EXCLUSIVE TAXATION
OF
REAL ESTT'1 rE
A;ND THE
FRANCHISES OF A FEW SPECIFIED MONEYED
CORPORATIONS AND GAS COMPANIES.
IR E M ARKS
OF
ISAAC S H E RMAN
BEFORE THE
ASSEMBLY COMMITTEE ON W4YS AND ME4NS
OF THE
STATE OF NEW YORK,
OCTOBER, 1874.
NEW YORK:
MARTIN B. BROWN, PRINTER AND STATIONER,
201, 203 & 201; WILLIAM  STREET.
i875.








EXCLUSIVE TAXATION
OF
REAL ESTATE,
AND THE
FRANCHISES OF A FEW SPECIFIED MONEYED
CORPORATIONS AND GAS COMIPANIES.
OF
ISAAC SI H E RMAN
BEFORE THE
ASSEMBLY COMMITTEE ON W4YS AND ME4NS
OF THE
STATE OF NEW YORK,
OCTOBER, 7874.
NEW YORK:
MARTIN B. BROWN, PRINTER AND STATIONER,
20I, 203 & 205 WILLIAM STREET.
I875.








TAXATION.
" No tax can ever reduce, for any considerable time, the rate of profit in any particular trade,
which must always keep its level with other trades in the neighborhood."
"In order that the greater part of the members of any society should contribute to the public
revenue, in proportion to their respective expense, it does not seem necessary that every single
article of that expense should be taxed."-ADAM SMITH.
" A tax upon land seems hard to the land-holder, because it is so much money going visibly out
of his pocket; and, therefore, -as an ease to himself, the land-holder is always forward to lay it upon
commodities. But, if he will thoroughly consider it, and examine the effects, he will find he buys this
seeming ease at a very dear rate."-JoHN LOCKE.
Mr. SHERMAN said he recomrmended  an  annual State tax of
two per cent. on the par value of the shares, and on all the surplus, less ten per cent. of National banks in this State, and the
same amount of tax on State banks, trust companies, and insurance companies organized under the laws of this State; and also
a tax of three per cent. otl the gross premiumns of foreign insurance companies, as an equivalent for the tax proposed upon their
domestic competitors. These taxes would yield annually not
less than  $4,000,000  to  the  State  treasury.  He  also  recommended  a tax, for the  benefit of the  treasury, of cities and
villages, on all gas companies, to the amount of three per cent.
on the value of all gas sold.  With  these exceptions he favored
an exclusively real estate tax for local and State purposes. This
plan is an embodiment of the principles of taxation  enunciated
by George H. Andrews, in his recent address before the Committee on Ways and Means of the Assembly.
EQUALITY UNDER THE PROPOSED SYSTEM.
All lands in this State being equally taxed, all the products
of lands, and all things manufactured, held, sold, stored, or consumned on lands, will bear an equal pressure of taxation according to the value of the lands occupied. The products of other




4
States could have no advantage in our markets; for these products must be taxed in other States as personal property, or
through the medium of real estate. it is proposed to tax uniformly all the corporate rights of all corporations having an
office and doing the business of receiving deposits, except savings
banks, which are or may be limited in the amount of deposit from
one person, and which do a non-competing and different business,
paying depositors solely on presentation of pass-books.  The
present restraining laws prohibit foreign corporations and domestic corporations, other than the moneyed corporations proposed
to be taxed, from doing a regular business of receiving deposits.
Individuals cannot be considered equal and immediate competitors with banks of issue and deposit, or with insurance companies. The capital and funds of a bank or insurance company
are trust funds, and must be retained to meet the obligations of
the corporation, and cannot legally be appropriated for individual speculations, or any other than the trust purpose; banks
and insurance companies are required to make public reports,
which inspire confidence, and the tax, if not so excessive as to
be more than the value of the special corporate advantages, will
work no injury or discouragement to banking and insurance.
Many other corporations, from the nature of their business, and
especially manufacturing corporations, have no important advantages over private individuals. A newspaper published by a
corporation has no material advantage over a journal published
by individuals, and to tax the one on its value and exempt the
other would be an odious discrimination. It is possible, however, that some other corporations than those enumerated might
be taxed without invading the rule of uniformity among direct
competitors. Taxed gas companies can have no favored competitors, except by some new invention or new and mlore abundant discoveries of petroleum or of other cheap illuminating material. The removal of personal valuations under the proposed
changes will be less than $200,000,000, or less than nine per
cent. of the present valuations in the entire State; and at the
present rate of annual diminution of personal assessment the
change in a few years will produce more valuations on the few
moneyed corporations fully and uniformly assessed than will




be derived from  the entire personal assessment under the present fading and receding personal assessment.  Foreign and
domestic insurance companies will be equally taxed, and the
rule of uniformity and proportionality, under this system, is
intended to be fully established in all the classes of things which
are subjects of taxation. These few things will be, in effect, the
economical tax collectors, and will cause the taxes, through the
laws of equal competition, to'permeate all other things. Mr.
S. said he should confine his remarks, in the main, to the consideration of an exclusive real estate tax, although he admitted
that certain franchises, under a regulation of uniform burden of
immediate competitors might be equitable.  There are certain
fundamental maxims or canons, however, in taxation, which
equality, justice, morality, and the principles of free constitutional government require as a basis of any system of State and
local taxation, and all systems should conform to these fundamental maxims.
~ 1. Proportional taxes onr all things of any givenr class will be
diffused and equalized ort all other property.
In order to burden equitably and uniformly all persons and
property, it is not necessary to tax primarily all persons and
property within the taxing district. Taxes, like nature, abhor a
vacuum, and if equally and uniformly imposed upon all things
in the same category or field of direct competition, will be diffused secondarily by the natural laws regulating competition,
the cost of consumption, and the cost of production.  Taxes and
l5rofits, by the operation of the laws of human nature, constantly
tend to equate themselves; man is always prompted to engage in
the most profitable occupation, and to make the most profitable
investment; and since the emancipation from feudalism, with its
sumptuary laws, legal regulations of the price of labor and merchandise, and other arbitrary governmental invasions of private
rights, individual judgment and self-interest have been recognized as the best test or arbiters of the profitableness of a given,
investment or occupation. The average profits, therefore, of one
form of investment or of one occupation, must, for any long




period, equal the average profits of other investments and occupations, whether taxed or untaxed, skill, risk, and agreeableness
of occupation being taken into consideration. Natural laws will,
therefore, always produce an equilibrium of burden between
taxed and untaxed things and persons. There is a level of
profits and a level of taxation by natural laws, as there is a level
of the ocean by natural laws. If United States bonds were unwisely taxed one per cent. per annum, and the tax collected uniformly at the time of payment of interest under a law authorizing the issue of the bonds, it is evident that the purchaser of
these bonds in the reduced price would realize the same rate of
net profits or remuneration, and no more or less, than is now
realized on the present untaxed bonds. It is not the Government bondholder who now enjoys the advantages of exemption
from taxation; it is the borrower, the United States Government, which is really exempted, and on which the tax must fall
in the reduced price of its bonds, if a tax is permitted to be imposed. Taxes form an important part of the cost of all productions, distribution, and consumption, and represent the labor performed in guarding and protecting property at the expense of
the State, in all the processes of development and transformation, and will always be diffused and disseminated equitably and
uniformly by the same mneans and natural laws as are other expenses of production. We produce to consume, and consume to
produce, and the cost of consumption, including taxes, enters
into the cost of production, and the cost of production, including
taxes, enters into the cost of consumption, and thus taxes unifornrly levied on things of the same class, by the laws of competition, supply, and demand, and the all-pervading mediums of
labor, will be distributed, percussed, and repercussed to a remote
degree, until they finally fall upon every person, not in proportion to his consumption of a given article, but in proportion to
his aggregate consumption. Mr. Astor bears no greater burden
of taxation (and cannot be made to bear more by any laws that
can properly be termed tax laws) than the proportion which his
aggregate individual consumption bears to the aggregate consumption of all others in his circuit of immediate competition.
As to Mr. Astor's other taxes he- is a mere tax-collector or con



duit, conducting taxes from his tenants or borrowers to the State
and City Treasury. A whisky distiller is a tax conduit or taxcollector, and sells more taxes than the original cost of whisky;
a dealer inrimnported goods, like Mr. Stewart, keeps on hand a
stock of accumulated imrnposts, foreign and domestic, for sale;
the farmer charges taxes in the price of his produce; the landlord in his rents; the laborer in his wages; the clergyman in his
salary; the lender in the rate of interest he receives; the lawyer
in his fees; and the manufacturer in his goods. A bible printed
by the American Bible Society is always, in part, loaded with a
whisky and tobacco tax, paid by the printers, paper-makers, and
book-binders, or paid by the producers of articles consumed by
these mechanics, and reflected and embodied in their wages and
the prloducts of their labor according to the degree of absence of
competition from fellow-mechanics who abstain from the use of
those and other taxed articles.  The traveler who stops at the
Fifth Avenue lHotel cannot avoid paying a tax to Mr. Eno, who
owns that hotel, and is one of our great and effective real estate
and diffused tax-collectors; and in fact all proportional contributions to the State from  direct competitors are diffused upon
things and  persons in  the taxing  jurisdiction  by  a uniformity as manifest as is the pressure upon water, which is
known to be equal in every direction. Bleeding is accomplished
effectively and skillfully, without bleeding the patient at every
pore by myriads of mosquito bites or otherwise, and endangering
life b1y an unnecessary irritation and inflammation; and one
incision is sufficient to produce entire depletion.  But blood,does not circulate more freely through the human system than
do flow the atoms or minute particles of uniform taxes levied on
all things of the class made subject to taxation, with an equal
pressure, free from  unnecessary annoyance, inquisition, and expense, under the guidance of natural laws, through all other
property. Labor, individual enterprise, production, distribution,.consnmption, and competition are the arteries and veins through
which equal taxes circulate in all parts of the body politic.
These natural and inflexible laws can also be always relied upon
in thi.  istribution and equalization of taxes originally imposed
with proportionality. These laws of competition are never sus



8
pended; a temporary suspension would for the period of suspension render the ordinary dependent day laborer a slave, for
he must sell his labor, become a slave, or perish; but human
nature asserts her power, and members of society always com1pete for his labor, and he can therefore always depend upon
being a freeman. By the operation of these trustworthy and
beneficent laws the food and clothing absolutely necessary for
our daily protection and sustenance are supplied without fear of
deficiency, the price and snpply;of wages and merchandise regulated, and all free from the prying eye of officials or the exercise
of arbitI ary power. Therefore, equgally burdened conmpetition is,
in effect, an egqal and atniversca suffrage of labor  and capital,
and its jurisdiction is the equal and open market,.where uniform
taxes on all things of the class made subject to taxation will be
diffused and equated on all other things by this universal suffrage of labor and capital, and to the same Ilinute degree that
the price of wages and other expenses of production are diffused
and equated.
~ 2. Exenlptioir of ary part of the property of the saire class, which
is nrade the subject of taxation, is spoliation or[ that part
which is discriminately burdened.  Exclusior[ of art entire
class of property fromr taxation is riot ant exeMnptior.
"An exemption is freedom  from  a burden or service to
which others are liable;" but in case of an exclusion of an
entire class of property from  primary taxation no person is
liable, and therefore there is no exemption. An exclusion of all
milk from taxation, while whisky is taxed, is not an exemption;
they are not competing articles, or articles of the same class.  It
is true, that highly excessive taxation of a given article mlay
cause another and similar article,in some instances, to becoie a.
substitute or competing article, and hence the necessity of care
and moderation in establishing the rate of taxation. It has been
shown that entire; classes of property, excluded from plrimary
taxation, will bear their equal proportion of burden, in the form
of taxes equalized by the natural laws of competition. But
these natural laws are suspended, and made nugatory if exemptions are permitted.  It is impossible for the owner of taxed




property to add the tax to the rent or the price of his goods, if
there is a favored or privileged class in direct competition, and
having the same kind of property to offer in the same open
market, where all persons seek the lowest prices, and therefore
the surcharged tax-payer, according to the amount of the favored
competition, becomes the victim, not of taxation, but of an
arbitrary exaction, and cannot diffuse it, but must pay it, or
retire from the unequal competition. The best possible test, to
ascertain whether a law is a tax law or an act of spoliation, is to
examine and see whether the so-called tax is equal upon an
entire class of competing things, and whether it can be diffused
upon other persons and things, by the laws of competition,
among equally burdened competitors. Any law which will not
bear this test should be immediately eradicated from the statute
book as a relic of personal servitude.
A tax on ships owned by residents, and an exemption of
competing ships engaged in the same carrying trade here, but
owned in Montreal, Pennsylvania, England, France, and other
countries where ships are untaxed, is an unreasonable and
arbitrary discrimination, and shows an absence of equality and
fair play which even a brutual prize-fighter will condemn. It
seems almost incredible that a law so unjust and oppressive
should exist in the nineteenth century, when piracy is generally
condemned, or that it should be enforced against old and respectable ship-owners, guilty of no crime, and entitled to the equal
protection of the laws. A discrimination is not taxation, but an
unjust exercise of mere brute force.  A discriminating tax on
every other store, on the same side of Broadway, cannot be
diffused; therefore it would be an act of spoliation. A tariff,
which is only an exaggerated or excessive tax, if levied only on
resident importers, would be an act of prohibition  against
importations by resident importers, unless the tariff was very
low or nominal, and in that case it would be a moderate spoliation. Taxation by the arbitrary rule of the residence of the
owner, without reference to the laws of competition regulating
the price of the taxed article, is, therefore, a despotic and brutal
act, and analogous to brigandage, and cannot be diffused by the
laws of competition, and canl only be avoided, like brigandage,




10
by flight —-a change of residence. Hence negotiable bonds are
made, by our unequal and oppressive legislative acts, to flow to
Europe into the hands of untaxed holders; and hence is found
in all the great cities there an " American colony," composed of
permanent residents, who have fled from discriminating taxation,
and who there enjoy an equal favoritism or exemption granted
by our State to other non-residents, with whom they compete on
equal terms in open market, here or there, for the purchase of
our securities.
~ 3. Equal taxationr cortsists ir equal burden of all subjects of
imnrmediate cornpetitiorn.
Our present laws for assessing personal property, violate this
fundamnental rule, and are, therefore, more "honored in the
breach than the observance," and their only redeeming feature
is the patent fact that they are incapable of practicable execution. We do not tax mortgages, negotiable bonds, or other
evidences of debt, but we tax only the resident owners- We do
not tax mortgages held by non-residents, but made here in coinpetition, in open market, with residents; made payable here;
interpreted as contracts by our laws; protected by our laws, and
their collection enforced against the property mortgaged by our
judiciary. But we tax resident mortgagees; we tax resident
owners of negotiable bonds, made in open competition here;
we exempt the same bonds if held by non-residents, and these
bonds are conveniently  owned  and collected by the residents of Canada, Elgland, France, and other countries, and
where these investments are untaxed. Pennsylvania has practically excluded personal property from taxation; Maryland does
not tax mortgages; personality is not taxed in Montreal, and
New Jersey has removed mortgages from  taNation in four
neighboring counties. Hoboken has Elysian Fields, where the
resident mortgagee finds rest, and subject to only three cents
ferriage when he visits New York to compete with residents who
bear a discriminating and intolerable burden.




~ 4. Residertt or rtort-residertt owners of exerrnpted property irt
thle sarte field of comnpetition, and of thie sante class as that
wh1icIh is taxed, are subjects of cl~arity to the extent of the
exemptions, at the expense of their surcharged competitors.
All exemptions of any competing contracts, titles or property, are a charity to the exempted person, and the beneficiary
of the exemption is a recipient at the expense of the surcharged
competitor to the extent of the exemption. The large loan
made to this city a few years ago by the Rothsehilds, in their
hands as non-residents, is an exemption and a source of charitable contribution to them; but if any portion of that same loan
is found to be owned by a resident widow, orphan, or resident
maimed soldier, the holder will be subject to an annual tax of
nearly three per cent., a most arbitrary exaction, and not less
oppressive and discriminating than would  be a tax  solely
imposed on Jewish, Catholic (as has been done in some countries) or colored investors.  The resident holder of New York
City stocks gets no special protection, as a holder of this stock,
not granted to his rivals and equal competitors, the Rothschilds
and other non residents, unless it is the protection which the
wolf gives to the lamb, or the right to be crushed by his
favored, privileged, and untaxed immediate competitors. These
unreasonable enactnlents are, however, so violative of all just
principles of taxation; of all equality and uniformity, and partake so much of the character of medieval and barbarous
edicts, that, like the old Fugitive Slave law, they are not and
cannot be rigidly and fully executed; and the judgment and
natural impulses of the assessors, sustained by the community,
collstantly prompt them  to "temper the wind to the shorn
lamb" and give relief by a "higher law" against the strict
letter of the legal and odious discriminations, which are not
based on justice or sustained by the public conscience. Legislative acts when excessively oppressive are often powerless; the
comrmon mind instinctively abhors all arbitrary discriminations,
and therefore it is not sulprising that an assessor does not see
and "ascertain" negotiable bonds capable of being transferred
by delivery and held where they are untaxed, or see and
"ascertain" a second mortgage "over and above just debts,"




12
when the owner of a first mortgage on the same property, if he.happens to reside in Jersey City, or other places where mortgages are not taxed, is exempt.  The inability to generally
enforce these provisions of spoliation in our tax laws lenders the
oppression. and injustice still greater in the instances when they
are executed, and freedom, justice, and equality imperatively
demand their immediate repeal.
~ 5. Benefits of linmitirtg taxatiorn to real estate or few classes of
tiinr gs.
By limiting the sources or number of primary taxes we
limit the sphere of government and the -number and sphere of
officials; we limit the sources of official corruption, and we
give strength to free institutions by leaving the distribution of
taxes, in infinitesimal form, to individual judgment and individual enterprise and competition, the great motor forces in all
free government, rather than to the acts of officials which must
be more or less arbitrary, inquisitorial, offensive; and if in any
degree  effective, must be executed by espionage, oaths, and
domiciliary visits, which are not in harmony with the spirit of
the age or free government.
~ 6. The general goverrAmerAt taxes personality exclusively, and
an equal apportionment of prirrmary taxation between realty
arqd personality will require the States to tax exclusively realty.
More than one-half of all the taxes collected in the United
States are received by the General Government exclusively
from personal property, and if there is to be an equal or equitable apportionment of taxes between real and personal property,
the State and all its municipalities must refrain from levying
personal taxes. The ratio of the taxes of the General Government to all the taxes of the country, including State and local
taxes, is much greater than the ratio of all personal property to
all the real estate.




13,> 7. The ratio of the value of personal property to the value of
realty is as great or greater irt agricultural districts ttlart in
cities.
In Ohio debts are taxed, and all visible and tangible property
in excess of $50 in value, owned or in possession of any adult, is
made subject to taxation without any offset on account of debts.
The report of the Auditor of that State shows that under this
rule of taxation the ratio of personality to realty, in the agricultural counties, is greater than in the City of Cleveland and the
City of Cincinnati. In Illinois, also, debts are taxed, and visible
and tangible personal property is taxed wherever found, subject
to no offset of debts; and the official reports show that the proportion of personal property to real estate is less in Chicago than
in the other parts of the State.  Massachusetts taxes by a
similar rule, and in Boston the ratio of personality to realty is less
than in the other sections of the State. In the cities there are more
imported goods in the hands of the importer, goods in transitu,
and other exempted property, than in the country, and with these
exceptions the ratio of personal property to real property must
be equalized, and must be the same in the city and country by
the natural laws which give all value to real estate only in proportion to the amount of personal property produced, sold,
manufactured, or used on it or in its immediate vicinity, the
usual part of the same taxing division.
~ 8. Tl.e value of land is ir proportion to the value of personal
property produced upon it, reflected uporA it, or competing
for it.
Lands appreciate in price by regular laws and regular gradations, from  the almost worthless lands of the Adirondack
Mountains to the palatial stores and buildings of Broadway and
Wall street, and always in proportion to the amount of personal
property and labor expended on them  and employed on them,
and in immediate proximity; and hence the cause of their being
more than half a dozen buildings in this city, any one of which
is worth more than $1,500,000, or three times the total value of
all the property in a wealthy and flourishing town in the interior
of the State. The transitive power or reflection of personal




14
property also establishes the value of land in different cities and
in the different sections of the same city. Stone-yards, coalyards, and feed-stores are not found in the crowded and most
valuable parts of Broadway and Wall street; but the business
requiring the largest amount of stock, capital, transfers, or transactions will, and does by natural laws, concentrate there.
In a strict sense we do not tax land; we tax the value of
land, which is only another form or all embodiment of capital
and labor. An uniform tax o(n all land in great cities and in the
country by the acre, without regard to the value of the land, would
be a nearer approach to a strict land tax. In taxing the value
of land we, in effect, tax the productive power of land, and its
ability to hold and attract personal property, which is capital
and labor. Lands producing large crops have a large amount of'
labor performed upon them  and a large amount of personal
property and capital employed upon them. Mills, factories, and
villages are but valuable crops produced on land, and a great
city, like this city, is the most valuable crop that land is capable
of producing. Great cities are as much the active and immediate
agencies of production, and have as clearly defined productive
power as lands which produce corn or potatoes.  The great
appreciation of values of land in great commercial centers, do.
not arise, however, fromt the intrinsic values of land there, which,
in fact, are not greater than the intrinsic values of the remote,.
interior, fertile lands which command a moderate price. The
constant high values of lands, therefore, in commercial marts,
are a constant verification of the principle and the fact that
values of lands are always produced by the reflection and concentration of labor and capital, and that the taxation of land-values.
is only another method of taxing labor and personal property
which  produce these land-values.  It must be immaterial.
whether we tax the product or that which produces the product,.
and the result of the burden must be the same in either case.
The result is the same, except the extra expense and annoyance,
whether we tax the land which produces wheat and other products, or whether we tax these products. It may be considered,
therefore, a physical impossibility to tax land-values without.
taxing personal property.




~ 9. A tax or[ all lands is a tax on all personal property, arid a
separate additiornal tax ori personality is a duplication of taxation.
Land, as we have seen, receives its value from the amount
of personal property expended on it, and the pressure or
demand of personal property and labor to use, possess, and
Occupy it, and therefore the taxation of all land values is a
taxation of the personal property, the cause and sources which
give, establish, produce, and measure these land values; and if,
after personality has been once taxed in the land values, the
subjects of its competition and creation, another tax is separately imposed on it, it must be a duplication of taxation. If all
personal property was by law excluded forever from Manhattan
Island, it is evident the land here would have no more value
than it had when Hendrick I-IHudson first landed here. The
land in this city, through all the stages of its growth, has increased in value by a natural and immutable law just in proportion to the amount of labor, and capital, which is accumulated
labor, that have been expended upon it, and that are or may be
competing for it. The relative value of land of one city as
compared with the value of land in another city or district, is
always dependent upon the amount of labor and capital making
a demand for its use and occupation in each city or district.
This same natural law of competition is found, as previously
shown, to regulate the value of land in a part of a city, as
compared with another section of the same city. The tax on
unoccupied lands is paid and accumulated by the owner, and
will always form  part of the cost of the land; and the owner
will require a rent on this portion of the cost when the land
will be occupied; and thus, also, the tax on vacant land will
finally be paid by the personal property that will be placed
upon it. Land is an integer, and the whole is greater than the
parts; the taxation of land must include the taxation of its
uses; its contents, and all that rests upon it, is produced, sold,
expended, manufactured, or transported on it. By a fiction of
law, personal property is imagined to be separated from land,
but in fact it is always physically united with it, rests upon and
is a part of it as a whole. The States of Louisiana and Ken



16
tucky formerly enacted that slaves were real estate and subject
to all the laws pertaining to the mortgaging, sale, and descent
of real estate; the statute of Wisconsin now makes real estate
of the rolling-stock of railroads, and which may be moved at a
speed of fifty miles an hour. These are likewise legal fictions
which a State may constitutionally enact, but they do not
change the fact that these classes of property are capable of
beiiig moved from  place to place.  Nor do our laws, which
enact that personal property is separated from real estate, affect
the notorious fact that it is always upon it, and a part of it, and
imparting value to it. The legal fiction is useful if clearly
understood and not arrayed against fact. It was a religious
dogma or fiction that the world does not turn upon its axis, but
this fiction and the extorted confession of Galileo led him nevertheless truthfully to say "it still moves."  There is competition
among land-owners, but land as a whole is a monopoly; there
has been found no substitute for it; and all goods and chattels
Inust pay for the use of the ground they occupy in all the ramifications of production, sale, and consumnption. Personal property is only a branch of land in a distributive form, or portable
land, movables, resting and produced on other land, and giving
value to it. The falling apple which led Sir Isaac Newton to
discover the laws of gravitation was real estate on the tree and
personal property on the ground; but it was still on land, and
was burdened with the law of gravitation and with taxes,
in the use of the land for production, alike on the ground
and on the tree.
All taxes should be levied upon so broad a base, therefore,
at so moderate a rate as to prevent them, in their incidents, from
acting more as prohibitions than as a revenue law. A real estate
tax is the broadest tax that can be imposed; it includes everything, and renders all other local or State taxes duplications and
unnecessary.  A  tax on land is a tax on all the products of
land; a tax on importers is a tax on importation; a tax on
sheep is a tax on wool; a stamp tax on match-boxes is a tax on
matches; a tax onl wages is a tax on all the products of labor;
a tax on leather is a tax on shoes; a tax on boxes is a tax on the
contents of boxes; and these illustrations indicate that a tax is




effective, although it -may not be levied in every form, combination and development which an article may assume.  All forms
of personal property are the subjects of the use of land, and
must be reached by a tax on aggregate land values, which will
always be produced, increased, or diminished, in proportion to
the amount of labor and productive capital expended upon or
competing for the use and occupancy of the land.  Land of
itself cannot be said to have any exchangeable value. Labor
alone produces value, and land values are mere representative
values of labor and productive capital.
~ 10. Th1e pressure of taxation on personal property is also a
pressure of taxation on real estate.
Real estate is as intimately connected with personal property, and burdens upon the one or the other are as interchangeable and automatic in their action, by the laws regulating the
cost of production and free competition, as are the atoms of
water in two conmmulicating vessels, where the pressure is equal
in each and where the water rises and falls the same in both
vessels. It is impossible to suspend the natural law whllich
adjusts ratably real estate taxes upon personality, unless the laws
of human nature are suspended-the laws which control the
average profits of all occupations and investments when left to
open competition and to the free exercise of individual judg'ment. Personal property inheres to land and imparts an inseparable value to it, and the cost of production must include the
burdens upon the former and the latter.
Land and personal property are so inseparably' blended, married, and allied, that a tax on the whole of the one is a tax on
the whole of the other.  An unreasonable and excessively
oppressive personal tax will render land in the taxing district
valueless, and an extremely oppressive land tax will likewise
render personal property in the taxing district valueless.  They
have one common destiny when the burden of taxation is
understood.   It is evident that a tax  on  a farm  must
be a tax on the products of the farm, whether levied on the
farm or the products of the farm, and if the tax is not levied




18
on these products while in the hands of the farmer, but upon the
purchaser, it is also evident that lie will pay the farmer so much
less, and thus the tax must fall upon the farm.  Then why tax
these products more than once, and why not tax them in the value
of the farm-a uniform, economical, and trustworthy basis of
taxation, and leave the tax to adjust itself, by natural laws of
competition, on the products ill all stages of transformation.
But it is true that often the personal property which gives
value to a particular lot of land may not be on that lot, and may
be quite distant; but still labor and personality give the land its
entire value, and it will be reached somewhere in aggregate real
estate valuations. The capital which keeps in mot1ion a factory
will give value to land for considerable distance, for increased
production of food for operatives, and for their residences and
other uses, and thus the capital of the manufacturing establishment will be manifestly reflected upon these lands, and will be
taxed there. Personal property in transitu through our State,
on railroads, cannot be primarily taxed, but it gives value to our
railroads; and the products of land exchanged for untaxed
imports impart value to our warehouses, residences, railroads,
and lands, and thus gives us revenue by transmission of land
values, reflected both from the imports and the articles exchanged
for them.
~ 11. Personal property does not follow the person for the purpose
of taxatior. Extra territorial taxation unconstitutional. Taxatior` of a title irt a separate jurisdiction from tlhe situs of the
property which is tlhe subject of the title is art act of spoliatior.
If all the States and all countries of the world taxed personal property annually to the owner at the place of his
domicile, it is evident that this class of property would be taxed
but once the same year; but, by this rule, property would often
be taxed where it was not protected, and it often would be
untaxed where it was in direct competition with similar property heavily burdened. If this rule, therefore, was everywhere
adopted, it would entail gross inequality. Taxation by the rule
of residence of the owner, and taxation by the rule of the actual
situs of the property, are different, irreconcilable, and in



19
harmonious systems, and cannot exist together under a free and
liberal government, which must always reject, as State crimes, all
arbitrary exactions and duplications of taxation by different
States at the same time on the same property.  Massachusetts
and several other States have hitherto adopted both rules, which
are palpable inconsistencies, indicating a purpose to disregard
all honesty or equality in taxation.  A resident of Massachusetts
is taxed for personlal property having a situs in another State,
and a non-resident is, by another and irreconcilable rule, taxed
on all his personal property having a sittus witomin that State;
but when these two inconsistent rules of taxation were brought
face to face in the Court of Appeals of this State, in the case of
H-oyt vs. The Commissioners of Taxes (23 N. Y., 224), the Court
held that the situs of property gave the right to tax, and that
the power to tax by the rule of actual sitss excluded the power to
tax extra-territorially, or to tax by the arbitrary rule of residence
where the property is not protected.   The  United  States
Supreme Conrt, in United States vs. Rice (4 Wheaton, 246), held
that the right to tax arises from the exercise of jurisdiction over
the property and the correlative duty to protect it. In the recent
decision of the United States Supreme Court, in the foreign.
held bond case (15 hWallace, 300), it was held that it is a violation
of the United States Constitution, on the part of a State to
attempt to tax property beyond its jurisdiction. The Fourteenth
Amendment of the United States Constittution prohibits any
State from  depriving any person of property "without due
process of law," and taxation without jurisdiction is an arbitrary
exaction on property, and not " due process of law."  The Court
said: " It is only one of many cases where, under the name of
taxation, an oppressive exaction is made without constitutional
warrant, amounting to little less than an arbitrary seizure of
private property. It is, in fact, a forced contribution levied
upon property held in other States, where it is subjected, or
may be subjected, to taxation upon an estimate of its full
value."  " Even where the bonds (railroad bonds in this case)
are held by residents of the State, the retention by the company
of a portion of the stipulated interest can only be sustained as
a mode of collecting a tax upon that species of property in the




20
State.  When the property is out of the State there can be no
tax upon it for which the interest can be retained.  The tax
laws of Pennsvlvania can have no extra-territorial operation."
The United States Supreme Court also, in Green vs. Van
Busklirk (7 Wallace, 150), actually and distinctly decided against
the feudal fiction of law, that personal property follows the person
as against the fact of actual situes, and, in unmistakable language,
referred to and confirmed the decision of our Court of Appeals,
in Hoyt vs. The Tax Conmmnissioners, as involving a United States
constitutional question, and as a decision against the constitutional power of a State to tax her citizens for property situated
extra-territorially.  The Court said: " It (this legal fiction) has
yielded in New York on thepower of the State to tax the personal
property of one of her citizens situated in a sister State."  " If
New York cannot compel the personal property of Bates (one of
her citizens) in Chicago to contribute to the expenses of her
government, and if Bates had the legal right to own such property there, and was pr'otected in its ownership by the laws of the
State; and as the power to protect implies the right to regulate,
it would seem to follow that the dominion of Illinois over the
property was complete."  The legal fiction or legallie that property follows the person, as to taxation, thus dies with its natural
consort slavery, and it will hereafter be known in history only as
a record of tinmes when the rights of persons and property, and
"due process of law," were disregarded, and its abrogation will
mark the progress of our civilization and of our respect atld consideration for the rights of persons and property.  Personal
taxes, thelrefore, in the form  heretofore known as a species of
personal servitude, can no longer constitutionally exist in this
country, and the States must hereafter confine their taxation to
persons (poll tax), business, movables, anld other property within
their jurisdiction.'These decisions of tile Federal Courts against extra territorial
taxation will, also, in their logical results finally prevent cities
and towns from taxing, by the arbitrary rule of residence of the
owner, property beyond their jurisdiction or protection.  It
must be apparent that State spoliation cannot be more odious
than town or city spoliation. Taxation without jurisdiction is a




:State crime, and it must be condemned on the soundest principles in any and every taxing district, whatever may be the
nature or character of the district.  We must, therefore, confine
taxation to property having a s8i'ts in the town, city, or school
district when the tax is imposed, unless we boldly favor extra
territorial taxation —a mere oppressive exaction unaccompanied
with the correlative duty of protection, which is the only basis of
taxation in any government where the principles of justice and
equality are recognized. Justice and common honesty, even if
the power exists, will not sanction municipal taxation in respect
to property situated in another and distant part of the State,
beyond the jurisdiction of the municipality, and which cannot
possibly be benefited or protected by the local municipal exactions upon the resident owner.  This city can have no just claim
for taxes imposed to light streets and maintain the Fire Departmnent upon personal property situated in the Adirondack Inountains, nor would an extra-territorial tax imposed by this city
upon real estate situated in the interior of the State, and exacted
from the owner residing here, be more arbitrary and oppressive
than municipal extra-territorial taxation of personal property.
There does not seem to be any sound reason against extra-territorial taxation of land which will not apply with equal force
against extra-territorial taxation of tangible personal property,
and, in either case, the taxing officer presents the combination of
a legal highwayman and a civil magistrate in the same person.
Extra-territorial exactions are not taxation, and spoliation is a
mild term to apply to them. This is the nineteenth century, and
if public attention is once centered upon this relic of feudal enactinents, it must disappear before an enlightened public sentiment, strengthened and enforced by the influence and power
of the Federal Courts.
~ 12. State artd local taxes upon. nrovables are frequerntly irrtposed
several tirnes on thle sarrte property, irt the sarme year, by
different cities and States, artd they are, therefore, urtequal,
artd art obstruction to trade, man.ufactures, and commnerce.
It is not equal taxation to tax all property annually where
found, if the tax is at uniform rates each time, and at each




22
place, for, often the property in another form, and in other States,
may lhave been previously taxed in the same year, one or even
several times, and there is not unfrequently wanting the elelnentof uniformity of duration of time that the property has been inr
the taxing district, or there may also be wanting, proportionality
of increased value, by the application of labor within the State.
In taxing real estate all new values added to( personal property
will always be taxed, because the labor, the basis of the new
value, will always be reflected in land, in residences, shops,,
manufactories, consumption, and production, and thlus all values
will appear in the land values diffused by natural laws.  If,
however, in the sale, tranlsfer, and delivery of personlal property
in a city, which is a great entrepot, the transfer is rapid, the
enhanced value will be small, the time of deposit short, and the
tax light, if the tax is only on real estate values; but the tax will
be equitable and in proportion to the new values created, and in
proportion to the average amount of capital required in the
transactions. But a chattel or personal tax is now imposed by
our present laws on the full value of the property, if it is in the
State but a part of a day, and out of the State tile next day, and
thus the inequality in the present system  may be greater than
the difference between one day and three hundred and sixty-five
days. A real estate tax, on the contrary, will be equated and
diffused by the laws of competition  on personal property,
according to the minutest length of time that it may be in the
towln, city, or the State, and the amount of new value or labor
added to it there. Taxation of personality, through the agency
of land, is all reaching  like gravitation, and is executed )by
diffusion, when uniformly imposed on land, by the natulral
laws regulating human  action, never arbitrary, and always
efficient and equal.
Personal property being movable, a primary tax upon it will
render it liable to taxation to the amount of its full value in
every new jurisdiction it may enteil dtring the year. Goods taxed
in this city in January will be again taxed, if found in Boston, in
May, ownied by a resident or non-resident, and without any offset
of debts, and the same goods, if transported to Connecticut the
same year, will again be taxed in October. In New Jersey taxes.




23
are assessed in May, and the same goods assessed in this city in
January, if found in that State, will be again assessed; and the
goods assessed in New Jersey and Ohio in MIay, if brought into the
interior agriciltulral counties of this State, will be again assessed
in July. Most of the Western States tax visible, tangible property,
wherever fonnd, without offset of debts and without reference
to the residence of the owners; and the products of these States
are again taxed in several of the Eastern States where found on
a givetn day.  The sugars of Cuba pay three taxes there, including an export tax, and then pay a tariff rate here, and, after being
sold by the importers, often pay two or three taxes imposed by
States and municipalities.  Imported goods are taxed primarily
or secondarily in the countries from which they are shipped, and
they are frequently again taxed in several States in this country
during the same year. In some instances as many as seven or
eight different taxes have been paid on the same imported goods
in the same year; and it is quite frequent that as many as four or
five taxes have been levied in the same year by different States
and cities oni the same domestic products.
~ 13. Debts are rights, qualified titles, or conclusiorls of law, and
not property, and, if taxed, the burden must be paid by
the debtor; and when the borrowing power of residents of
arnother State is taxed, throughl tihe medium  or agerncy of
resident lertders, it will be extra territorial taxation, artd ur\constitutional.
The act of making debts, bonds, contracts, verbal or written,
notes, book accounts, mortgages, warehouse receipts, titles, certificates of stock, or any form  of salable and transferable
rights, is not a creation of new property, but simply an exchange
by contract, or operation of law, of the rights or titles of parties
in pre-existing property, and any tax on any of these rights or
titles is only another form  of burdening the property which is
the subject of the rights or titles. Property is a "physical actuality" made valuable by some form  of labor, and cannot be
created by mere paper documents, except to the extent of the
value of the paper and writing or printing. When a farmer sells
land to his neighbor and takes a mortgage on the land sold and




24
on his neighbor's farm, he parts with a fee simple to his land and
takes a paramount title to both pieces of land; but no new property has been created, and if the mortgage is subject to taxation
the price of the land sold will be enhanced to the supposed full
amount of the burden of the tax on the mortgage, amnd thus, by
a circuity of action, the debtor-purchaser will be taxed at the
time of making the contract of purchase. The result will be the
same if, instead of selling land, money is loaned. The natural
laws controlling human action will prompt the lender to ask for
the use of his money, including taxes, a remuneration equal to
the remuneration of other investments,  If the City of New
York should issue and sell bonds made subject to an honest, uniform, semi-annual tax of one per cent., to be deducted at the
time of paying the semi-annual interest coupon, the bonds would
sell proportionately low, and it would be made apparent that
the debtor, the City, would be taxing itself and imitating a
puppy that chases his own tail, which may be a harmless amusement on the part of the puppy; but taxation on the part of a
city or State of its own borrowing power, is a folly, and not
relieved even by being an amusement. It is not only a settled
principle of political economy that burdens imposed through
the medium of lenders, are primary, and not secondary or diffused taxes upon borrowers; but it has also been adjudicated by
the Supreme Court of the United States, and is, therefore, now a
part of our constitutional law. Chief-Justice Marshall, in giving the
opinion of the Court in Weston v8. City of Charleston, 2 Peters,
449, against the constitutionality of a State tax on the holder of
United States stocks, said: " The right to tax the contract to any
extent, when made, must operate upon the power to borrow
before it is exercised, and have a sensible influence on the contract.  The tax on government stocks is thought by this Court
to be a tax on the contract, a tax on thepower to borrow money
on the credit of the United States."  In this case Mr. Weston
was a resident of South Carolina and subject to its jurisdiction,
and it was claimed that by virtue of jurisdiction over his person,
the City of Charleston could arbitrarily tax him; but it will be
seen that the Court held that the burden or primary tax was not
on Mr. Weston, but on the bomrrower, the United States Gov



25
ernment; or, in other words, that borrowers must always pay
burdens levied  on debts, and that the lender is only  the
medium or agency of collection. Now, if it is a principle of
political economy and constitutional law, that a tax levied upon
and  (collected  through  the  agency  of  a  lender to the
general government is a tax on the borrower, the same
rule of constitutional law  and political economy will exist
when the borrower is a private individual, for the reason that
constitutional law and political economy recognize no special
providences. It is not important in an examination of the incidents of taxation to note the agency through which the tax may
come into the treasury; but it is important to see where the
burden falls. Taxes are in  many instances assessed  upon
tenants, but nevertheless they are direct land taxes, because the
burden is primarily and immediately upon land; and for the
same reason a tax, or a right or power to tax in form on a
lender, is, in legal effect and logical reasoning, a primary tax on
the contract, and the burden is immediately sustained by the
debtor simultaneously with the making of the contract. The
federal court likewise decided and said in the case of the State
IFreight Tax (15 Wallace, 272): "It has repeatedly been held
that the constitutionality, or unconstitutionality of a State tax is
to be determined, not by the form or agency through which it is
to be collected, but by the subject upon which the burden is
laid."  Therefore, according to the reasoning of the highest
court of the land and the soundest principles of political economny,
when New York taxes, through the agency of her citizens,
mnoney loaned in Michigan or on contract for the sale of property there, she burdens borrowers, purchasers, and contracts,
beyond her jurisdiction, and no way subject to her protection or
control. The fact that New  York has jurisdiction over the
person of the lender, gives her no jurisdiction over the borrower
in another State, and upon whom the federal court holds the
burden falls. It is not assumed that the tax on the resident who
lends money in another State, is a tax on his person or a poll tax.
It purports to be a tax on a transaction and not a poll tax, and
in the instance cited it is therefore a burden on extra territorial borrowers and  purchasers, and  therefore unconstitu



26
tional and  void. "All subjects over which  the sovereign
power of a State extends, are objects of taxation; but those over
which it does not extend, are, upon the soundest principles, exempt
from  taxation" (McCulloch vs. State of Maryland, 4 Wheaton,
429). The State of the lex loci contractus can undoubtedly tax
all contracts made within her territory, at the time when the
contract is made, and thllus forming a part of the contract; and
some States have levied such taxes in form  of stamp taxes, in
taxes on registry of mortgages, and in other forms; and the
power to impose these taxes when the contract is made must
exclude the power of other States to tax the same contract. In
Holland, at one time, no contract was valid until it had been
visaed, and a tax paid upon it. The States can, constitutionally,
adopt the same uniform and equal rule of taxation of contracts,
if titles must be taxed.  But taxation by another State of the
same contract, which may be subject to taxation in the State
where made, would impair the contract, and would deny " full
faith and credit to the public acts" of a sister State; the power
and jurisdiction of the States are involved in the constitutional
question of full faith and effect to their public acts and judicial
proceedings (Green vs. Van Buskirk, 5 Wallace, 307). The btorrower and his contracts (the subjects of the burden, as the Couirt
has decided, in the case of the taxation of money contracts),.
however, being without the  State, and, tlerefore, exempt
for want of jurisdiction, it follows that the resident who
has lent in another State cannot be taxed unless his person
can be arbitrarily burdened and made the agency for the
collection of an unconstitutional inmpost on extra-territorial
transactions-borrowers and purchasers.  If States can arbitrarily tax the persons of residents for property and transactions
beyond their jurisdiction, they can evade all constitutional prohibitions, and destroy the efficiency of the General Government.
They need not tax United States bonds, but the persons of the
holders, and they need not tax colrnmerce between the States, or
importations, but the persons engaged in the business of interState commerce and in foreign importations. However, there is
a decision of the United States Court that renders it certain that
the States cannot tax arbitrarily the person, and thus evade the




27
constitutional interpretation and prohibition against extra territorial taxation by a State of persons, transactions, and things.
It is clearly unconstitutional, and has been as clearly defined to
be unconstitutional, for a State to tax extra-territorially, as to
tax Government bonds, or imposts in the hands of the importer;
and yet the United States Court, in Brown vs. Maryland, 12
Wheaton, 444, held that a prohibition against taxation of imports
could not be evaded by arbitrarily taxing the importers. The
Court said: " The State, it is said, may tax occupations,
and  this (a license on importers)  is nothing  more.  It is
impossible  to  conceal from  ourselves that this is varying
the form without varying the substance."  "Now, suppose the
United States should require every exporter to take out a license,
for which he should pay such tax as Congress might think proper
to impose, would government be permitted to shield itself from
the just censure to which this attempt to evade the prohibitions
of the Constitution (against taxing exports) would expose it by
saying that this was a tax on the person, not on the article, and
that the Legislature has the right to tax occupations i"   The
Court consequently held that the taxation of the person, the ilnpolter, was a taxation of imports; and wve must conclude, therefore, that the taxation of the person of a resident for extra-territorial property, or as a medium  or agency of taxing transactions
and borrowers in other States, is only "varying the form and not
the substance," and is still extra-territorial taxation and a denial
of full faith and credit (or efteet, as interpreted by the United
States Court, Mills v. Duryee, 7 Cranch, 481,) to the public acts
of other States, aiid therefore unconstitutional and void.
Taxation of debts is in effect a discriminating burden upon
persons who may, for any cause, be in debt. Competitors doing
business on their own capital and free from debt, pay one separate
tax on their personal property, while the unfortunate debtor
must pay the tax on his visible and tangible property and on the
money borrowed, or he cannot get it, for lenders generally lend
as a matter of profit and not as an act of benevolence. This is
the effect of taxing money at interest in the States where no offset of debts is permitted; and this rule has been adopted in all
the States where personal property to any considerable extent has




28
been assessed.  Taxation with an offset of debts has been found
a mere farce wherever attempted.  It is impossible for assessors
to ascertain the amount of the tax-payers' debts, and the amount
may be increased, at the will of the interested tax-payer, by the
purchase of United States bonds; by the ownership or pulrchase
of personal property situated beyond the jurisdiction of the State,
and by the purchase of non-taxable corporate stocks, and thus
practically  rendering, under the  rule  of offset of debts,
personal taxation a mere voluntary contribution. In England
and on the Continent there was accorded, for several centuries, to
the clergy the right or prerogative of taxing themselves for
personal taxes; and now the citizens of this State, by the practical
effect of our laws, unconsciously  enjoy the full 6eneft of
clergy in personal taxation, and tax themselves. While this
debasing farce of offsetting debts is authorized two assessors
meeting will always as instinctively smile, as did Rnman Augurs
smile, according to Cicero, when they looked each other in the
face.
By permitting an offset of debts we first go through the formality of attempting, by inquisition or some vague conjecture,
to tax the debtor through the medium of the borrower, and then
give the borrower an exemption on his visible personal property
to the amount of his debts. This isl if the assessor is a clairvoVant and the assessment accurate, nothing but.the old story of
the puppy chasing his own tail; and there seems to be no object
in the law unless it is to give the lender, who charges the borrower the supposed average tax, an opportunity of evading its
payment; and unless it is to give the borrower an opportunity,
with created or similated indebtedness, to evade all personal taxation.  Debts and all forms of titles are mere shadows of the
property which they I'epresent; and in our eagerness for infinitesimal taxation, like the dog in the fable letting go the meat when
crossing a stream and grasping for its shadow, we have lost both
shadow and substance.  All credits are forms of titles, and they
are a paramount title to a fee-simple title when enforced in the
courts against the debtor's property, or when his property by
operations of law or enforcement of liens is reduced to the possession of the creditor. No new property is created by making




new titles by exchange of titles. Now, in this State, land is first
taxed, and if land is leased for more than twenty-one years the
lessor is subject to a tax on a sum of money which, at seven per
cent., will produce the amount of the annual rent; and, if the
land is mortgaged, the mortgagee is also taxed.  lBnt these taxes
are only multiplications of taxation on the same land, which must
bear all the burdens imposed on these various titles to it. The
lender of money or the vendor of property does not retain possession or absolute ownership of the money lent or the property
sold, but he holds a qualified title, according to established and
legal priorities.  The borrower or purchaser obtains and retains
control over the property which is the subject of the title, and if
the whole " physical actuality" is taxed in his hands, the parts,
or the titles to the parts, will be taxed, and the tax will be apportioned on the personas holding the vcarious titles to the parts by
natural laws whatever may be the nature of the titles —leasehold, simple credit, mortgage, or lien debt, quit-claim, fee silnple,
or other title; and this adjustment will be made, as it is now
made between landlord and tenant, by mutual agreement, and
free from inquisition and annoyance.  If titles are taxed, however, to make a harmonious systenm, free from  extra-territorial
exactions, our State and other States can only tax the title and
not the property to which it refers.  If New Jersey taxes an
entire farm in her territory; and New York taxes resident mortgagees and lessees for their interest or title to or in a part of the
same farm, it is evident that parts of the farm will be taxed three
times and twice by extra-territorial and unconstitutional taxation
It cannot be said that a taxation of the whole is not a taxation
of the parts. If the State confines its taxation to the property
visible and having a corpus and a situs, extra-territorial taxation
will be avoided, and the system will be harmonious.
~ 14. Taxatior of all visible and tangible personal property, except
through the nmediurm of real estate, is impossible of execution
with ary degree of uruiforMnity, but it is a more equal systenr,
artd more capable of uniform execution tharu a system of taxation upon tthe owner by tlhe arbitrary rule of residernce.
Lingard, in his IHistory of England, gives a copy of an assessment roll in the reign of Edward III., which contains a list of




30
articles down to a towel and a bench; and the historian says, in
the returns are carefully mentioned the very rooms in which the
different articles were found, and there were no exemptions,
except one suit of clothes for each person, and that was supposed
to be taxed in the tax on polls. This was logical taxation of all
personal property by an annual inventory. The assessors and
collectors made domiciliary visits and reached every house and
apartment, but the law was so odious that it could not be executed, and was modified. No people will endure the trouble
and annoyance of infinitesimal taxation.  In Ohio all visible
property above $50 in valtue, without any offset of debts, is subject to taxation, but no assessor or official pays the least attention
to any sum that is quite considerably in excess of the line of
exemption, and officials freely admcllnit that the tax cannot be
rigidly executed; that they do and must of necessity exercise
discretionary and arbitrary power, and that an attempt to execute it would cause a political revolution and repeal of the law.
The official report of the Auditor of that State shows that
the total number of annual assessments do not amnount to
one-tenth of the number of adult population of the State,
notwithstanding, by the system  in  force there, the same
owner will be taxed in every town or district in whlich
he may have property in his own possession, or in the possession of an agent.  It is not probable that practically in the
assessment more than one adult person in fifteen or twenty is
reached in that State, while the law theoretically taxes all property and adults not indigent, or not having less than $50, without
deductions for debts. But the system  that discards the idea of
the diffusion of taxes imposed on all articles of the class subject
to taxation, and requires all personal property to be primnarily
taxed, commits suicide when it authorizes any exemption. An
exemption of the same class of property is a manifest inequality
and a surcharge upon the burdened persons and property above
the line of exemption, and a special privilege to the property ald
person below the line of exemption.  While we -protect amid
educate the feeble and indigent, the true American scorns to
receive undeserved charity or any special exemptions or privileges. There is not to exceed $500per capita of visible per



31
sonal property in this State, and an exemption of $250 to each
adult would remove from taxation a large share of the personality in the State, and thus take from the system all its vaunted
character of equality.  There are in this city 500,000 and in the
State more than 2,000,000 adults, all of whom  must undergo
annually an inquisition under a system of taxation of all personal property, even if a moderate exemption is permitted. hlow
can the assessor ascertain who or what property is exempt unless he
makes the inquisition?  How can it be expected that assessors,
acting officially a few days, at a compensation of $1.50 per day,
and subject to a penalty of $50 if they refuse to serve, having
access to but few judicial decisions, can decide readily and correctly all questions of title to personal property, which are
always involved in a system of taxation of personal property by
the rule of the residence of the owner?  How can they read the
minds or ascertain the intent of parties absent in the army or
navy, or sojournlg in another part of the State, in another
State, or abroad, to return or not return to their jurisdiction?
And yet the question of his domicil, the place and power of
taxing the absent person and his personal property, is dependent
upon his intent to return, and a rigid State civil service bill
must require that only " mind readers" should be eligible to the
position of assessor. HIow  can the assessor ascertain the ages
of tax-payers unless he examines and takes testimony about a
great number of persons less than twenty-one years of age, and
hdw is any assessor ever to ascertain the age of a woman?
W att Tyler's insurrection in England was produced by an at
tempt on the part of a tax collector to ascertain the age of his
daugbter, and a rigid inquisition into the ages of women and the
amount of their finery would produce a feminine insurrection
here.  Some of the residents of this city live fifteen miles from
the City Hall, where they must make an annual pilgrimage, or
they may be arbitrarily taxed to any amount whether they
have much, little, or no property. We have in this State more
than eleven thousand school districts, and the trustees in districts
act as assessors in the assessment of taxes for school purposes;
we have highway commissioners who assess road taxes in about
a thousand towns; we have village assessors in great numbers,




,32
and all the separate assessment rolls made anew for each school,
highway and village tax must be made at the time of assessment
and on a new inquisition, for in order to be legal and constitutional the person taxed must be a resident of the taxing district
when the assessment is made, if the taxation. is by the rule of
residence, and the amount of personal property must be assessed,
as it existed in the State subject to taxation at the time of each
assessment, and if the tax is upon property when found, it must
be in the taxing district at the time.  We have all these separate
inquisitions at different periods, and in different taxing districts
down to the limited teritorv of a school district. Verily, if every
item of personal property must undergo examination and be
taxed when found, as the Ohio law requires, and if any law is
to be executed with any degree of efficiency on all personal
property, the principal vocation and "chief end of man" will
be to examine assessments, submrit himself to inquisition, and
pay taxes. But any such law is merely Utopian, and never has
been and never can be executed with any degree of equity or
effectiveness.  The celebrated French statesman, Colbert, said the
secret of taxation consisted in picking the goose in a manner
to produce the least possible amount of squalling, but a system of
taxation of all personal property reverses this theory and exacts the
maximum  of squalling.  What a grand squalling we should
have in this State if two millions or more of our population
should be subjected annually to an inquisition and then to a
moderate plucking, followed with a supplemental inquisition
and  plucking for the  country highway and  school district
taxes!!
But, annoying and unequal as would be a system of taxation
of personal property where actually found, without offset of
debts, and without exemption, it is more logical and can be executed to a, greater degree than a system of taxation by rule of
residence with an offset of debts.  The residence is often in
a different district from the situs of the property, and then the
burden must be arbitrary.  But in either case, the property produced and consumed within the year; before the appearance of
the assessor, would be free fromn  any primary taxation; and no
really effective primary taxation of all personal property can be.




made, therefore, unless production and consumption'are constantly watched by an official eye.
~ 15. Practical arid beneficial effect of an exclusive real estate tax.
In Philadelphia, Montreal, England, France, and wherever
personal property has been excluded from  taxation, and an
exclusive burden on real estate has been adopted, it has been
found that realty is a most efficient, equitable, economical and
vigilant tax-collector and tax-distributor, and has demonstrated
that any complicated and inquisitorial system of separate taxation
of goods and chattels is wholly unnecessary, an obstruction to
trade, an injury to production, an unnecessary invasion of the
lprivacy of human affairs, and a self-torment inflicted on land
itself.  Good agricultural lands in England have been sold as
high as 8500 per acre; real property sells higher in London
than in any other city in the world, and the comfort, well-being
and prosperity of the poor and middle-classes is probably greater
in Philadelphia than in any other large city.
~ 16. ArA equal levy uponr real estate imrplies an equal distributiorn
uporn all personal property.
A full recognition of the law of diffusion of taxes will produce harmony between classes, and will tend to a concert of
action among classes to reduce the amount of aggregate taxation
in a community. When taxes are uniformly levied upon all the
subjects of taxation, natural laws will impose the burden
eqtually upon all other property.  Man imposes taxes, but
there is a divinity or natural law which diffutses them, and thus
there is a solidarity between the primary tax-payer and those
who pay the taxes that are diffused and repercussed. The owner
of land, equally with the owner of personal property, or the
poor day-laborer, is interested in having an economical system of
taxation acting like a labor-saving machine, and realty is less
subject to a burden when the tax is imposed solely upon land
than it would be if the tax were levied by a troublesome and
annoying system of taxation of personal property or labor. If
these principles are denied, it must be assumed that all taxation




34
is a hostile act, and that in all matters of taxation classes are always in a belligerent attitude to each other, and that certain
classes must combine to form a majority to oppress a minority.
This is a sad and erroneous view of human nature, and a full
comprehension of the true principles of taxation will lead us to
believe that appropriate taxes upon all things of a given class
will reach by adjustment, equation, and diffusion, all persons
and things, and in harmony with the idea that man is not always hostile to his fellow-man, but reciprocally joined with him
in all matters of public burden.  Natural laws will not except
any member of a community from the burden of uniform taxation of all the subjects of the impost; he who breathes, produces, and consumes must pay those taxes.
(Mr. S. here made a suggestion to limit the rate of annual
taxation in i cities to 2 per cent. and in towns to 1I  per cent., and
thus compelling assessors to make a full valuation of land to enable towns and cities to meet their annual expenditures, and he
also suggested other means, in detail, which he thought would
produce a full and uniform valuation throughout the State. He
said a concentration of effort on one immovable, visible subject
of taxation, like land, could be made to produce an approxin-ation tofull valuation and to uniformity, which it is impossible
to attain in the taxation of personality which is migratory, and
may be moved by steam, and always easily concealed.)
~ 17. Effect of art exclusive real estate tax; clheap nrortey;  increased
value to real estate; increase of Maraufactures arid productions
and commerce unrestricted ar\d fully developed betweeri cities,
towrxs, territories, arid States.
If loans of money and credits, created by the sale of property,
are untaxed, the purchasing power of money, to the extent of the
tax at least, must diminish, which signifies that the purchasing
power of farms, and the products of farms, and all chattels in
exchange for money, must, to the same degree, increase; and
hence the farmer or land owner, who even never borrows money,
will find his ability increased sufficiently to equal the new burden
on his land in lieu of the personal taxation for credits. Tenants,
controlledl by the natural laws of competition, can and will give




35
increased rents if their personal property is excluded from primary taxation; and manufacturers and producers occupying
their own premises will find full compensation for any resulting
increase of land tax in a like exclusion of their personality.
All members of society, whether they are subject now to a
personal tax or not, will be benefited by its removal. Its annoyance, demoralization, trouble, uncertainty, obstruction to trade,
manufactures, and commerce, and its authorized exercise of discretionary and arbitrary power must all be a burden on the entire
community and an incubus on free institutions.  The present
system should be removed on moral and political grounds. It
inculcates a disregard of all moral questions in taxation, and its
arbitrary power is repugnant to the spirit of freedom.  It acts as
an obstruction to trade and commerce in its duplication and
multiplication of taxes in different towns, cities, and States; and,
if rigidly and logically executed, would reduce free and untrammeled commerce to the limits of a school district, and, like the
vexatious and arbitrary obstructions between district and district,
and similar personal taxes of feudal times, it would produce the
stagnation of the Middle Ages.
By a free and unobstructed trade between all the States, and
between different sections of the same State, we utilize the forces
of nature in every section, to the mutual benefit of all sections of
our country.  Nature gives great power of production of cotton
in one State; great advantages in spinning it in cheap steam
or water power in another; great facilities for weaving it in a
third State; and peculiar advantages for dyeing and printing it
in a fourth State; and another, or fifth State, may afford extraordinary means in cheap water transportation lines or low grades
of railroads, and in open harbors for the sale of the raw material and the distribution of the manufactured article.  Often, in
the economical and advantageous production, manufacture, and
sale of a given article, all or some of its component parts will
be brought into the jurisdiction of a half a dozen States and
cities in a single year; and if all these cities and States impose
even a moderate tax it will be a multiplication of taxation, a
serious obstruction to the use and development of the natural
advantages and resources of our highly favored land, and trade




36
and manufactures must feel the blight of the vexatious burdens,
like moderate custom-house dues established between State and
State and city and city. The fact that other property in the
State is taxed at the same rate, at the same time, is no relief to
property that will be in the State, perhaps, but a few days, and
is destined to be soon in another, or several jurisdictions, where
n the same year it will be taxed.
The world has never before witnessed the extent of free and
unobstructed trade which has been developed in our confederacy
of thirty-eight States.  Our inter-State trade is more than fifteen
times greater than our foreign commerce. Let this State remove
the last feudal barrier which obstructs and burdens the free
transfer and introduction of personal property from other States
to this State, and from  town to town in this State, and we shall
make this State a place of refuge for labor, capital, commerce,
and manufactures, and we shall more fully develop our resources
and the resources of the entire country; commence a new era
of prosperity; and, by our liberal policy and by our prosperity,
we shall be an example that will be followed by other States, or
we shall drain from them capital, manufactures, and commerce,
until the feudalists will learn that their old system is not adapted
to this age, and that it is now tolerated only because it is imperfectly executed, and because other States have not entirely discarded it. New York will undoubtedly be the master of the
situation if she adopts early the proposed change, and will reap:iae reward always arising from the adoption and administration
of a revenue policy founded upon justice and equality.