THE ETHICS OF TAXATION. we THE remark that Goldsmith in one of his essays lets drop apropos of the history of a tavern is essentially true of the history of taxation,-it "is a true picture of human infirmity," in which “ see every age equally absurd and equally vicious." If this seem too disparaging to the present age, consider for a moment the most obtrusive features of taxation in the world of to-day, or, rather, the most obtrusive features of the tax systems of the most progressive nations. For, despite its historical identity with early taxation, we may no longer designate as taxation the habit of the Orient, where taxes are indistinguishable from blackmail, and where the rich disguise themselves in rags to escape the exaction of the publican. Nor may we longer account as taxation the archaic methods in vogue in the land of the Grand Llama, where the tax-collector, happening upon the wayfarer, accosts him with complaints of the cruel rigor of the winter, and, after a minatory flourish of his matchlock, remarks, "Thy cloak, venerable brother." Process like this is rendered unnecessary in civilized lands by the proper extension of indirect taxes. Instead of allowing the sovereign to blackmail the subject, we graciously permit the owner of personal property to determine the amount of his contribution to the public treasury, much as he might fix upon the gratuity to his waiter in a restaurant. Seriously considered, the justification offered for indirect taxes is a most curious commentary upon our system of selfgovernment. In the United States, for example, not far from half of the government's total revenue is obtained by disguising taxes in the prices of merchandise, either duty-paid imports, or liquors and tobacco freighted with the weight of the internal revenue. Despite the incidental advantages such taxes afford in consulting the convenience of the payer as to the time and the amounts of particular payments, the great reason for the existence of these taxes in every country is their power to conceal from the governed the real cost of supporting the government. The people, in whose interest the government supposedly is conducted, must be induced to pay their taxes in an unconscious condition, "lest at any time they should see with their eyes, and hear with their ears, and should understand with their heart, and should be converted" to a belief in another than the dominant programme of expenditure. If, on the other hand, we look away from our Federal taxes to our system of state and local taxation, the crying inequalities of the latter are only too well known. The millionaire émigré too frequently escapes his just contribution, while the widow's mite and the orphan's crust pay the very uttermost farthing. Had the Lord questioned Mephistopheles upon the subject of taxation exclusively, the verdict of "herzlich schlecht" would have needed but little qualification. Adam Smith, the sagacious father of political economy, saw the situation in his day, and was sad, but the consolation that he offered then is about all we have to-day. "If a nation," said he, “could not prosper without the enjoyment of perfect liberty and perfect justice, there is not in the world a nation which could have prospered. In the political body, however, the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man; in the same manner as it has done in the natural body for remedying those of his sloth and intemperance." Whatever the causes for the persistence of injustice and double dealing in finan cial administration, one thing is certain, - that these evils are not due to the absence of enlightened inquiry into the nature of fiscal problems. One might in this connection almost echo the remark made of the medieval Italian cities, that nothing could surpass the excellence of their treatises on money, or the wretchedness of their actual currency. Of the extreme thoroughness with which the diagnosis of the financial status of the body politic has been made, one is reminded by the appearence of Dr. Weston's recent volume.1 This work does not import into the discussion any new practical plan for securing equity in taxation, for substantial agreement upon the practical ethics of taxation had long ago been reached. That taxes cannot properly be regarded as an insurance premium paid to the state for protection received, nor as a commercial equivalent for benefits enjoyed (except in case of special assessments levied to pay for public improvements to private property), — upon these points there has been for a long time substantial agreement among serious students. And, apart from those obsessed with the idea that society has no claim upon its members to take aught in taxes except what society is first alleged to have created in the rental values of land, universal homage has been paid to the dictum that contributions to public needs should be determined by the contributor's ability. This canon of ability has hitherto been treated as sufficiently explicit as to the matter of justice in taxation. Indeed, the ingenuity of the text-writers has been mainly bestowed upon finding concrete indicia of ability, -such as income, property, expenditure, and the like, — and upon judging extant tax-laws by their conformity to such criteria. Very different is Dr. Weston's inquiry. He has undertaken rather to show how the principle of justice in 1 Principles of Justice in Taxation. By STEPHEN F. WESTON, Ph. D. New York: The Macmillan Co. 1903. taxation stands related to what might be called the metaphysics of finance, and how the implicates of the science of finance involve the fundamental theory of the state and the problem of human personality. To the economist and doctrinaire financiers, accustomed to grovel here below in the sordid realm of material wealth, and all the while disturbed by the brawling of the market-place, this aerial flight will prove a much needed boon. Their lungs need expansion in a rarefied atmosphere. They need to rub their eyes and sit up and read that "taxes are in fact voluntarily paid, even though the attempt is almost universally made to evade a part of them, or a protest is made against their amount." They need to learn that in a broad way conscious membership in a state implies acquiescent coöperation in supplying its needs, and that, therefore, it is proper to say that taxes are voluntarily paid, in the Hegelian sense previously referred to in Dr. Weston's essay, according to which "the criminal wills his own punishment." There is here a striking coincidence, one would think, between the Hegelian and Pickwickian senses in which propositions may be understood. It will doubtless stir the cynic devil in the blood of the typical economist to read at the end of sixty-seven pages of idealistic philosophy Dr. Weston's triumphant contention that he has demonstrated the intimate metaphysical relationship between Economics and Ethics. But this again is precisely what the vast majority of economists need, to have the truth seared upon their consciousness that the scientific method of measuring the utility of wealth, where previous abstraction has been made of the moral character of its constituents, can afford no fundamental basis of public policy, and can issue no imperative word of political guidance. In the face of the supreme questions the oracles of expediency are dumb. But fully to fathom the iniquities that attach to taxation we must leave the financial experts to their own devices, and condescend to men of low estate. It may be that the matter will become somewhat clearer if we consider the average taxpayer, first as an exponent of conservative class prejudice, and second as an example of individual frailty. The first will explain why unsparing reform of our system of direct taxation is so unlikely; the second will make clear why our system of direct taxation is so bad. The taxpayer is above all things a conservative animal. Before his name appeared on the assessor's roll, he was, like Stevenson's bachelor, "fit for heroism or crime; but taxes, like conscience and matrimony, make cowards of us all. Let the average citizen interrogate his own consciousness and ask, "Am I willing to risk a radical change in our system of taxation, by which doomage shall supersede self-assessment, and personal property in the hands of the holder be exempted altogether, this in order to secure a thoroughgoing reform?" and the answer will almost infallibly be in the negative. We are determined at all hazards not "to fly to evils that we know not of." We must be dragged to them, if we ever reach them at all. In a way, it is really remarkable how certain parables of caution have become incorporated in the canons of our political scriptures. One cannot propose the smallest innovation, except in accentuating our truculent policy of foreign aggression, but that our political doctors take us to task by recounting to us the fable of the Dog and the Bone, and beseech us not to sacrifice the reality for the shadow. They never seem to reflect that a plunge in a clear shining stream may often be worth the sacrifice of a dry bone. They are continually exhorting us "To take the Cash and let the Credit go," This reluctance to reconstitute the taxmachinery is the more singular from the fact that those who are unwilling to risk a substitute grumble over the imperfections of the present system as loudly as the reformer who is bent on radical readjustment. The typical yeoman and the well-to-do citizen of the lower middle classes, both of whom through their frugality own a modest homestead, but little beyond, will bitterly oppose the exemption of any form of personal property. And yet individually they will often assent to the dictum of the West Virginia Tax Commission, - a veritable locus classicus in the literature of taxation, which declared 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 Sundayschool." So far as taxation is concerned, our electorate presents the incongruous spectacle of radical prepossessions coupled with a paralyzing distrust of all efforts at amendment. The doctrine of pro forgetful of the fact that we really have gressive taxation, that the percentage of to fill out an inventory of all kinds of personal property, itemized so minutely that through its meshes absolutely no chattel or credit can escape. He is fre clare over his own signature, and not uncommonly upon oath, that the list returned is complete and literally correct. Under these circumstances the taxpayer almost universally commits deliberate perjury, and omits, or knowingly undervalues, what personal property he possesses; and moral paradox that it is taxes should rise as property or income is greater, is to the man in the street an axiom. That a man's ability to contribute to the public chest is more than doubled when his income is doubled-quently, if not generally, required to dea proposition to the classical economist a stumbling-block, and to the hard-headed logician foolishness has to the ordinary voter of reflective turn of mind the stamp of self-evident truth. The Philistine assesses lightly the sacrifice of what he designates superfluous luxuries, which, under progressive taxation, the well-conditioned classes would have to submit to. The man of common clay has little inkling of the real pathos of Motley's cry, "Give us the luxuries of life and we will dispense with the necessities." He finds it not a bitter, but an easy thing to look into the sacrifice of happiness through another man's eyes. But despite his radical convictions, extreme and indefensible as they often are, he shakes his head at any proposed change in our system either of direct or indirect taxes, both of which notoriously impose the heavier relative burdens upon the weaker shoulders. But the average taxpayer represents not only the conservative apathy of his social class, but another constituency as well, essentially a pocket-borough, to wit, himself. Despite the fact that, under the usual process of assessing real estate, the taxpayer has comparatively little power over his assessment, when it comes to the declaration of personal property, he has almost unlimited liberty of "writing himself down," not an ass, but a pauper. In a sense there is no more curious problem in social psychology than the way in which the ordinary taxpayer interprets, and the degree in which he discharges, the duty that rests upon him, of contributing to the expenses of the government. The elements in the situation, so far as the taxation of personal property is concerned, are these: the individual is confronted with his duty to an abstract personality, the government; he is required thinks none the worse of himself for it. It has long been a truism among students of American finance that the tax on personalty, as various official reports have it, "has in effect become a tax upon ignorance and honesty," "a school of perjury promoted by law," " a premium on perjury and a penalty on integrity;" and that, when the taxpayer's conscience is tender, "virtue is perforce its own reward." There is little use in drawing a long face over this situation, or of saying of all men at our leisure what the Psalmist said of them in his haste. The truth is that what we really need is a new code or digest of what might be called Decalogical Limitations. The leading case, so far as the commandment of veracity is concerned, has already been decided by a learned judge who refused to admit as proper evidence of a witness's general reputation for veracity the tax-duplicate which said witness had returned under oath. The common sense of mankind will support this decision. "In lapidary inscriptions," as Dr. Johnson has declared, "a man is not upon oath." Nor, we may add, is a fisherman when questioned as to his catch; nor a woman, if one is graceless enough to ask her age; nor, of course, a God-fearing burgess when he fills out his tax-bill. Must one always squat in the dead centre of verity, and never hover upon the confines of truth?" Does not Jove himself laugh at lovers' vows? Why all this simulated concern over taxpayers' oaths? If "charity is a demand for beggars," self-assessment is a demand for perjury. That the supply of either should fail to be forthcoming would be an anomaly indeed. Nor let it be fancied that this vice is wholly a masculine peccadillo. If one would see what Lombroso, the Italian criminologist, calls the Female Offender, let him but visit the custom house. The exemplary mother of a family is returning from abroad, and with a ferocity which quite overpowers the protest of her husband's "struggling, tasked morality," she delights to outwit the ferretfaced inspector on the dock, at the cost of asseverations which would have put St. Sapphira herself to the blush. The conclusion is plain. The law, as some one has well put it, is such a fragile thing, that when men take it into their own hands, it is almost sure to get broken. If we want to continue to have our tax-laws broken at the expense of individual veracity, all we have to do is to continue the present arrangement of self-assessment or declaration of personal property. If it be asked what is the prospect of an intelligent reform of taxation, the answer must be that the effective impulse will probably come only from a sensibly increased pinch of taxation. Peaceful reforms, like warlike revolutions, crawl upon their belly. Jeshurun may have "waxed fat and kicked,” but modern peoples generally reverse the scriptural order. The Revolution in France and Chartism in England were the significant precursors of the two greatest tax reforms of modern times. This tendency of social unrest to unsettle social injustice long antedates our modern democracies. As far back as the fourteenth century in England, the author of Piers Plowman was enough of a political philosopher to observe that, when the fluctuating tide of prosperity is once past, Demos becomes restless. "And thanne curseth he the kynge and all his conseille after, Suche lawes to loke [enforce] laboreres to greve." Fortunate is it for us that the lines upon which the reform of direct taxes must proceed have been so clearly marked out, and that some of our commonwealths have already taken pronounced steps in the right direction. The taxation of real estate by and for the local governments exclusively, the practical exemption of credits and chattels in individual hands, and the relegation both of the administration and the proceeds of corporate taxation to the state governments, foreshadow the financial reform to which we may some time attain. But if the vision of an equitable system of direct taxation seems not impossible of realization in the proximate future, the prospect for a similar adjustment of Federal imposts is as yet beclouded and dim. The craft of state finance and local finance ply the sheltered channels of fairly stable and calculable expenditure; the national ship of state has to breast the uncharted waters of international politics and encounter the storms of war. When to the difficult task of providing sums whose aggregate must vary greatly from year to year, there is added the additional task of giving through taxation a constant protective stimulus to certain industries, the double and often conflicting demands made upon our Federal financiers are obvious. are obvious. Were the protective function of our Federal taxes done away with, while there would still remain perplexities great enough in all conscience, one of the unknown and baffling factors in the problem would be eliminated. For over a generation many unselfish and thoughtful American citizens have cherished the hope and the aspiration that the intrinsic injustice of our national system of taxation might be extirpated, not at the unreasoning anger of the victims of its oppression, but at the |