CHAPTER XXXVII

UNJUST TAXATION AND SOCIALISM

689. Justice in Taxation Impossible.-Taxation is an old subject, is always the subject of controversy, and its discusion is always characterized by charges of corruption; and yet not all of the difficulties connected with the subject of taxation under capitalism are to be attributed to the corruption of public officials or the dishonesty of the tax payers. (See Chapter XXXVI for tax-dodging as a cause of municipal corruption.) Assessments are ordinarily by townships, sometimes by counties. Assessments are always supposed to be made for less than the actual cash value. Boards of review, in attempting to readjust the work of different assessors, must do so largely without personal knowledge of the facts involved. State boards of equalization usually have the power to raise or lower all assessments in a given county, but not to enter into the matter of differences in the valuations as made by the various assessors within the counties. For many years in Chicago, if the original assessment had been fairly made in any particular case, the final equalization by the state board would have raised the amount of the taxes in that case to such a rate as to more than absorb the annual property value. In that

city the only way that the individual taxpayer can protect himself from the confiscation of his property by taxation is to make untruthful representations as to the value of the property at the time the assessment is made. All assessments for personal property are likely to be mere guesses, and again, result, in many cases, in the greatest injustice even when the assessor is doing his best.

690. Indirect Taxation.-Indirect taxes, as tariff and internal revenue charges, are always unfair, inasmuch as it proportions the public burden upon the proportion of consumption of certain articles rather than on property values. It would be hard to find a reason why a man who uses tobacco should be required to pay more taxes than one who does not. It would be hard to find a reason why people should be required to pay taxes at a time and in a manner which makes it impossible for them to determine what share of their payments may be properly figured as living expenses and what share as taxes.

These difficulties are inherent in capitalism, and no kind of tax reform can be devised so long as capitalism remains that will prevent injustice being done even when public officials are doing their best.

691. Property Which Can Be Hidden.-There are three kinds of property subject to assessment; the one, property which is easily hidden, such as securities, bonds, diamonds, jewelry and other personal belongings. This property rarely pays taxes. The tax roll of any great city will reveal how absurd is the idea of supposing that property subject to assessment and capable of being hidden pays any just share of the burdens of taxation. For the practical purposes of this discussion we may admit that property which can be hidden escapes taxation.

692. Cannot Be Hidden-Held in Small Holdings.—

Next, is the property which cannot be hidden, but is owned in such small holdings that the owners cannot afford to take the time and incur the expense necessary to control the assessor, the equalization boards, or whatever public authority may for an inducement neglect to collect or remit without collecting taxes once assessed. Such properties include the teams and wagons of expressmen, the stocks of goods of small merchants, the tools of small shops, the homes of the poor, real estate held in small amounts, and all ordinary farming property. The owners of such property are rarely able to control the assessor and the boards who have authority to review the work of the assessor. The burden of taxation falls upon such properties and they have no means of escape.

693. Cannot Be Hidden-Held in Large Holdings. -The third and last class which we consider is property which cannot be hidden, but is held by corporations, or by private parties, with the holdings sufficiently large to enable the owners to make it pay to give attention to securing control of the assessor and of all other public officers in any way connected with the subject of taxation. They cannot hide their property, but they can elect a clerk, or a personal dependent, or a member of the corporation to be the assessor, or, as a notorious tax dodger recently remarked, "Even when the assessments have been made, it is one thing to assess and another thing to collect, with the great corporations so largely in control of the courts." Railways, street car companies, great department stores, great manufacturing establishments, mining corporations, great industrial organizations of all sorts usually maintain a special department devoted exclusively to the subject of avoiding the payment of taxes.1

1. “I have studied autocracy in Russia and theocracy in Rome, and I must say that nowhere, not even in Russia, in the first years of the

As long as the corporations control,-and as long as capitalism lasts the corporations must control,-so long the great properties will escape their just share of the public burden, and the small properties will pay the cost of maintaining the state, whose authority will be constantly used by the large enterprises in the process of destroying the small ones. And, again, so long as capitalism lasts it will be impossible to devise any systems of assessment, and scheme of taxation which will protect the man whose enterprise is too small to make it possible for him to control the assessor, against the enterprise which is so large that it cannot afford not to control the assessor.2

694. Public Charges Under Socialism.-The coming of Socialism will abolish all this, for under Socialism it is inconceivable that society would consent to any system of taxation. The keeping of the public accounts and any services which may be found necessary as a means of adjusting disputes of such a nature as to call for public attention, would be masters of the public's business. The cost of doing these things would be a part of the cost of production. Instead of the gross products of particular workers being distributed to them from the public stores, and then another departreaction occasioned by the murder of the late czar, have I struck more abject submission to a more soulless despotism than that which prevails among the masses of the so-called free American citizens, when they are face to face with the omnipotent power of corporations."-Stead: If Christ Came to Chicago, Quoted in Lorimer's Christianity and the Social State, p. 203. See also p. 204.

2. "But thoroughgoing Socialism or Collectivism would probably deny that any limit upon the tax power is justifiable which stops short of the proximate realization of their distributive ideal. It is right here that the sociological side of finance becomes of prime importance. The present constitution of private property has been challenged. Whether this institution can or ought to be changed, if so to what degree: whether the distribution of the social dividend can be effected upon another basis than the present one-these are the points of contact between collectivism and the industrial constitution of modern society. In short, the battlefield where Socialism will not improbably assail the conservative forces of society lies within the domain of finance."-Daniels: Public Finance, p. 6.

ment of public service created to inquire after personal possessions, and to levy taxes for public purposes, any public expense necessary for the public welfare, under any possible system of co-operative production, would be directly provided for by the collectivity before distribution to the various workers would be made. Such expenditures would be of the same nature as charges for fuel, for light, for oil, for machinery, for repairs on the tools of production, and would be a part of the running expenses, a part of the cost of carrying on the industrial co-operative commonwealth. These services being a part of the work of production, the persons performing these services would be rewarded like other producers, not by levying a tax upon any or all, but by directly using such a share of the social products as would be necessary for such social purposes.

695. Taxation Under a Local Socialist Administration.-What effect will the victory of the Socialist party have in any particular locality on the subject of taxation, in that locality, before a general national victory shall make possible the inauguration of Socialism? The most careless examination of the tax assessments in any community will reveal that great injustice is being wrought under capitalism against those who, if they own property, own it largely, not for the purpose of exploiting others, but for the purpose of occupying it as their homes, or for the purpose of using it in the employment of their own labor; and this wrong is done by the great properties which exist solely for purposes of exploitation.

It is sometimes claimed that a Socialist victory, in any given town, would immediately raise the tax rate. If the rate of assessment were left at the current rate and the large properties fairly assessed at that rate, the public income would be enormously increased. As