state and local governments and 51 per cent of all taxes collected in the country, (1) national, state, and local. The most important characteristic of this tax is suggested by the word "general," the tax is levied in principle upon nearly all property, real and personal, in the hands of the people.

Though the administration of the property tax differs in many details among the states, it is the usual custom for assessors in each community to prepare complete statements of all kinds of taxable property owned by the people of the community. In some states the assessors receive from all residents sworn "lists" of property owned and subject to tax. By the terms of the law the property is supposed to be rated at its true full value, though, by the acknowledged practice of assessors and courts of review, the real rates vary widely from state to state, from community to community, and from individual to individual. On the basis of the property valuations thus made the state and local governments levy direct taxes at a rate fixed from year to year according to fiscal needs. The tax is then collected by local officers, and of the whole amount the portion levied by the county and state is passed on to the designated officers after each minor political division has set aside its share.

As yet few economists who have written upon the subject, and few state officers who have had to do with the administration of the tax, have ever been able to speak of it except in terms of the severest condemnation. Naturally, then, there is now a strong tendency to work away from this form of taxation. Some of the many serious faults which the general property tax has everywhere shown call for comment and explanation.

1. Unjust Apportionment. The first of the defects of the tax appears in the apportionment of the state's share of the tax. Each community has a narrow, selfish interest in reducing its assessment so that it may escape its just share of the tax. The same mean struggle is especially frequent between city and country districts. To correct the evil, boards of equalization. are usually appointed, but experience has shown that such boards usually do their work in a most perfunctory way. Although earnest study of assessments may and sometimes does secure a

substantially just apportionment between county and county, this equalization does not correct the glaring inequalities within particular counties, and even within single assessment districts.

2. Inequality as between Realty and Personalty. In the second place, the general property tax has proved grossly inequitable in laying an undue proportion of its burden upon real property, allowing various forms of personal property to escape with a slight tax or with no tax at all. A secondary result of this inequality is that the rural districts bear a disproportionate burden, since the greater part of the tax-escaping personalty is owned by the wealthy citizens of our cities.

3. Undervaluation of Large Properties.- Very similar to the preceding evils is the further injustice wrought by the tax through the disproportionate assessment of large and small properties. Thus, an investigation in Virginia covering over sixteen thousand pieces of property, showed that while the average ratio of assessed to true value was 33 per cent, parcels worth less than $500 were assessed at 47 per cent of full value, and parcels worth more than $10,000 at only 28 per cent of full value.1

4. Temptation to Dishonesty. It follows from the evils already described that the general property tax leads to a shocking amount of dishonesty, perjury, bribery, and other forms of corruption. Indeed, as one writer has expressed it, "The general property tax has gone far toward making perjury respectable and even virtuous."

5. Fundamental Theoretical Defects. But the most fundamental defect of the general property tax is found in the fact that it is an incongruous mixture of real and personal taxes. Real estate, in a great majority of states, is taxed at its situs, irrespective of ownership or the tax-paying ability of the owner. The personal obligation of the owner to support the government under which he immediately lives is met practically everywhere by that part of the tax which falls upon personal property, personal property paying at the domicile of the owner. This distinction between real and personal property is artificial, Report of the Joint Committee tion (Virginia), 1914, p. 101.

inequitable, and illogically applied. Personalty, as a measure of ability to pay taxes, ought to be accurately computed by offsetting liabilities against assets, so that the taxpayer would pay only upon net assets. Yet no state, with the possible exception of New Jersey, grants full and complete exemption of debts; only three states permit a subtraction of debts from all personalty; the rest either refusing any abatement for debts whatsoever or limiting the abatement to subtraction of debts from money, or money and credits, or other restricted classes of personalty. Moreover, nearly all the states manipulate their definitions of real property in the most discreditable manner, causing many kinds of double taxation. To take a single illustration: most states tax the stock of foreign corporations held by resident citizens, whether the corporation pays full taxes at its situs or not. Many of these states tax their own or domestic corporations at full value, thus indorsing the theory that a corporation should be taxed as a business unit where the business is carried on. Nevertheless, they attempt to tax the stock of foreign corporations when the stock is the only thing they can reach. Some states, though not a majority, actually tax both the shares of stock and the business of domestic corporations, and then wonder that the stockholders attempt to evade the inequitable obligations imposed upon them by law.

Reform of the Property Tax. - This brief outline of the evils connected with the general property tax furnishes us with the key to reform. By far the greatest reform that could possibly be accomplished would result from placing the work of assessment on a scientific basis, by appointing expert assessors under civil service protection, who would give their whole time to the business and hold their places during good behavior. In 1902 practically three fourths of the revenues collected under the general property tax came from the tax on real property. We shall undoubtedly keep the real estate tax. Scarcely any one advocates its abandonment or believes that it will be possible to get along without it; and with trained assessors it would be possible to make a substantially fair assessment of real property. Yet even the assessment of real estate is in most places today

markedly unequal. We spend a great deal of time thinking out ambitious fiscal reforms that will remedy the present system by revolutionizing it, overlooking the fact that the remedy for the deepest and widest evil lies within our reach, neglected and unavailing, not because we are ignorant of its potency, but because we lack the will resolutely to apply it.

At the same time, no assessor, however expert and well paid, can ever be expected to assess all kinds of personal property with even approximate accuracy. To persist in the attempt to assess all the property of every person is simply to debase public morality and convince assessors that nothing short of divine wisdom will enable them to satisfy the requirements of the law. In short, the more intangible forms of personal property, if not all personal property, must be exempted from taxation, and the loss be made up by the introduction of simpler and more workable taxes. Probably the best substitute is an income tax, or what has been called a "presumptive ability tax " based upon house rent, rental value of business premises, salary, or all of them. In individual cases such a tax would violate the rules of exact justice, but with suitable exemptions and proper adjustments it might be roughly equitable.

The personal property tax on business and commercial concerns, with its impossible requirements of stock valuations, taxation of book accounts, bills receivable, and credits generally, should be replaced by a tax on gross or net income, or by some simple form of license taxation. We should then have, in place of the general property tax, a tax on real estate, a business tax, and a personal tax measured by net income or evidences of income. Although the real estate tax would in appearance take no cognizance of mes or debts sec

had acquired ownership, he would be indemnified in most cases for paying all the taxes, by receiving a lower rate of interest on his mortgage than he would be enabled to secure if the creditor were liable for taxes upon that part of the property covered by the mortgage. Real taxes, which take no cognizance of the financial status of the owner, are not inequitable when they are consistently applied and supplemented by a separate system of personal taxation.

All these taxes destined to take the place of the general property tax may possibly, in the future, be assigned to the local governments, although administered in some cases by the central government. If necessary to provide enough revenue for the state, however, a small state tax could equitably be levied upon real estate, as the equalization of real estate assessments among the larger governmental divisions, such as counties, is a comparatively easy matter. Whether the state will be able to get along without taxes upon real estate, depends principally upon the productivity of certain corporation taxes, the proceeds of which belong logically to the state rather than to the local governments. This absorption of corporation taxes by the state is already well under way in the New England and Middle Atlantic states. In 1915, for instance, New York, New Jersey, and Pennsylvania together raised $70,078,685 from special property and business taxes (practically corporation taxes), but only $18,743,626 from the general property tax. In that year Delaware made no use of the general property tax at all for state purposes. However, the breakdown of the general property tax has by no means been accomplished yet. In all the states and territories in 1915, 51 per cent of the total tax receipts came from the general property tax, 23 per cent from special property taxes, 22 per cent from business taxes, less than 1 per cent from poll taxes, and something over 4 per cent miscellaneous licenses. These proportions are based upon receipts. If local revenues were included, the general y tax would appear much more important.

ation Taxes. The exact way in which any corporabe taxed depends upon a great variety of considera