TAXATION MUST BE JUST

A system of taxation must be just if it is to meet with popular approval.  It is not easy, nor indeed possible, to devise a system that works with absolute justice in every case; for the assessment of taxes is a complicated process, and reliance must be placed to a considerable extent upon the honesty and conscientiousness of individual citizens.  The people are satisfied, however, if they see that every reasonable effort is made to secure justice.

The first essential in a just system is that every citizen shall bear his share of the burden.  Therefore the paying of taxes is compulsory by law.  It is also just that each citizen shall pay only in proportion to his ability.  These two principles of taxation are similar to those applied in the selective draft for war service.  It is in assessing taxes according to ability to pay that one of the principal difficulties appears.  But an effort has been made to do this by the following procedure.

HOW THE AMOUNT TO BE RAISED IS DETERMINED

It is first necessary to know how much money will be needed by the government.  Each year, therefore, the heads of the various branches and departments of government make an estimate for the coming year, based on their knowledge of past expenditures and present and future needs.  Such estimate can be made intelligently only when there is an accurate and businesslike system of keeping accounts and records, and a well-planned budget system.  Unbusinesslike methods of keeping accounts and the lack of a budget system have been among the chief weaknesses of our governments, equally characteristic of local, state, and national governments.  Efforts are being made to remedy these defects and are described in Chapters XXV, XXVI, and XXVII.

TAXES ON PERSONS, PROPERTY, AND PRIVILEGES

The second thing to be ascertained is the ability of each citizen to pay.  In some states a uniform Poll tax is assessed upon every adult citizen.  This is a tax upon the person and usually amounts to about two dollars.  Only those are exempt who are incapable of self-support.  But the chief reliance is upon a property tax.  State and local governments depend principally upon a general property tax, for which purpose property is divided into two kinds:  Real estate, which includes land and buildings, and personal property, which includes furniture, tools, livestock, money, and valuables of various kinds.  In addition to the general property tax there may be taxes upon incomes and upon inheritances.  There are also license taxes, such as dog and automobile licenses.  Finally there are taxes upon certain privileges which are bestowed upon the individual by the community and have a money value.  Of such a nature is the license tax imposed upon a peddler or upon a person who maintains a market stand on the public street.  Such, also, are the taxes placed upon corporations for the privilege of using the public highways for car tracks, water mains, or telephone poles.