Within the State.—­Local and state taxes are all direct.  They are meant to be proportioned to a person’s ability to pay.  In fact, however, a person’s tax is based upon the value of his discoverable property.  The value of such property is estimated by local officers called assessors.  The estimates of these officers are reviewed by the local board, and the reviewed estimates are again examined and equalized by the county board.  But assessors, local boards, and county boards are all tempted to make the estimates low, to reduce their share of taxation for the use of the state.  So a final review is made by the state board of equalization.  The final estimates being reported to the computing officer, and the various sums to be raised having been reported to him, he finds the rate of taxation, computes the taxes, and turns the books over to the collecting officer.

Certain classes of property are exempt from taxation.  Among those usually exempt may be mentioned property owned by the United States, the state, or the municipal corporation; church property; educational and charitable institutions; and a certain amount of personal property.  United States bonds cannot be taxed.

By the General Government.—­The sources of revenue to the general government are:  1, customs; 2, excises; 3, direct taxes; 4, public lands; 5, receipts from post offices, patents, copyrights, fines, escheats, &c.  The last two classes cannot be called taxes.  As it cannot compel a state to collect taxes for it, the general government is practically barred, on account of expense, from laying direct taxes.  So that it is practically true that national taxation is all indirect.  The “customs” are duties on imports.  The “excises,” or internal revenue, consist of taxes on tobacco, fermented and alcoholic liquors, &c.

A Difficult Problem.—­Though taxes have been levied for untold centuries, it is still one of the unsolved problems how to levy them so as to be just to all.  Much progress has been made, but entirely satisfactory answers have not yet been wrought out to the questions:  What are the proper things to tax?  For what purposes should taxes be levied?

HOW THE GOVERNMENT BORROWS.

When an individual wishes to borrow money, he looks around for some one who has the money to spare and who has confidence enough in him to let him have it.  He gives his note or bond, and gets the money.  Similarly the United States borrows.  The secretary of the treasury looks for lenders in the money-centers of the world, consults great banking-houses, and sometimes advertises in newspapers.

A private borrower pays for the use of the money, and similarly the debt of the United States is largely interest-bearing.  The notes called “greenbacks” bear no interest, because, being legal tender, they circulate as money, as do also the gold and silver certificates of deposit.