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erty, and prepare tax lists at rates which will Expenditures.--Approximately 55 per cent Field the requisite sums including the appor of the aggregate government expenditures in tioned quota for county and state taxes. The the United States were disbursed by local town treasurer, directly or through tax collec- governments in 1902—almost three-fifths by tors, receives revenues and transmits to county cities. Besides costs of administration, the and state treasurers their respective quotas. local expenditures were mainly for education, He holds the town revenues, and, subject to roads and bridges, courts and prisons, char. warrant of the selectmen, pays township ex-ities, interest on debt, and health. Cities and penditures, keeping detailed records of all re- towns have additional expenses for fire protecceipts and disbursements. The fiscal functions tion, sewers and drainage, lighting and parks. and administration of New England counties Distribution between county and minor diviwidely vary, being nil in Rhode Island. Coun- sions varies widely, counties bearing more in ty expenditures and tax levies are fixed in proportion as townships are less developed and New Hampshire and Connecticut by county urban population relatively small. members of the legislature, elsewhere by county Revenues. For the whole country, the gencommissioners, with subsequent legislative en- eral property tax yielded (1902) most of the actment in Massachusetts. A county treasurer local revenues; viz., in cities of over 25,000, receives, holds, and, subject to warrant of the 81.4 per cent; in cities of 8,000 to 25,000, 76.6 county commissioners, disburses, the funds of per cent, in counties 79.9 per cent, other minor the county.

divisions 80.7 per cent. Subventions and South.-In the southern states, county grants, licenses (chiefly liquor), and poll taxes boards supervise county finances, determine the gave almost the whole remainder. Except in expenditures and fix tax levies, adding state cities, the bulk of poll taxes and the major taxes on general property—commonly by spe- part of license taxes other than liquor were cifying rates (mills) for each main object of obtained in southern states. Subventions for expenditure. They assess the much used li. various purposes, especially education, are cense taxes, and sometimes act as boards of granted by most states. The recent tendency equalization and correction for tax assessments. in some states towards centralization of variIn Georgia—as in Connecticut, New Hamp- ous taxes is often accompanied by division of shire, Indiana and Arkansas-separate officials the proceeds with local governments. Cities fix tax levies, thus separating this function obtain revenues from similar sources, also from appropriations. Elective assessors and largely from fees, municipal services and spedeputy assessors value and assess locally tax-cial assessments. able property and prepare tax lists. Taxes are See AssESSMENT OF TAXES; BUDGETS, STATE received by collectors, sheriff, or treasurer, and AND LOCAL; County GOVERNMENT; EXPENDIheld usually in separate funds by the county | TURES, STATE AND LOCAL; FINANCE, STATE treasurer, who, subject to warrant of the coun- SYSTEMS OF; PUBLIC ACCOUNTS; TAXATION, ty board, makes disbursements. The county SUBJECTS OF; TOWNS AND Townships. auditor, or clerk, audits bills.

References: J. A. Fairlie, Local Government Middle States and West.-In the mixed sys- in Counties, Towns and Villages (1906), Pt. tems of New York, Pennsylvania and many II, chs. v, vii, Pts. III, IV; “State Supervision western states, the characteristic features of of Local Finance" in Am. Pol. Sci. Assoc., Protownship and county systems are variously ceedings, 1905, 151-163; R. L. Ashley, Am. combined. The township system is also repre- Federal State (1903), chs. xx, xxi; F. J. Goodsented in the South. County fiscal functions now, City Government in the U. 8. (1904), increase in relative importance in most New ch. xiii; D. F. Wilcox, Municipal Franchises, England states and dominate in the West. II (1911), Pt. IV, ch. xliv; U. S. Census Economy and efficiency of centralized admin- Office, Special Report on Wealth, Debt, and istration for such services as education, char: Taxation (1909), Pt. III, 618-620, 642-648, Pt. ities, and roads explain this tendency. County IV, Tables 6, 7, 8, 10, 12–20, Statistics of Cities boards usually equalize aggregate assessments Having a Population of Over 30,000, 1908 between districts, but sometimes they make (1910); Am. Year Book, 1910, and year by adjustments between individuals.




Diversity of State Systems.-Original sim- | following measures elsewhere successful, still ilarity of economic conditions, constitutional | tend to assimilate state systems. Nevertheless limitations, administrative organization and perplexing diversity of systems grows out of functions gave wide uniformity of state sys-changing economic conditions, urban growth, tems of finance, though variations were abun- diversification of interests, different methods of dant in local systems. Efforts at reform, by taxing new forms of property, and constituFINANCE, STATE SYSTEMS OF tional limitations. Where apparent similarity cent; other licenses, 5.5 per cent; subventions exists, variety actually arises from different and grants, 1.7 per cent; poll taxes, 1.4 per methods of classification and accounting, and cent. Recent changes reduce somewhat the renders comparisons deceptive or impracticable. percentage from general property taxes, in. The resulting diversity of state fiscal systems, creasing that from special taxes. especially of revenues and administration, is While general property yields about half of such that only a separate exposition in detail the total, yet proportions range from nothing for each state could be completely accurate. (Connecticut, Delaware) to 90-96 per cent

Expenditures.—The general expenditures of (South Carolina, Utah, North Dakota, Oklathe states and territories aggregated (1902) | homa). South Carolina supplements general $185,600,000—somewhat less than the total ex- property taxes with commercial revenues, using penditures of counties, one-third that of cities, but slightly other forms. Over two-thirds of four-fifths that of other minor divisions. One the states—including all the south central and third of the states' total went for education, western (except Montana), and most of the common schools absorbing 75 per cent. Di. north central and south Atlantic, with New rectly for education some states expend little Hampshire in the north Atlantic divisions(Tennessee 2, Massachusetts 5, per cent), oth- receive above half of their general revenues ers more than half their totals (New Jersey, from this source. But, while general property Delaware, Michigan, Texas). Proportions for usually includes “all property, both real and common schools range from almost nothing personal,” yet both legal exemptions and defi(Indiana) to practically all educational ex. nitions of real and personal property widely penditure (New Jersey). These variations at vary among states. Thus Vermont exempts tach to varying degrees of decentralization. personalty of residents which is located in The enumerated expenditures for common another state. Deductions for debt and mort. schools are practically subventions paid to lo- gages are allowed variously, or not at all. cal governments which maintain such schools. Many states tax corporations separately by The remaining two-thirds of the aggregate gen- special methods-several using the general eral expenditures went: for insane, 11 per property tax but slightly for state purposescent; for charities, 10 per cent; for legislation while some state constitutions make all franand administration, 8.6 per cent; for penal in-chises taxable under general property. Differ. stitutions,, 7.6 per cent; for courts, 6 per cent; ences in classification make impossible accurate for interest, 5.3 per cent; military, highways, statistical comparisons-especially the ratio of sewers and drainage, agriculture, police and realty to personalty-between the several inspection, parks and recreation, health conser- states. Obvious inequalities of assessed valuvation, etc., took the rest. Under most of ation (see) cause widespread discontent with these different heads, expenditures by the sev- this tax as a main source of state revenue. eral states range from nothing or almost noth- Two reforms much urged are in some measure ing, to proportions doubling the average. Dif-realized: (1) separation of sources, raising ferent methods of accounting contribute to state revenue primarily from corporations, lithese statistical variations. Efficiency and newly censes, fees, and leaving land and tangible assumed functions of more centralized adminis- property for local taxation (Connecticut, Delatration continually increase state expenditures ware, Pennsylvania, West Virginia); (2) under every head, without arresting the growth classification of property, and low tax rates of local expenditures. Besides general expendi- on those classes which evade higher uniform tures, further payments by states (1902), ag. rates. Several states now have low flat rates gregating $86,000,000, were composed mainly on moneys and credits (Maryland, Pennsylvan. of investments ($27,300,000), book transfers ia, Indiana, Minnesota). Constitutional limi. $25,800,000, debt redemption 17,500,000, reve- tations, especially one requiring that all kinds nues collected for other civil divisions $10,400,- of property be taxed at a uniform rate, hamper 000. Excepting debt redemption, these pay- most states, or make constitutional amendments inequally distributed among states, rep- ments a preliminary to such reforms. resent little actual charge for state uses on Special property taxes are derived from in. current revenues.

heritances and mainly corporations. These and Revenues. Certain classes of state revenue intimately related business taxes together connected with debt refunding, book transfers, yield one-third of all general revenues. States various temporary receipts on account of local usually tax corporations under general propgovernments and disposal of state property, erty, but increasingly by special methods deare nominal results of accounting methods or signed more simply, directly and equably to occasional

Omitting these, state reach various forms of corporate property. To revenues are classified as general and commer- this tendency, state constitutions interpose obcial. The percentage of aggregate general rev. stacles. Hence few states have completely difenues derived by states and territories (1902) ferentiated corporation taxes from general from the main sources was: general property property. Nine-tenths of the aggregate special tax, 51.7 per cent; special property and busi- property taxes, including inheritance (1902), ness taxes, 32.7 per cent; liquor licenses, 6.1 per were raised by four states where separation FINANCE, STATE SYSTEMS OF of sources was extensively realized (Massachu. | tion of varying efficiency, never adequate, resetts, Connecticut, Pennsylvania, New York). adjust such inequalities. Some states more


Business taxes variously share the nature of hopefully employ tax commissioners (see) to special property and license taxes, and apply similar ends. Corporation taxes are variously to corporations and individuals. They supple- assessed, increasingly under the “unit rule,” ment general property taxes, especially in by special boards which include with growing southern states, differing from state to state; frequency tax commissioners and other experts. and partly supplant general property, corpora- Corporations commonly so taxed are railway, tion and license taxes. About three-fourths telegraph, telephone, sleeping car, express, ofof the states have inheritance taxes. Many ten street car companies. Where taxed by states exempt, other fix low rates for direct special methods, the capital stock, or gross or heirs. Rates are usually progressive collateral- net earnings, is the basis.

Some states proly, rarely as to value of estate. Collection hibit, some compel, taxation of "corporate exis often lax, total yield, therefore, moderate cess,” or franchise, value. Individual sharebut increasing. New York's law of 1910 ap- holders in such corporations are rarely taxed plied (double) progressive rates much below separately. Corporate tangible property is those in Great Britain. Circumvention by commonly taxable in localities where situated. change of residence induced the governor to Bank stock is usually assessed at the bank recommend repeal. The law of 1911 moderated against individual shareholders. Corporation the rates.

and license taxes are with increasing frequency Many states leave liquor licenses wholly for collected by state officials, especially officials local use.

New York, Pennsylvania, Ohio, Mas- who issue licenses, and in some cases such revsachusetts together obtained (1902) over three-enues are wholly or partly returned to local fourths of the aggregate raised for state pur- governments. poses from that source. Business licenses See APPROPRIATIONS, AMERICAN SYSTEM OF; Fielded important sums to Wisconsin, Pennsyl- | ASSESSED VALUATIONS, COMPARATIVE; Assessvania, Texas, Louisiana and a few other states, MENT OF TAXES; AUDITOR, STATE; BUDGETS, chiefly in the south Atlantic and south central STATE AND LOCAL; COMPTROLLER, STATE; Cost divisions, and largely from sources covered in OF GOVERNMENT IN THE UNITED STATES; DEBT, some states by business and corporation taxes. Public, ADMINISTRATION OF; EXPENDITURES, Poll taxes yield state revenues only in Indiana, STATE AND LOCAL; PUBLIC ACCOUNTS; PUBand the south Atlantic, south central and LIC PROPERTY; PURCHASE OF PUBLIC SUPPLIES western divisions. Several states have income and PROPERTY; REVENUE, PUBLIC, COLLECTION taxes of insignificant yield. Wisconsin levied | OF; REVENUE, PUBLIC SOURCES OF; Tax Coman income tax to be effective 1912, progressive MISSIONERS AND TAX COMMISSIONS, STATE; in rate, to supplant personal property taxation. STATE DEPARTMENTS, HEADS OF; TAXATION,

Administration.-State systems of adminis- SUBJECTS OF. tration are differentiated primarily by the References: U. S. Census Bureau, Special relative degrees of decentralization and by dif- Report on Wealth, Debt, and Taxation, 1909, ferences in the main forms of revenue, involv. Pt. III, Pt. IV, 953–974, Tables 9, 10, 12; J. A. ing differences in methods of control and ac- Pairlie, Report on Taxation and Revenue Syscounting. States are assuming a larger share tem of Illinois, 1910, chs. ix, x; C. C. Plehn, in expenditures and administration, both of Introduction to Public Finance (1911), 197which have rested mainly with local govern 203, Pt. III, ch. viii; Nat. Tax. Assoc., “State ments. Expenditures are effected usually by and Local Taxation” in Int. Conferences, the state treasurer (see) and auditor. Sev- | Annual Proceedings (since 1908); R. T. Ely, eral states seek more effective supervision Taxation in Am. States and Cities (1888), Pts. by vesting in a board of control (see) large II, IV; J. Bryce, Am. Commonwealth (1910), powers over all expending agencies. Revenue | I, ch. xliji; E. R. A. Seligman, Essays in Taraadministration centers in a state comptroller tion (1897), chs. ii, vi, viii, xiii; Johns Hop(see), or auditor and treasurer. Differences kins University, Studies in State Taxation in the functions and powers of these several (Maryland, North Carolina, Kansas, Mississipagencies attach especially to general property, pi, Georgia, 1900); R. C. McCrea, “Taxation corporation, business or license taxes. Ad- of Personal Property in Pennsylvania” in ministration of general property taxes, mainly Quart. Journ. Econ., XXI (1906), 52–95; J. under local systems (see), hinges on assessed E. Brindley, “Recent Tax Legislation in Iowa" valuation (see). Where apportioned, each in ibid, XXVI (1911), 178–182; W. Eldred, township fixes the state rate, and unequal “Taxation of Intangible Property in Minnevaluations affect only its contributions for sota” in ibid, XXVI (1911), 182–185; T. S. county purposes. But where, in more central- | Adams, “Wis. Income Tax" in Am, Econ. Reized systems, the state government fixes view, I (1911), 906–909; K. K. Kennan, "Wisthe uniform rate to be added to local assess-consin Income Tax” in Quart. Jour. Econ., ments, unequal valuations corresponding- XXVI (1911), 169–78; J. H. Gilbert, “Tax Aply increase or reduce local contributions portionment in Oregon” in Pol. Sci. Quart., for state purposes.

Boards of equaliza- | XXVI (1911), 271-289; E. L. Bogart, “Recent


Tax Reforms in Ohio” in Amer. Econ. Review, in the several states by Comptrollers, TreasI (1911), 505-518; J. A. Fairlie, “Taxation urer, Tax Commissioners; Am. Year Book, in Illinois” in ibid, I (1911), 519-534; reports | 1910, and year by year. E. H. VICKERS.



The financial policy of the Federal Govern- | revenue, but since 1816 protection has been ment differs in a marked degree from that of advocated with increasing force as a controlling the leading European nations because of the principle in the making of tariffs. Duties have separation of powers between the national and been laid upon thousands of different kinds of state governments. This affects both revenue commodities so that the revenue is derived and expenditures, and more particularly the from a great variety and number of trade oplatter. The underlying principles which deter-erations, and this, in turn, causes wide and mine this division of financial activities are sometimes violent fluctuations in receipts. As described elsewhere (see FINANCIAL POWERS, income cannot be predicted within reasonCONSTITUTIONAL Basis of). The most significable limits of accuracy, the Treasury has never cant constitutional provision (Art. 1, Sec. ix, been in a stable position. Surpluses and de14), which has, of necessity, driven the Federal ficits have been unexpectedly large, and each Government to indirect taxation, is that, until has created embarrassing problems. the passage of the Sixteenth Amendment (see) Taxation of domestic industry by internal all direct taxes (see TAXES, DIRECT) were ap- revenue duties has been less restricted. In the portioned; while in expenditures, the exercise two earlier levies of internal revenue taxes of certain powers by states has relieved the (1791 and 1814) duties were imposed upon disNational Government of responsibilities which tilled spirits, carriages, manufacture of snuff come upon other large countries.

and sugar, and auction sales; and in the Civil The financial policy of the United States may War period, upon almost every form of the conveniently be discussed under four headings: manufacturing, mercantile and transportation (1) revenue; (2) expenditure; (3) indebted industries. After the war, duties were prac

(4) participation in private business. tically limited to whisky and tobacco. As the Revenue.- For financial support the Govern- objects have been few, it has been possible to ment has rested almost entirely upon indirect gauge in advance their productivity, and in taxes, as customs receipts on imports, and in- so far these taxes have contributed to an orderternal revenue or excise duties; and until the ly budget. close of the Civil War the former was almost Unlike European nations, the Federal Gov. the sole reliance. From the organization of ernment has made but little use of an income the Government until 1910 inclusive, the total tax (see). Until the Civil War it was not sugordinary receipts were 20,320 millions; of gested, and its benefits, when then adopted, this, 11,195 millions came from customs; were retained for only a short time. During 8,445 millions from internal revenue; 28 mil the past twenty years there has been an inlions from direct taxes; 362 millions from creasing desire to add this prop to the financial sales of public lands; 1,391 millions from mis- desire to add this prop to the financial system, cellaneous rources; 96 per cent of the total system, but constitutional dituculties until 1913 has been thus derived from customs and inter- barred the way. One financial resource the nal revenue. Internal reverue duties were long Federal Government has neglected to employregarded as emergency income, to be used only its great national domain. For one brief petemporarily, as in case of war.

riod (1830-1835) the Treasury receipts from When import duties were adopted as the the sales of public lands were large, in one main source of financial supplies, it was almost year exceeding that from any other source; inevitable that the revenus system should be but as a whole the income has been insignifiutilized to further industrial and commercial cant. Intentionally it has been the policy to policies. There is no system of taxation which dispose of public lands on easy terms to so keenly affects business relationship as does settlers, and revenue has been a secondary obthe collection of duties on goods coming into ject. Only within recent years has the country a country, for it discriminates against certain been aroused to consider the advantage of a merchandise in favor of other competing prod. stricter policy, whereby national ucts. A domestic tax, however, places the same owned by the Government may be conserved burden upon all home producers and relatively and used to yield a public revenue (see Condoes not change their positions as competing SERVATION). rivals (see PROTECTION, THEORY).

Expenditures.-Until recently the policy of The revenue system was, therefore, early di- the Government in the matter of expenditures verted into an agency to protect domestic in- has been almost exclusively devoted to the dustry. At first protection was incidental to' maintenance of the primary agencies of Gov.



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ernment–its executive, judicial, and legisla- , to mistaken notions in regard to the benefits tive branches; to the support of a diplomatic of an enlarged monetary medium, than to a and consular service abroad; to the care of desire to escape just obligations. An inflexible Indians; the improvement of rivers and har- tax system has made it ditticult for the Govbors; to pensioning soldiers who have engaged ernment to meet sudden emergencies; and the in the nation's wars; to the payment of in- apparent lack of loanable capital has frequentterest on debts, wholly due to the necessities ly tempted Congress to rely upon Treasof war; and to protection of the nation's sov- ury notes, but with the exception of the legal ereignty by an Army and Navy. From 1810 tender (see) notes of the Civil War, they have to about 1835 various proposals were made always been quickly funded; moreover, with for national roads and turnpikes, and one was the exception of the greenbacks, they have built (see C'UMBERLAND Road). Until the Civil borne interest. They are, therefore, to be reWar, however, the nation kept closely to the garded as short-term certificates of indebtedness above named objects. In 1862 Congress author- rather than as paper money. In more recent ized that grants be made for the establishment years there has been a greater tolerance of a of agricultural colleges (see MORRILL GRANT), public debt, due to the necessities of the nabut payments for this purpose did not directly tional banking system which requires bonds involve taxation, for the expenditures were to for a basis of circulation. But the national be made from the proceeds of sales of public debt of the United States is small compared lands. The burdens of the Civil War checked with those of other countries. In the United any disposition, if there was one, to expend States the per capita national debt in 1910 was money on other than the primary duties of $11.42; in the United Kingdom, $82.38; in government.

France, $150.09; in Germany, $17.38; and in After 1880 a surplus revenue stimulated pro- Canada, $45.09. posals of expenditure which covered a wide Participation in Business.—The Federal Govrange, among which federal grants to common ernment carries on several great enterprises, school education received zealous, though un- particularly the Post Office; but the chief insuccessful, support. Congress still held to the fluence over business which the Treasury has traditional policy and applied its funds to the exerted has been upon the money market, and creation of a new Navy; and rather than em- indirectly upon commercial affairs, through bark on new policies, it refunded to the states the possession of large balances of idle public $15,000,000 of direct taxes collected during the money. The proper use of such state funds Civil War; just as fifty years earlier it dis. in its earlier aspects was concerned with the tributed back to the states a surplus derived security of public funds; later, it has includfrom unexpected sales of public lands (see). ed the service which the Treasury could render

With the beginning of the twentieth century by making its resources temporarily available the Government, through legislation by Con- for private use. The withdrawal of large sums gress, reached out in new directions; it en- by taxation in excess of current expenditures, gaged in the construction of the Panama Ca- if kept in government vaults, lessens by so nal; extended the work of the Department of much the amount of loanable capital in its Agriculture into new fields; and showed a most available form, that of money. disposition to engage in humanitarian services After the establishment of the sub-treasury which formerly would have been left to the system (see) in 1846, the Treasury gave little states to perform. The indications are that concern to the money market; and after the the expenditures of the Government will ex- Civil War it had abundant use for all its tend over a much wider range of application. funds. In 1873, however, on the celebrated

Debt.-The American people have never fav- Black Friday, the Secretary of the Treasury, ored the perpetuation of a large national debt. on the personal direction of the President, In the earlier years of the republic this feel- broke the corner in gold by selling gold in the ing was influenced in some sections by the public market out of the Treasury. belief that public indebtedness magnified fed- Between 1880 and 1890 the question became eral power and responsibility at the expense of more serious, for surpluses threatened to pile state sovereignty. Counter convictions as to up a huge accumulation in the Treasury. The payment of the national debt have rarely been difficulty was temporarily met by buying bonds put to the serious test of sacrifice because at a premium at considerable pecuniary sacri. American revenues have continued so ample, fice to the government, as the price of the bonds often more than was expected. Notwithstand-was lifted to an artificial level. Then for a ing these qualifications, Congress has been so- short time the deposits (see) in banks were licitous to provide for prompt payment of in increased, and the money was returned to comdebtedness. Bonds (see) have run for short mercial channels, but the Republican adminisperiods as compared with indefinite loans of tration in 1889 reversed the policy. Renewed foreign nations. The issue of Treasury notes prosperity in 1898 again brought the question (see) may appear to be an exception, but into prominence, and deposit in banks was acceptance of this method of providing for im- chosen as the solution. The Treasury became mediate financial needs has been due rather | more and more involved with the business

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