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going too far in the average state.1 In short, there is a logical and important connection between business or property and particular divisions of government. The true method is to ascertain the character of this relationship and assign the business or property, for purposes of taxation, to the proper governmental division. Then if the state has too much revenue, it may be apportioned to the local districts. If it has too little, the remainder may be raised by taxes upon the equalized value of real estate. Experience has shown that it is a comparatively easy matter to equalize real estate values among counties or similar divisions, with all the accuracy necessary for the equitable distribution of a light tax.

QUESTIONS

1. Why are the terms "direct" and "indirect" taxes particularly vague and equivocal?

2. Explain why no protection is given the home producer when the import duty is shifted upon the foreigner.

3. What is the greatest fiscal defect of American customs taxation? Can this defect be remedied?

4. Are excise taxes ethically justifiable? Do they materially check consumption when imposed upon alcoholic beverages and tobacco?

5. Do you know of any state which levies an income tax at the present time? Is the tax successful?

6. What arguments in favor of introducing a federal income tax can fairly be derived from European experience?

7. Should income representing not earnings but simple return of capital be taxed? Should income which is saved and immediately reinvested be taxed? Is it not double taxation to tax savings and the earnings from such savings as well?

8. The inheritance tax has been justified as a compulsory payment according to accidental or suddenly enhanced ability. Is this explanation logical?

9. Should corporations be taxed at the same rate as unincorporated business concerns? Should any definite relation between the two kinds of taxes be maintained?

10. Contrast the taxation of national banks in your own state with the taxation of trust companies, ordinary commercial or manufacturing corpora tions, and unincorporated business concerns.

1 Although the recommendation of the California Commission is doubtless justified for California by peculiar local conditions.

II. What difference is there between real and personal taxes? Are real taxes inequitable?

12. Are assessors elected or appointed in your own state? Do they require taxpayers to declare their personal property in great detail? Do the local assessment rolls contain separate figures for real estate and improvements? Is the property of non-residents specially designated?

13. Why is the general property tax particularly unsuited to the taxation of business and professional men?

14. Should the federal government, if it possesses the power, make the taxation of interstate commerce corporations uniform throughout the United States?

REFERENCES

BULLOCK, C. J. Selected Readings in Public Finance, Chaps VII-XIX; and "The Taxation of Corporations in Massachusetts," Quarterly Journal of Economics, Vol. XXI, pp. 181–246.

ELY, R. T. Evolution of Industrial Society, Chap. VII, "The Inheritance of Property," pp. 271-314.

HOLLANDER, J. H., Ed. Studies in State Taxation, Johns Hopkins University Studies in Historical and Political Science, Series XVIII, passim.

MCCREA, R. C. "The Taxation of Personal Property in Pennsylvania,” Quarterly Journal of Economics, Vol. XXI, pp. 52-95.

Report of the Industrial Commission. "Taxation," Vol. XIX, pp. 10311069; "Taxation in Various States and in Canada with Special Reference to the Taxation of Corporations," Vol. XI, Part VII; "Taxation of Transportation Companies," Vol. IX, pp. 1006–1091. Reports of State Tax Commissions. Upon the topics indicated see "The Massachusetts Tax System and its Workings," Massachusetts Commission of 1897, pp. 1-73; "Public Service Corporations," Wisconsin Commission, 1901, pp. 72-121; "Taxation of Credits," ibid. 1903, pp. 88-144; "Mortgage Taxation," ibid., 1907, pp. 303 et seq.; "Railway Taxation," Ontario Commission, 1905.

WEST, MAX. The Inheritance Tax, Chap. VII, "Inheritance Taxes in the United States," and Chap. IX, “Economic Theory of the Inheritance Tax."

BOOK IV

HISTORY OF ECONOMIC THOUGHT

CHAPTER XXXVI

HISTORY OF ECONOMIC THOUGHT

The Development of Economic Thought. If society were not progressive, history would be of comparatively little value. The study of the present would give us all the essential facts needed to understand society, and, problems once settled or institutions once explained, the work would not have to be done over again. All this, however, is the very contrary of the truth, so contrary, indeed, that one of the most difficult things that either the scientist or the statesman and reformer has to do is to overcome this idea that institutions are fixed. Society moves but slowly, to be sure, and its development is so much slower than that of the individual that he easily overlooks its changes altogether.

The relation is much like that of a tourist to a glacier. He climbs nimbly over its rigid mass with as little sense of underlying movement as when he climbs the mountain itself. He maps out its confines and its jutting peaks with as much accuracy as the rest of the landscape. He returns to-morrow and next year and sees no important changes, and so thinks his investigation is complete. But let a century elapse, and his map is wholly wrong. Another observer stumbling upon it wonders that a man could have made such blunders, and makes his map with painstaking exactness. But he may be as wrong as the first; indeed, he is as wrong unless he has discovered the cause of the discrepancy. The glacier moves. This slow but constant and resistless motion is the cause of every seam and crevasse, of the huge piles of bowlders at the sides and base, in short, of the great landmarks upon the map. The tourist may disregard it, but not the engineer who shapes the interests of a remote posterity.

The social sciences have a similar experience. Map succeeds map, each claiming that former maps are false, and assuming that

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