§ 4. Taxation systems of the United States and other Countries.

It will now well repay study to examine Chart No. XXI, which shows in what manner the United States have raised their revenues, and to consider how far the right rules of taxation have been followed.

I. For means of comparison, I shall give the last annual budget of the United States in order to make clear from what sources the country derives its revenues:

[pg 591]

Chart XXI.

United States Budget, Year Ending June 30, 1883.

[In millions and tenths of millions.]

Receipts:
Customs	$214.7
Internal revenue	144.7
Direct tax	.1
Sale of public lands	7.9
Miscellaneous	30.8
Net ordinary receipts	$398.2

Expenditures:
War Department	$48.9
Navy Department	15.3
Indians	7.3
Pensions	66.0
Miscellaneous	68.7
Net ordinary expenditures	$206.2
Interest on public debt	59.2
Total	$265.4

This leaves a surplus of $132,839,444 above all expenditures, and our problem is now where to reduce taxation. The annual interest charge is lessening with the payment of the public debt, having fallen from its highest figure of $143,781,591 in 1867, to $59,160,131 in 1883.349Our national taxation is practically all indirect, that of internal taxation being chiefly levied on tobacco and distilled spirits, and our customs falling on almost all articles which can be imported, materials as well as manufactures.

In the United States direct taxation on real and personal property is very generally levied for State, county, and municipal purposes. In fact, nearly all the perceptible taxation is the property tax, and, inasmuch as the State and county tax is very light, the burden is almost always owing to municipal and town expenditures. People do not seem to be aware of the enormous national burden, because the taxes are indirect, and only increase the prices of commodities. Other countries, it will be seen, make a greater use of direct taxation than the United States. In fact, the comparison of the ways by which different countries collect their revenues may naturally show us where we may gain by their experience.

II. The English system is especially interesting, because, after having had an extended scheme of customs duties, they abandoned it, and raised their revenue, some on imported articles, [pg 592] it is true (generally on those which could not be produced in England), but by the income-tax, and other forms.350

In 1842 Sir Robert Peel found 1,200 articles subject to customs-duties. He began (1) by removing all prohibitions; (2) by reducing duties on raw materials to 5 per cent or less; (3) by limiting the rates on partially manufactured goods to 12 per cent; and (4) those on wholly manufactured goods to 20 per cent. Now customs-duties are levied only on beer, cards, chiccory, chocolate, cocoa, coffee, dried fruit, plate, spirits, tea, tobacco, and wine. The following budget gives the sources of revenue for Great Britain:351

Budget Of Great Britain, 1883.

[In millions and tenths of millions.]

Receipts:
Customs	$98.4
Excise (such as on tobacco and spirits)	134.9
Stamps	58.5
Land tax	5.2
House duty	8.9
Income tax	60.9
Post-Office	36.5
Telegraph	8.6
Crown lands	2.0
Interest (on loans, Suez Canal, etc.)	6.1
Miscellaneous	26.4
Total	$446.4

[pg 593]

Expenditures:
Interest on national debt	$148.4
Army, navy, etc.	157.1
Cost of revenue departments	45.1
Public works	9.1
Public departments, salaries, etc.	12.5
Law and justice	35.7
Education, science, and art	22.9
Colonial and consular	3.4
Civil list	2.0
Pensions	2.0
Miscellaneous	6.8
Total expenditures	$445.0

From this it will be seen that in the land, income, and house taxes, Great Britain raises by direct taxation about $75,000,000, and in customs and excise, by indirect taxation, about $233,000,000.

III. The following is the system adopted by Germany (Prussia):

German Budget, 1881-1882.

[In millions and tenths of millions.]

Receipts:
(1.) Property income from domains and forests	$11.7
From mines and salt-works	2.5
From railways	22.5
Miscellaneous	5.0
	$41.7
(2.) Royal Lottery	1.0
(3.) Bureau of Justice	$12.7
Harbors and bridges	.5
	13.2
(4.) Direct taxes	$35.5
(5.) Indirect taxes (for Prussia)	12.3
Total receipts	$103.6

Expenditures:
(1.) Civil list	3.0
(2.) Debt	25.0
(3.) Various ministries, schools, etc.	49.5
(4.) Pensions	4.0
(5.) Miscellaneous	19.5
Total expenditures352	$101.0

The Prussian direct taxes include (1) a land-tax, (2) a house-tax, (3) an income-tax, (4) a class-tax, (5) a trade-tax, and (6) miscellaneous taxes.

[pg 594]

IV. How the French supply themselves may be seen by the following statement:353

French Budget, 1881.

[In millions and tenths of millions.]

Receipts:
Direct taxes	$75.9
Similar taxes	4.7
Registry, stamps, etc	135.1
Forests	7.6
Customs (and salt duty $3.5)	65.4
Indirect taxes (including tobacco)	209.7
Post-Office and telegraph	27.2
Miscellaneous	29.8
Total receipts	$555.4

Expenditures:
Public debt, etc.	$249.0
General functions of the ministries	243.7
Administrative expenses, cost of revenue collections, etc.	58.5
Miscellaneous	3.5
Total expenditures	$554.7

The direct taxes are (1) on property; (2) one nearly like our poll-tax together with a species of income-tax; (3) a tax on doors and windows; and (4) one on licenses.