The minor divisions in the United States are thus con stantly creating debts at the rate of about $2,000,000,000 each year, and at the same time paying former debts in instal ments, in a total amount somewhat less than this. In the case of some municipal investments that are commercial enter prises (such as those supplying gas, electricity, and water), these annual payments can be made out of the profits; in the case of others, the payments come from special assessments upon the owners; and in most other cases they are collected by the usual methods of taxation. In America a large part of these costs are, by the law of special assessments, placed upon the owners of adjacent lands, whose outlays are usually more than offset by the increased value of their lands as a result of the improvements. In this case also, the present in vestment is in anticipation of the future incomes which the owners of the improved lands will get.
§ 8. Revenues from taxation. Much the largest part of the receipts of most governments, apart from loans, and in many cases nearly all such revenue receipts, come from taxa tion. Tax (as a verb) meant originally to touch or handle, then to estimate or appraise, and then to charge a burden upon some one, especially to impose a payment of services, goods, or money upon persons or property for the support of government. Taxation is the legal process of taking in come, services, or wealth from private persons for public uses.
Taxes are of various kinds, but they always are incomes, or wealth representing future incomes, transferred from private ownership of the taxpayers to the government. In rare cases, more than the net current income of a certain kind may be taken for public uses. As economic income has many sources, it may be intercepted at many different points, and taxation may take various forms. The differences are so manifold that it is difficult to classify particular taxes satisfactorily. There are border-line cases where it is difficult to decide whether a particular payment to the government in the form of a fee, price, or special assessment is in the legal sense a tax or not. SomA courts have, for example, decided that for certain purposes a special assessment is to be called a tax, and in certain other cases it is not to be if this would defeat the evident and just intention of the legislature.
§ 9. Kinds of taxes. The following are the kinds of taxes most frequently referred to.
(a) The simplest tax is a poll tax, a uniform amount pay able by every person of the taxable class. This form of tax is being less and less used in America, and now amounts to little more than this being only .6 of the
1 per cent of the aggregate taxes in the United States. The national government gets about one fourth of this amount from a tax on immigrants, and the rest is collected by (some of) the states, counties, and minor divisions. Ur:Inally the poll tax is imposed only upon voters, as a condition to the right to vote.
(b) Taxes may be laid upon incomes, as they come into the possession of the owner. Usually only monetary incomes that arise in commercial transactions are taxable, and no attempt is made to estimate the value of psychic incomes. Commer cial incomes are more easily measured, but the omission of the other elements must cause many inequalities in the bur den of the tax as between two individuals controlling equal incomes of real things.
(c) Taxes may be on property, either general, upon all property in the taxing district, or special, upon certain forms of property. A property tax may be specific or ad valorem, in proportion to value, as to the method of its determination. Since the value of material wealth is the capitalization of the rentals at the prevailing rate of interest, a general ad valorem property tax, as far as it applies to material wealth, and if it were accurately assessed, would take an approximately equal proportion of wealth-incomes. It does not, of course, touch directly incomes derived from wages and salaries, but it re The figures do not include returns from incorporated places having a population less than 2500, where the poll taxes may be a considerable sum.
duces their purchasing power in many cases. It is in some respects more searching than a tax on actual rents, for it reaches the prospective, or speculative, rental.
(d) Taxes may be on expenditure (sometimes called taxes on consumption). This is but another mode of attacking in come, for in the long run most income is spent, not always by the individual who earned it, but by some one, and thus it is reached by a tax on expenditure. Usually in the United States the tariff duties are accounted to be taxes on expendi ture, as also the internal revenues (also called excises) of the national government. In time of war, internal revenues are extended in the United States to a multitude of articles, but usually they have been limited (with minor exceptions) to liquor and tobacco. Most of these taxes are in fact levied not at the time of purchase by the ultimate consumer, but upon the specific goods in the hands of some merchant or business agency, and some of them are essentially special property taxes and others are business taxes of the kind next to be mentioned.