DIRECT AND INDIRECT TAXES. A classification of taxes of much practical importance is that which distinguishes between direct and indirect. The distinction cannot be sharply drawn; but it may in general be said that direct taxes are those which are levied upon the persons or property of those upon whom they are expected to rest, while indirect taxes are levied upon com modities or industrial processes with the expec tation of their further diffusion. Examples of the former kind are the poll tax, the general property tax, and the income tax. Examples of indirect taxes are customs duties and excise taxes. The practical advantage of indirect taxation lies in its ease of collection. and in the fact that it creates a minimum of opposi tion on the part of the taxpayer, wno does not recognize that he is paying a tax through the enhancement of price of articles which he may purchase or not as he chooses. This very fact gives rise to one of the chief disadvantages of such taxation: namely, that it encourages waste ful administration, since the financier is not held to such strict account for funds raised in this way. A further objection to indirect taxation is that it weighs most heavily upon the poor, since it is only commodities in general use which can yield a considerable revenue through indirect taxation.
Fowls OF TAXATION. The simplest form of taxation is the poll tax. a head tax levied equal
ly upon all citizens or inhabitants. This tax was not uncommon in England toward the close of the Middle Ages: it was an important form of taxation in the New England colonies. Where it still exists it is of minor importance. A tax on general property was developed in the north ern colonies of America. Taxes on houses are dis cussed under the title HOUSE TA_X (q.v.). Land is in some countries, as in the United States, taxed at the same rate as other forms of prop erty; in other countries a special land tax is levied. A tax on land if permanent has the peculiarity of diminishing the value of the land by the capitalized value of the tax: it may therefore be said to be borne wholly by the one who owns the land at the time when the tax is first imposed. In New Zealand the tax on land is graduated with the size of the holding. The aim of this system is to prevent the accumulation of holdings in a few hands.
For inheritance tax, see that title.
The chief forms of indirect taxes are customs duties (sec TARIFF') and excise taxes, or taxes upon the production or sale of commodities. The latter are common wherever business is highly developed. They are employed in England to offset duties on imports. which would otherwise serve to protect the native producer.