In
the administration of fiscal laws the system was no better.
The force of the spoils system placed the valuable politi-
cian in office rather than an efficient administrator, and
haphazard, inefficient, and wasteful methods were the re-
sult. Too frequently the elected official, as the local as-
sessor, was dependent upon his constituency for con-
tinuance in office, and the result was favoritism at the
price of justice and efficiency.

In Federal Government. To some extent this situation
is still true, but, as a general proposition, it is rapidly
changing. A few years ago members of Congress, to a
great extent, were all-wise beings, and felt the need of no
expert advice. The present situation of having, perhaps,
our greatest authority on fiscal matters as chairman of
an advisory tax board for the United States Internal
Revenue Department, would have been looked upon, a
decade or two ago, as a somewhat superfluous arrange-
ment. Yet, that the situation exists, indicates that pub-
lic officials have come to recognize the need of expert ad-
vice. The establishment of a tariff commission points in
the same direction.

In State Governments. The use of trained experts has
made greater progress in the fiscal program of states and
localities than in that of the national government. The
pressure for revenues and the limitation of sources de-
manded that something be done. First, honesty of officials
was demanded, but it was soon found that this was not
enough. Cities began to see that, just as private business
grew through strong centralization, so efficient and re-
sponsible administration demanded a central and qualified
corps of officials. The adoption of the commission or the
city manager plan of government has been the result. In
addition, there have been added, in many municipalities,
expert accountants, bureaus of public efficiency, and



CONCLUSION 513

similar officials, each prepared for his particular duty, all
for the sake of securing a more efficient administration of
the public revenues and expenditures.

The Tax Commission. The states, likewise, have shown
the inclination to get away from politics in fiscal affairs,
and to center more or less responsibility in some body of
men, usually called the State Tax Commission, chosen on
the basis of their expert knowledge of fiscal affairs. The
powers of the boards vary all the way from the mere act
of advice to the centralizing of the entire fiscal system of
the state in their hands. The tenure of office is usually
made long enough, and the salary high enough, to attract
men who, because of training and experience, are qualified
to handle wisely and efficiently the problems which are
placed before them.

In addition to the regular commissions, the special tax
commission has been an institution of frequent occurrence
in recent years. To this body of experts, of which these
commissions are composed, is assigned some special prob-
lem for investigation and solution. The difficulty still
remains, however, to a somewhat marked degree, that
legislatures are not willing to accept the advice of these
standing and special commissions, and to put into effect
the fiscal policies which they formulate.

250. The Study of Fiscal Subjects Is Increasing. That
a .greater interest is being taken in the expenditures and
revenues of the various political units is evidenced by the
increased study of these problems which is being carried
on, both by those directly connected with the formation
and administration of tax laws, and by those who act in
no official capacity. It is a hopeful sign that a systematic
study of fiscal problems is rapidly finding a place in the
curriculums of our colleges and universities. The old idea
that an education consists almost entirely in gaining a
knowledge of the so-called " cultural" subjects is passing,
and the notion is gaining prevalence that higher educa-
tional institutions should impart more knowledge having
immediate application to the world in which the student
lives. The emphasis, consequently, is no longer being
placed so exclusively on Lathi, Greek, and Mythology,
but the facts of modern society are given more attention.
In practically all the large universities, and in many of the
smaller institutions, therefore, courses are found which
deal specifically with fiscal problems. Such a develop-
ment of study is hopeful, for it should place in each com-
munity a group of leaders who should be vitally interested
in the expenditures and revenues of then* district, as well
as those of the state and nation.

These leaders, who have learned to think sanely and
clearly on the principles, will be able to peer beneath the
surface and separate the true evidence from the false, and
will be deeply enough grounded that they should not be
easily swayed by partisan politics or party slogans, when
the issue is essentially one of economic interests. It has
been a source of much gratification to the author to note
the interest his students have displayed in working up
reports on the expenditures and revenues of their home
communities. That this interest has not been merely a
passing one is evidenced by the letters which are received
from former students, in which attention is called to dif-
ferent fiscal situations which have come under their ob-
servation, and that they are now able to see the facts hi
the case.

Outside the colleges and universities the same tendency
to study fiscal problems is making itself manifest. Or-
ganizations, both national and state, have been established
for this purpose, and are doing a good work. Authorities
in various fields work out their respective problems and
usually assemble at least once a year to discuss the fiscal
situation and to interchange ideas. The National Tax
Association is the best illustration of this form of organiza-
tion on a national basis. The annual state conferences on
taxation in New York are largely for the purpose of
studying the fiscal problems of that state. Conferences of



CONCLUSION 515

various classes of officials are also frequently held for the
purpose of studying problems peculiar to their duties.
Conferences of local assessors, for example, frequently oc-
cur to discuss the problem of the discovery and valuation
of property.

The study which has been done, and that which is being
carried on at present, will facilitate the future investiga-
tion of fiscal problems. There is gradually being collected
a quantity of valuable literature, both in this country and
hi other countries, which is common property to all pres-
ent and future students. The reports which have been
published by the various special and permanent commis-
sions are supplemented by published proceedings of the
numerous conferences which are held every year.

251. A More Enlightened Public Is Needed. One of
the outstanding needs hi the further perfection of fiscal
systems, and one which can only come with the gradual
dissemination of knowledge as to the nature of expendi-
tures and revenues, is an enlightened public. The nature
of public expenditure is too often overlooked, or not under-
stood. Individuals and communities frequently assume
the attitude that it makes little difference whether any
return is rendered for receipts from public treasuries.
The Congressman who succeeds in getting a massive gov-
ernment building for his home village has been a benefac-
tor. The discharged soldier points with pride to the
equipment he managed to purloin from the government.
These illustrations but represent an aspect as it appears
at first sight. Governments generally depend upon their
citizens for their funds, since they have no magic source
of supply. A government expenditure, then, is a removal
of funds from one pocket for the purpose of putting them
into the other, with some deductions for the expense of
handling. If the amount is not taken from the pockets of
the particular individuals who receive the benefits, it
must be taken from those of their neighbors, so there is
no gain to society. When individuals realize that it is



516 OUTLINES OF PUBLIC FINANCE

their demands upon the government that cause the in-
crease in tax burdens, they will be more concerned about
the demands which are made.

It naturally follows that the citizenship of a state should
have some adequate knowledge of what constitutes proper
expenditures. Obviously this will depend upon the con-
ception which may be held as to the proper functions of
the state. An anarchist and a socialist, for example,
would have difficulty in coming to an agreement on the
proper lines of activity upon which a state may properly
enter. Yet, in order that the citizenship may have some
notion as to whether they are receiving a value commen-
surate with the tax burden, they should have hi mind
some measure of the proper activities for state initiative.
In general, the citizen should feel that a greater value is
being given when the funds are being expended through
his public representatives than if they had been left to be
expended by himself. A study of public expenditures,
with this in mind, will lead to a closer scrutiny of the acts
of public officials, and will hold them to a more strict ac-
countability for the way hi which public funds are spent.

The citizen, moreover, should become so enlightened
that he will demand the efficient management of public
funds. It has frequently been said that if the business
principles which are used hi conducting the various politi-
cal units were applied to a private enterprise, it would
soon be forced to bankruptcy. Too many candidates who
run on efficiency platforms leave the platforms behind
when they assume the duties of office. The citizens have a
right to demand, and in the interest of reducing the public
burden and in securing value received for their taxes, should
demand, as exacting business principles in the conduct of
the state as in the conduct of private business enterprise.

With an increased study of fiscal problems by the
officials who must administer them, and by students who
are to become the leaders in civic life, through whom
knowledge will be disseminated to the public as a whole,



CONCLUSION 517

problems of expenditure and revenue may be expected to
be handled much more efficiently in the future than they
have been in the past.

252. Tax Laws Need Simplification. It has been the in-
tention in the preceding pages to mention and discuss
only some of the more important considerations that con-
front fiscal students and officials. Many others have
doubtless occurred to the reader. Each locality, of course,
has its own peculiar problems and difficulties, which could
not be specifically treated. It is hoped, however, that a
study of the previous pages will prove an aid in the better
understanding and solution of the problems which have
not been specifically treated.

One objective that is worthy of the efforts of every
official and taxpayer who desires a simpler fiscal system,
is to eliminate the complexity that is now found in many
of our tax laws. Of the complexity existing at present
examples need be cited only of the Federal income tax
law, the excess profits tax law, and many of the state
laws, such as the New York system for taxing corpora-
tions. Individuals and corporations desire to have some
reasonable idea as to how much tax they will have to pay
without the necessity of employing an attorney to aid in
making the calculations. The difficulties do not even
stop here, for the courts are crowded with tax-adjustment
proceedings, many of which are of years' standing. This
element of uncertainty is disconcerting both to the tax-
payer and to the officials who must calculate the amount
of revenue which will be received. The state tax commis-
sions of some states have done much to secure a simplifica-
tion of fiscal statutes, but much remains to be done in
both the Federal and state laws.

253. Attempts Have Been Made to Outline a Model
System of Taxation. The difficulties which have been
considered in the foregoing pages have weighed heavily
upon the minds of fiscal students and officials who have
been interested in a greater degree of justice and simpli-



518 OUTLINES OF PUBLIC FINANCE

fication in the tax system as a whole. Attempts have
been made to formulate schemes which have been called
" model tax systems.' ' If only one political unit were to
be considered, this could be done with comparative ease.
Where there are as many competing jurisdictions as are
to be found in the United States, however, the difficulties
which are encountered by one who attempts to formulate
a tax system which embodies the principles of justice,
simplicity, and adequacy can be readily imagined. After
much consideration and deliberation, a committee which
worked under the auspices of the National Tax Associa-
tion formulated a plan which embodies these principles in
a high degree. The model tax system, as given by this
committee, is worthy of the study of those who may have
occasion to be interested in tax reform. The report em-
bodies the following principles