A house and lot worth $5,000, for
example, is much more likely to be assessed at that figure
than is one worth $50,000 to be assessed at its full value.
The tax rate on property, then, actually varies inversely
with the amount of the property a situation which con-
demns the system from the standpoint of justice.
The Personal Property Tax Degrades the Morals
of Citizens. The personal property tax has been charac-
terized as one which falls upon the ignorant and the
honest. Since such a small amount of the tax is assessed,
the statement implies that a large majority of the tax-
payers are dishonest. That the system is one well de-
signed to lower the integrity of the citizenship to the level
of the most unscrupulous cannot be denied. The classes
of property which are usually exempt from assessment
have already been noted, and it is often an easy matter
to convert otherwise taxable property into one of these
forms until after assessment day. The temptation to do
so is at least presented.

The widespread dishonesty occurs in the failure to re-
turn to the assessor the full amount of taxable property.
There is no possible way by which an assessor can reach
certain classes of intangible property, and reliance must
be placed upon the integrity of the owner to return it.
That very few make such returns, even though oaths are
often taken to that effect, is a matter of common knowl-
edge. Most of these individuals are considered exemplary
citizens, and would be highly incensed if they were con-
fronted with the charge of dishonesty and perjury.

The present situation has come to exist largely as a
weapon of self-defense. Every enlightened citizen recog-
nizes the services of the state and is perfectly willing to
bear his share of the burden. His objection arises, how-
ever, when he is asked to bear the burden which properly
belongs elsewhere. Some dishonest individual in a com-
munity fails to return his property, and his neighbors
know it. This not only means that he is going to escape
the tax, but that it will be placed on the other citizens by
a higher rate on the consequently smaller valuation. One



PROPERTY TAXES 253

does not have to look long at a list of assessments, which
some districts require to be published, to see how pitifully
small are the property returns of some of the wealthiest
citizens.

Imagine the feelings of a young college instructor with
nothing but ordinary furniture and one salary check in
the bank, when he finds his personal property assessment
higher than that of one of the leading bankers of his
community, one of whose automobiles represents more
value than the whole of the instructor's property. By
the time the next assessment is made his conscience will
doubtless have become so warped that his furniture will
have depreciated in value, and the assessor will find out
nothing about the salary check, even though the return
be made under oath.

The conscience of most people rebels at the thought of
committing murder, yet nearly everyone will shoot, if he
has a chance, as a measure of self-defense. So it is in the
case of property valuations men whose honesty is above
reproach, and who would shudder at the thought of falsi-
fying under oath, repeatedly swear to false tax returns
with scarcely a prick of the conscience. So it is those
who are ignorant of the actual burdens, or who have too
great a degree of integrity to act even in self-defense, who
really bear the brunt of taxes upon intangible personal
property.

Tax officials have long sensed the situation and have
decried it in no uncertain terms. One can pick up reports
of boards of assessors and boards of tax commissioners
for the last fifty years, almost at random, and find the
personal property tax denounced in scathing terms. Such
expressions as the following may be easily found. "The
system debauches the moral sense." "It is a school of
perjury." "The tax falls upon the man who is scrupu-
lously honest; upon the guardian, executor, and trustee,
whose accounts are matters of public record." ''The sys-
tem has demoralizing and corrupting influences." "The



254 OUTLINES OF PUBLIC FINANCE

system is debauching to the conscience and subversive
of the public morals a school for perjury, promoted by
law." Pages might be given to citing opinions of various
officials, but the inevitable conclusion would be the same
that the system has been a dismal failure.

137. The General Property Tax Is Intrenched in the
United States. When all these glaring defects of a system
are presented, one immediately inquires, "Why is it toler-
ated?" A number of explanations might be given. The
country has been new and prosperous, and the revenue
demands have not been an excessive burden on the social
income of the country. The increase in land values has
been more than rapid enough to offset tax burdens. It
has been difficult, moreover, to get concerted action among
a number of more or less competing commonwealths.
One state does not desire to tax land and capital at full
value, because it wants to attract industry to the state,
nor do its officials want to drive capital from its borders
to other states whose tax inducements are more favorable.
Hence state legislators have not always been overzealous
to increase assessments to the requirements of law.

Some of the devices which have been used to make the
system more effective have also helped to intrench it
more firmly in the minds of the individuals. The system
of valuing property for taxation at only 50 or 60 per cent
of actual value is an example. The psychological effect
is that the property owner feels that he is getting off
lucky by not having to pay taxes on the entire amount.
Then, too, he generally conceals some personal property,
and he feels he is somewhat ahead, forgetting for the
moment that others are doing the same thing. Many
attempts at classification of property have been voted
down, no doubt, because the voters in general have feared
that the capitalists were back of the measure, or that the
single taxers were attempting to introduce taxes on land.

Modern fiscal literature in the United States abounds
with discussions of the general property tax, and it



PROPERTY TAXES 255

strange to the American student to find nothing concern-
ing it in the literature of other countries. It forms such
an important part of our revenue that he has taken it for
granted that it is a universal phenomenon. Such, how-
ever, is not the case, but it would have been much more
nearly the condition two centuries ago. Other countries
have tried the method, carried it through its various
stages of development, just as we are doing, and have
found it wanting. They have long since discarded it as
a part of their real tax system, and it is now only a part
of their fiscal history.

In England, Italy, Scotland, France, Germany, and
other countries, the evolution has been the same. First,
taxes were placed upon land, then upon other commodi-
ties as they began to appear; this was followed by whole-
sale evasions and inqualities, with the consequent over-
throw of this form of tax as an important part of the
fiscal system. The general property tax still plays a minor
role in a few countries, but nowhere is it used as in the
United States. It may be that some time in the future
we will profit by their example, but at present European
writers refer to our fiscal system as an antiquated one.