The amount assessed against multi-millionaires. First. That the assessed value of all real estate in the State is approximately seven billions of dollars. Second. That the assessed value of all personal property is approximately $800,000,000. Third. That the market value of all real estate is but slightly in excess of its assessed valuation. Fourth. That the value of all personal property owned by the citizens of this State is not less than twenty-five billions of dollars. Fifth. That the income from investments made in real estate is of much lower percentage than that derived from personal property. Sixth. That the richer a person grows the less he pays in relation to his property or income. Seventh. That the owners of personal property have advocated and voted for local improvements without any substantial contribution on their part, until the tax on real estate has become a great burden. Eighth. Experience has shown that under the present system, personal property practically escapes taxation for either local or State purposes. As proof of this the following table showing the amount assessed against well-known multi-millionaires for personal property is as follows, for the year 1907 in the City of New York: 200,000 00 100,000 00 5,000,000 00 100,000 00 50,000 00 250,000 00 50,000 00 2,500,000 00 300,000 00 300,000 00 2,000,000 00 250,000 00 300,000 00 232. The Inheritance Tax The Wisconsin Tax Commission in a recent report made this statement of the case in favor of the tax on inheritances. theories for the tax. The economic theories for the inheritance tax are several, such Economic as the limitation of inheritance, the diffusion of wealth, co-heirship of the state, cost of administration, the special privileges accruing to the recipient of property, the accidental or fortuitous income, the receipt of property without toil or service, and the back tax theory. The enumeration does not include all the arguments advanced in justification of the tax, nor is it to be understood that agreement exists upon the validity of the theories just stated. socialistic? The view that the power of taxation should be employed to Is the tax limit the amount of inheritance or bequest and thus prevent the accumulation of large fortunes, although not necessarily socialistic, is generally so regarded, and does not have the approval of conservative men as a sound basis for taxation. This theory rests on the proposal that property above a specified large amount like $500,000, or $1,000,000, or the major part thereof, shall escheat to the state or be taken by the way of taxation. The doctrine of escheat or the diffusion of wealth is generally regarded as unsound and fails to satisfy the best writers on economics, although supported by eminent authors with great plausibility. argument. The back tax theory has more popular support than any other, Back tax and in some states has been the most potent argument for the enactment of inheritance tax laws. The claim is that as the general property tax is largely evaded during life, it is no more than just that the state should recover the equivalent from the recipient of property by a tax that cannot be evaded. The impossibility of framing a law on a scientific basis to accurately reach the exact amount of the tax evaded during life will be recognized by the most casual observer. in this The difficulty of following the changes in the form, character, or Weakness value of property, throughout the life of a decedent, so as to show the true condition of the estate to the satisfaction of the court argument. Reaching intangible property. Professor Ely's argu ment. administering it is unsurmountable, and such investigation is possible only for a very short period immediately preceding death. The logical application of the back tax argument would demand the enactment of a law for levying an inheritance tax equal to the tax which should have been but was not assessed against the property in the lifetime of the owner. The burden would be cast on the state of establishing by proof the assessment of the entire property from year to year with the taxes paid thereon, and the various kinds and value of property during the same periods, to ascertain the sum of taxes actually paid, and the amount which ought to have been paid. The difference would be the inheritance tax in each particular case if the validity of the argument is to find expression in the law. In this country taxes on real estate are levied and paid. The instances where land escapes are exceedingly rare, generally due to the inadvertence of assessors, and in this state efficient provisions exist for placing all real and personal property on the tax roll whenever omitted in the three prior years. It is personal property of the intangible kind that escapes taxation. Visible property is generally found and taxed with as much certainty as real estate. Therefore to be logical only intangibles such as money, notes, stocks, bonds, mortgages and other credits should be subject to the inheritance tax. The loss of revenue legally due the state by the concealment or omission of this class of property is a strong inducement to the enactment of inheritance tax laws, and the argument is not to be wholly brushed aside when the policy of this legislation is considered. It must, however, be conceded that the theory of exacting from the heir the tax evaded by his ancestor cannot be sustained on equitable principles. It would be a penalty on the heir for the sins of his ancestor, which is not a good basis upon which to rest a just system of taxation. In the opinion of Dr. Richard T. Ely, an eminent authority on economics, the inheritance tax can best be sustained on the theory that it falls on property which comes to the recipient without effort or labor. "Property," he says, "which comes by inheritance is an income received without toil. It is for the one receiving it an unearned increment of property, and on this account may properly be taxed. The most satisfactory basis upon which property can rest is personal toil and service of some kind and when property comes otherwise than as a return for social service, a special tax finds a good solid basis in justice." The accidental or fortuitous receipt of property on the occasion of the death of the owner is advocated by Dr. E. R. A. Seligman and Dr. Max West as a sound economic theory for the support of an inheritance tax. Other The objections sometimes urged that an inheritance tax is a objections tax on capital or unequal or double taxation are unsound. The considered. objection that the taxation is a discouragement to industry and thrift, and tends to drive capital away applies with far less force to the inheritance tax than to the general property tax. It sinks into comparative insignificance with the heavy burden of municipal taxes levied annually; whereas the inheritance tax is paid at long intervals, or once in a lifetime. CHAPTER XXXII The trust born of rapacity; maintained by tyranny. SOCIAL AND ECONOMIC LEGISLATION 233. The Spirit of Opposition to Corporations THE spirit which has led to much anti-trust legislation is revealed in this speech delivered by Mr. Burr in the last New York constitutional convention: The trust has come determined to stay. It has determined to accomplish its ends, no matter what the cost. It controls the great staples of the country. It is born of rapacity and maintained by tyranny. It stretches out its tentacles, quietly and stealthily, until whole industries are in its grasp. It creates a monopoly by throttling all competitors. It grinds down those who furnish the raw material and supply the labor, and exacts the highest possible price from the consumer. It has become an impregnable citadel of capital. It employs the highest legal and business capacity to perfect and maintain its organization. It laughs at public opinion, rides roughshod over railroad enactments, and baffles the law courts. It bridles newspapers with subsidies, and sends members to the Legislature and to Congress. It has agents in every Legislature, and legislative bodies become as pliable as wax in the hands of the modellor under its powerful manipulation. It tampers with judges. It makes alliances with political leaders and hires professors of political economy to defend its formation and its objects. We have seen it within the past month stalk into the Senate of the United States and prevent the passage of laws needed by the people, until it forced the highest legislative body in the land to yield to its imperative demands. It is no longer an interference with trade. It is a menace to political liberty. It is no wonder, then, as President Cleveland stated to Mr. Wilson in his now |