STATE TAXATION. In the majority of Ameri can States the basis of the fiscal system is found in the general property tax, levied both for State and local purposes, upon the realty and per sonalty of the inhabitants of the State. This tax, although general, is now being abandoned or at least limited in application, this being true of Vermont, Connecticut. Delaware, Pennsyl vania, and Wisconsin. The tax has been fre quently condemned on account of its inadequacy as a test of 'faculty' or ability to pay taxes and because of its failure to reach personal property. According to a report of a special committee of the California Senate on taxation and revenue (January. 1901) there is but one opinion throughout the whole country of the practical working of the tax, and this is "that it is in equitable, unfair, and positively unjust." The tax leads to understatement, to widespread per jury, and to numerous forms of evasion and dodging. Through the inefficiency and occasional dishonesty of assessors, and through their fre quent dependence upon popular favor, property of all sorts, and more especially personal prop erty, escapes its just burdens, while in many cases the system of basing the taxation of the State upon the local assessment leads to a com petition among the various districts of the State to keep their local assessment unreasonably low and thus evade, as far as possible, the burden of the State general property tax. The resulting in equalities are only partially remedied by the various State Boards of Equalization which now exist in about one-half of the States and which exercise the right to raise or lower the assess ment of counties and in cases even to alter the assessment of individuals. It has, moreover, been found impracticable to secure good results by imposing severe penalties for evasion or by paying portions of the tax to persons discovering such evasions. Remedial legislation has been proposed in several States, but the Industrial Commission in its final report went 'beyond such palliative measures and recommended "that the States abandon the general property tax"—but "that local revenues be raised by taxes on real estate and personalty under the general property tax system. as at present." Mortgages are taxed in most States together with the other forms of personalty, and as no deduction is usually made in the assessment of mortgaged property. the imposition of the tax
on mortgages usually amounts to double taxa tion. Attempts have been made in Massachu setts, California, Oregon, and elsewhere to pre vent this double taxation of mortgaged property as well as in some cases to shift the burden of the tax from the borrower to the lender. The tax in its present form is also criticised on the ground of its frequent evasion.
The general property tax, while practicable for a new, homogeneous, agricultural country, be comes objectionable in a more highly developed community owing to the escape of personalty, which has grown more rapidly in value than real property. The legal exemption of intan gible personal property has been advocated (notably by the Alassaelmsetts Tax Commission of 1897) because of its practical escape under present conditions and because it is claimed to be usually nothing but an evidence of ownership or of an interest in tangible property already taxed. The proposal to exempt intangible per sonal property has never met with the ap proval of the farmers or owners of rural prop erty, unless it is accompanied by some means of reaching the property or income of which the intangible personal property is the title or evi dence of ownership. There are also advocates of the exemption of taxes on improvements on land as well as adherents of a single tax on land values that will absorb the whole value of the land. See SINGLE TAX.
In connection with the general property tax, many of the Southern States also depend upon a number of license or privilege taxes upon vari ous forms of business, exhibitions, etc., and in 1901 a special committee of the Senate of Cali fornia advocated like taxes for that State. In the South the tax is not graduated, hut is usually a fixed charge, and according to (Es says in Taxation) is the natural result of the economic constitution of the South in the past. The aristocratic landed interest did not desire to tax themselves by a land or poll (slave) tax, but attempted to shift the burden in colonial clays by taxing imports and exports, and, after the adoption of the Constitution of the United States, by levying business taxes or licenses.