writers upon the subject of taxation. It is a simple method, requiring no special elucidation. While, as an abstract principle, it may perhaps be regarded as theoretically correct, still, under existing economic conditions and varied business development of such corporations, and in view of the experience of some States with it, it can hardly be regarded as preferable in actual practice to that of a State tax upon gross earnings.

The inadequacy, under existing economic conditions, of the general property tax, so called, and its utter failure, even under the most rigorous and effective administrative methods that have been devised, to reach for taxation property of a corporate and intangible character, are recognized in all the States named.

It is clear that under this system there are numerous forms of wealth that do not and can not be made to bear a just share of the public burdens, and which in large part evade or escape taxation, and some forms which, when reached at all under the prevailing general property tax, are not equally and uniformly but unjustly and disproportionately taxed, as compared with other property. The inevitable result is that real estate and some forms of personalty are unduly burdened with taxation.

These conditions under the search light of aggressive investigation have engendered positive public and political agitation in many of the States, and have inclined people in every State, keenly alive to prevailing injustice, to vigorous criticism and denunciation of "tax-dodging" individuals and corporations.

While State tax officials, tax commissioners, and writers upon taxation, with considerable justification, inveigh against the efforts of individuals and corporations to evade and escape just taxation, it should in justice be said that there is a lack of appreciation of the fact that the principal cause of these conditions is inherent in the system itself, rather than in a general desire to avoid just taxation. In all the States named vast amounts of property are virtually exempt from taxation, and other property is unjustly and grievously burdened through the operation of bad systems and injudicious laws. It is useless to inveigh against tax dodgers and faulty administration unless the methods of taxing such classes of property are changed.

Representatives of corporate management and others are animated usually not so much by the fear of "equal taxation" as of unequal taxation under the prevailing systems.

Justice Cooley, in his work on Taxation, says:

The assessment of personal property reaches so small a portion of the amount really protected by Government that it might almost be said that laws for the purpose remain on the statute books rather as incentives to evasion and fraud in the dealings of the citizen with the State than as a means of raising a revenue for public purposes.

This might aptly be applied to the system for the taxation of corporations as well as intangible personalty in many of the States, a system that puts a premium upon evasion and inflicts a penalty upon honesty and weakness.

The remedies seem to lie in the adoption by the several States, working in harmony so far as may be, of new and modern methods based on correct principles for the taxation of special forms of property, separate and distinct from the general property tax in respect to both valuation and rates of taxation, and a thorough administration thereof.

In the States investigated there has been more or less departure from the general property tax toward the adoption of special methods for the taxation of corporations. With few exceptions, however, efforts in that direction have thus far been devoid of real method or design, and upon the whole "chaos" is the only descriptive term applicable to existing conditions in Commonwealth taxation.

There is a marked tendency in all these States toward making earning power the basis of taxation for quasi-public corporations. Properly directed, this must

be regarded as the correct principle and capable of practical application to such corporations under existing industrial conditions. There is also, however, a strong inclination to cling to the old system in part, and to use this principle in conjunction with some feature or factor of the property tax, more particularly to use earning power as a basis of property valuations in connection with property tax or "uniform" rates.

A mistaken conception of the property-tax theory of "uniformity," and a general disposition to apply the misleading iron rule of equal taxation to all forms of property, are revealed in most of these States, so far as public sentiment is concerned. As bearing upon this observation, the following is quoted from the case of Pacific Express Company v. Seibert (142 U. S. Supreme Court Reports, 351): This court has repeatedly laid down the doctrine that diversity of taxation, both with respect to the amount imposed and the various species of property selected either for bearing its burdens or for being exempt from them, is not inconsistent with a perfect uniformity and equality of taxation in the proper sense of those terms; and that a system which imposes the same tax upon every species of property, irrespective of its nature, condition, or class, will be destructive of the principle of uniformity and equality in taxation and of a just adaptation of property to its burdens.

The great problem of Commonwealth taxation, of commanding interest in all States, consists practically of reform in the methods of taxing corporations and individual personalty of an intangible character, and an improved administration of a circumscribed property tax.

The principles that taxes should be levied in proportion to ability to pay, and that, even under the general property system, they are designed to be upon persons rather than upon property, are generally recognized. Under existing economic conditions property is no longer regarded as an adequate test of ability to contribute to the support of the government. Hence the marked tendency to apply different tests to special classes of property owners. There is a growing class of citizens who receive large incomes or salaries, and enjoy all the advantages of society and good government, who, though possessed of abundant ability to pay taxes, are, under existing systems, practically exempt from taxation or inadequately taxed. This class is receiving and must continue to receive especial attention in the revision or reformation of taxing systems in the several States. While a tax upon individual incomes is generally conceded to be just and equitable in principle, it has been received with disfavor and regarded as impractical in its operation. It is apparent, however, to the careful student of Commonwealth taxation, that because of its justice and the increasing efficiency of State administrative methods that are being evolved, the idea of a limited supplementary State income tax is growing in favor and coming to be more generally regarded as a practical measure under State supervision.

Such a tax has always prevailed in Massachusetts, the present law of that Commonwealth, which the legislature recently refused to abandon, imposing a tax upon so much of the income of a profession, trade, or employment as exceeds the sum of $2,000, but exempting income derived from property subject to taxation. While this law is imperfectly administered, it is not infrequently suggested by eminent authorities upon the subject that a supplementary income tax of that character imposed directly by the States, under modern methods of administration, would become an efficient and practical source of State revenue. In conjunction with the principle of taxing corporations upon earning capacity it seems destined to receive increasing consideration in the several States.

GEORGE CLAPPERTON.

MASSACHUSETTS.

The principal source of revenue in this State, as in most others, is the general tax on property.

POLL TAX.

A peculiar feature still retained in the taxation system of this State is the poll or capitation tax levied on every male inhabitant above the age of 21 years, citizen or alien, and upon every female citizen of said age who requests to be so assessed. In the early period of our history the poll tax was quite general and popular, but gradually became obnoxious and, in some of the States, as Ohio, was prohibited by constitutional provision.

Careful provisions are made in the Massachusetts law for obtaining accurate lists of those subject to this tax, and the assessors assess upon them State and county taxes. The State tax is assessed upon the number of polls in each place until such assessment amounts to $1 upon each poll, the remainder of said tax being then assessed upon property. County taxes are assessed in like manner. The result is that the rate of poll tax is $2 per year throughout substantially the whole State.

Formerly the payment of this tax was made by law a condition of the exercise of the franchise and was in most part paid either by the person assessed or by political organizations. This provision was repealed by an amendment of the constitution in 1891. Since that time the collection of the poll tax from those not liable to property tax has been difficult, and in cities it is now very largely uncollectable from the persons who are not taxed upon property. Notwithstanding this, the cities and towns of the State are required to contribute their apportioned taxes, State and county, whether by poll tax or property tax, so that the resources of State and counties are not affected by failure to collect poll taxes.

The number of persons assessed for poll tax in 1896 was 723,736; the number of persons assessed for that tax only was 511,659, and the total amount of taxes assessed on polls was $1,434,629. The total amount assessed on polls in 1898 was $1,478,630, and in 1899, $1,504,990.

GENERAL PROPERTY TAX.

All property, real and personal, of the inhabitants of this State not expressly exempted by law is subjected to taxation. There is the common exemption of property used for the public good, and special exemptions designed to lighten the burden of taxation upon those not able to bear it easily. Conspicuous in the latter class are the property of soldiers or sailors who served in the war of the rebellion, or their wives (exempt up to $2,000 if they suffered certain disablements or became permanently incapacitated for manual labor, providing their estate does not exceed $5,000); the tools of a mechanic not exceeding $300 in value, and household furniture not exceeding $1,000 in value.

The tax on real estate is by far the most important, nearly three-fourths of the taxes of the State being assessed on real property. The taxation of real estate is based in the usual manner upon assessment by estimate and valuation by local

assessors.

There seems to be an unusual lack of uniformity in the assessed valuation of real estate in this State. The tax commission in its report of 1897 shows that taxes in many of the farming towns, as a result of industrial causes, are excessively and unfairly heavy as compared with taxes on real property in other parts of the State, real estate in some towns being assessed above its selling value and the rate often being $16 to $20 and sometimes more per $1,000.

The total assessed valuation of real estate for taxation in 1896 was $2,040,200,644. The total amount of taxes assessed upon real estate was $30,120,730, out of a total tax assessment on polls and property of $39,954,339.

In 1898 the assessed valuation of real estate was $2,182,596,651. The total amount of taxes assessed upon real estate was $33,394,643, out of a total tax assessed

on polls and property of $43,792,378. In 1899 the total assessed valuation of real estate was $2,247,094,547, and of personal property, including resident bank stock, $628,926,675. The tax on real estate was $34,188,810, out of a total tax on polls and property of $43,038,672.

MORTGAGES.

A distinguishing feature of the method of taxing real estate is the treatment of mortgaged property. The provisions of the statute are designed to impose only one tax on real estate, whether mortgaged or not, the mode of payment of this one tax being left to adjustment between mortgagor and mortgagee. This applies only to mortgages on taxable real estate; mortgages on realty situated outside the State or on real estate within it but exempt from taxation, such as church property, are taxable as personal property to their holders. The mortgagor or mortgagee of taxable realty may make to the local assessor a statement of the amount of the mortgage and name and residence of the holder of the mortgage interest therein. The law provides that when this is done, the mortgage is to be taxed to the holder, usually at its face value, but not to an amount in excess of the fair cash value of the mortgaged property. The making of the statement, however, is optional with the mortgagor, and there is usually no inducement to make it, mortgages being invariably drawn obligating the mortgagor to pay all taxes. The mortgagee is therefore virtually exempted from taxation on the mortgage.

This method was adopted in 1881. Prior to that time both the mortgage and the mortgaged property were taxed for their full amounts to their respective owners. It is pointed out by the tax commission of 1897 that under this former method the taxation of mortgages was carried out with great uncertainty, and the larger proportion of mortgage securities held by private lenders were not in fact taxed; the rate of interest, however, was affected by the risk of taxation.

The result of the practical exemption of mortgages from taxation by the law of 1881, providing for the taxation of mortgaged real estate once for all, and permitting mortgagor and mortgagee to arrange between themselves for the payment of the taxes, was a reduction of the rate of interest, not by the average rate of taxation, but about three-quarters of 1 per cent. The competition in mortgage investments was greatly increased, and there was a general and substantial decline in the rate of interest.

The commission, after thorough investigation, recommends the retention of the present method of one tax upon mortgaged property, with right of adjustment of payment between mortgagor and mortgagee. The commission discusses "the other feasible method," that followed by the State of California. There also but one tax is imposed upon mortgaged property; the mortgagor is called upon to state the name of the mortgagee and the amount of the mortgage, each being taxed in proportion to his interest in the property, and no agreement for payment of all taxes by the mortgagor is recognized. The effect of this method, as shown by the investigation of the commission, is that while the lender is taxed upon the full amount of his mortgage, the debtor is compelled to pay a rate of interest higher by the amount of the tax and even by something more mortgages in California usually bearing 2 per cent additional interest as compared with other loans or investments.

In view of the experience in California and general probabilities, the commission concludes that the taxation of mortgages by an unfailing process would increase the interest charged at least to the extent of the tax, and says that if the existing method is defective, in that persons of means lending on mortgages do not contribute proportionately to the public burden, the remedy should be sought in some other way. As a means of securing greater contributions from the estates of persons of means, the commission recommends an inheritance tax and an income tax estimated according to the rental value of the habitation occupied. The joint legislative committee on taxation, in its report, upon consideration of the report of the special tax commission on the subject of the taxation of mortgages, says that the present law seems to work well, and that to repeal it would be an unpardonable step backwards.

PERSONAL PROPERTY.

The statutes provide that, subject to certain exceptions hereinafter considered, "all personal estate within or without the Commonwealth shall be assessed to the owner in the city or town where he is an inhabitant on the 1st day of May." The exceptions to the rule that personal property is taxable to the owner at his