak- ing any substantial and visible improve- nients, and line them heavier still for de- stroying tliein and erecting clean, «'omfort- alde lionies U|)oii their sites. Tlio users in these cjises not Iteing of the class from which these lines e.ni be so readily collect- ed, there is every iiidncemeiit for the own- ers to maintain tliein as buig as possilile In tlieir present sipialid and uiihealtliy condi- tion, and If we argue lliat a better class of people would be at traded to these new or imiiroved dwellings, able and willing to pay lo the owners a return coniiiieiisurate upon their investment, conij arcd with wliat they now recoivo. we arc still left witli tlie problem, under I'xistlng conditions, of how- to provide for the class which now occupies them. ALU IIAVU KVILS. We liave now considered almost every Im- portant fiuMii of taxation, we have tried tlioni all according to tlie canons of taxa- tion, sotting fortli the principles coticnrred in by some of the most eminent economic writers, and we have found them all want- ing. Some of thoni appear to liavc violated , every principle of equity and justice, all of them liave \iolaied some of thesi? prin- ciples. \N'e have found them all to be taxes upon industry oi»eratiiig to cause under con- sumption. t!io real name for business de- pression, generally attributed to, and agreed to exist through, what I believe is mis- called "over production." We are left to consider but one import- ant subject for taxation, and If we fall thorein to find a species of taxation which automatically collects from every citizen an amount almost exactly proportioned to the benefits he derives from government, we THE COST OF TAXATION iiiiiHt inrcr tliiit, taxation Ih tiien-ly n gnwH and a s<*raiiibl(>, incapable of bciiiK <'oi>- fornii'd lo till' prInc'iplcH of Jiiwtlci' aiiU (Mjuity. lint Ih tlii8 really hoV THE Ti:M>KN«V. Tlie tendency of eidiglileni'd la\v-nialiln« Ih to llx laxcH mainly on real eHtale, tlie land valni- aH dlHtin^ulsbed from tb*> Ini |»rovemcnl«, and wbalcvcr view we may lalve of I be real or assumed defccl« of .sncli a tax, it argucH a lendenr the further relief to bo afiforded by the greater concentration of taxation upon land values would be such as to jus- tify such a measure, should follow from its examiualiou according lo the canons pre- viously enunciated— ("on venlence, Economy, '"ertaiuty, Kiiuallty. Its convenience is exemplUied in tlie fact that it does not Increase the cost of pro- duction, nor Interfere with the process of distribution, since It would divert to Gov- ernment uses a portion of a fund which now goes to the Individuals In the form of rent, the volume of which Is regulated by til* law of supply and demand, and is not siisceptllde to arbitrary increase, as may be seen from the fact that rent now ex- acts to tile full e.\t<>iit of lis ability. Its economy consists partly in the fact that its subject is tlie most easily seen and valued for assessm«>iil of all classes of tax- able proiterty, reciuiring tlie withdrawal of the fewest men from tlie number engaged in production, and |)artly In the fact that, being a direct tax, there is little room for it to cost the taxpayer niiicli in excess of wliat is received by