(3) The only other clause of the Constitution, which, as students of Taxation, we are bound to examine, is the following: "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." A capitation tax is a poll-tax, which may be easily "proportioned" to the Census. It is not clear, what is the meaning of the words "or other direct tax"; the Supreme Court early struggled with that question, to this apparent result, that lands, as the only form of property that can be "proportioned" in their appraised value to population with any considerable degree of accuracy, are the only "other" subject of "direct" Taxation. However this may be, it is of considerable consequence to note, that the term, "direct tax," as used in the Constitution, does not correspond in its meaning to the significance of the same term as employed in Economics. With us, a "direct tax" means one demanded from and paid by the person on whom it is ostensibly levied, and cannot be thrown off or forward on anybody else; while an "indirect tax" is one which can be so thrown off or forward.
Attention is called to the distinction here, in order to show that an Income-tax, while in the Economical sense it is a "direct tax," is not such in the sense of the Constitution. Objections were urged against the late Income-tax in this country, that it was a "direct tax," and so, because it could not be proportioned to the population, was unconstitutional. The point is not well taken. It remains, and will remain, after the most searching scrutiny, that an universal Income-tax, all other taxes being abolished, is the form most consonant with the principles of Political Economy, and not at all repugnant to the Constitution of the United States.
15. Finally, are there any hints and guides to thought and legislation in the matter of Taxation through an extremely brief summary of the History of Taxes? So far as the Greeks are concerned, they showed a practical good sense in their laws of Property in general, and in their laws relating to Taxes in particular. The natural march of industry and commerce was not hindered by taxation: there was no forbidding the export of raw materials or specie; no favoring of manufactures at the expense of agriculture; no hint of the future Mercantilism in any efforts to preserve an artificial balance of trade; and no taxes on imports except for purposes of Revenue. These at Athens itself were usually 2% of the value of the goods, at the ports of her subject-allies 5%, and exceptional cases of higher rates than these were regarded as extortionate.
The Romans also were sensible and moderate in their modes of Taxation. They laid taxes for the sake of getting money for the public treasury, and had no other end in view. They knew nothing of what has since become famous under the name of "Protectionism." Their taxes were both direct and indirect, but especially the latter. The chief direct tax was the land-tax, that is, a claim to the tenth part of the sheaves and of other field produce, such as grapes and olives; and also pasture-money (scriptura) demanded of those who made use of the public pastures and woods. In Macedonia and the other larger Provinces, in lieu of the land-tax a fixed sum of money (tributum) was paid to Rome each year by each community in its own way. The grain-tenths and pasture-moneys were always farmed out to private contractors or companies on condition of their paying fixed quantities of grain or fixed sums of money. The chief indirect tax was customs-duties. There never was at any time a general tariff for the whole empire, but there were customs-districts, such as Italy, Sicily, proconsular Asia, the province of Narbo in Gaul, and others, each with a sort of tariff of its own, and some with special immunities. Goods imported by sea into Italy, for example, not for the personal use of the importer, were subject to a tax, which seems to have been mainly a tax on luxuries, since pepper, cinnamon, myrrh, ginger, perfumes, ivory and diamonds, are among the dutiable goods mentioned in one of these tariffs. Sicily had a tariff-tax quite distinct from this, since one-twentieth of the value of the goods (5%) was levied on the frontier on all imports and exports; and a similar tax of one-fortieth was laid by the Sempronian law on the province of Asia. These imposts, too, were leased to contractors, which gave, of course, some chance of fraud and wrong. There were other temporary taxes, like those, for instance, which Augustus laid of 5% on legacies and inheritances, and of 1% on articles publicly exposed for sale.
Green's History of England (I., 322 et seq.) gives an outline of the taxes there from the beginning of the monarchy. As land was almost the only source of salable things in the early time, so it was almost the only thing on which taxes were levied. Danegeld and scutage and feudal aids fastened only on the land. "But a new principle of taxation was disclosed in the tithe levied for a Crusade at the close of Henry Second's reign. Land was no longer the only source of wealth. The growth of national prosperity, of trade and commerce, was creating a mass of personal property which offered irresistible temptations to the Angevin financiers. No usage fettered the Crown in dealing with personal property, and its growth in value promised a growing revenue. Grants of from a seventh to a thirtieth of movables, household property, and stock were demanded. The right of the king to grant licenses to bring goods into or to trade within the realm, a right springing from the need of his protection, felt by the strangers who came there for purposes of traffic, laid the foundation for our taxes on imports. Those on exports were only a part of the general system of taxing personal property. How tempting this source of revenue was proving, we see from a provision of the Great Charter, which forbids the levy of more than the ancient customs on merchants entering or leaving the realm. Commerce was in fact growing with the growing wealth of the people." This passage shows, that, as a matter of fact, taxes have always hinged, and must hinge, on trade.
A few facts in the most recent movements of national Taxation in the United States may fitly conclude this Chapter and this Volume. Since 1867, Wool and Woollens have been the ass, upon whose breaking back the most conspicuous burdens have been piled; and the "McKinley Bill" so-called, still pending at the present writing in the Senate, heaps up still higher the groaning loads. The following table shows how futile is the attempt to keep out wools and woollens from such a country as ours, even by the most exaggerated barriers:—
Imports of Wools and Woollens.
(Calendar Years.)
| Years. | Wools. | Woollens. |
| 1886 | $17,403,099 | $43,995,641 |
| 1887 | 15,645,020 | 45,065,986 |
| 1888 | 14,542,244 | 49,984,298 |
| 1889 | 18,696,277 | 54,080,159 |
| 1890 | (fiscal year) | 56,582,000 |
Roger Q. Mills of Texas stated from his place in the House of Representatives in 1888, that the United States grows but about 265,000,000 lbs. of wool yearly, while it takes about 600,000,000 lbs. to clothe our own people. Why should more than half the wool needed to clothe the people be taxed in such a way as to double (in general) the cost of the people's clothing? And why should Benjamin Harrison, now President of the United States, have said in that same year, in view of these elsewhere unheard-of taxes, and in view of the average climate of his country, that somehow it seemed to him that cheap clothing implied a cheap man? In view of the enormous natural demand for woollens, in order to keep comfortable day and night 64,000,000 of inhabitants, is it not strange, and must there not be artificial causes for it in the kind and mode of national Taxation, that the United States has but 16 sheep to the square mile, while Germany has 92, France 111, and Great Britain 339?
Senator John Sherman stated in his place in August, 1888, and again in substance Sept. 2, 1890, that a line of custom-houses on our joint-frontier with Canada was "the height of nonsense, and almost a crime against civilization." Well might he say this in view of what his colleague, Allison of Iowa, has recently said, namely, that the Dominion bought in 1880 of the United States 8% of its brass goods, 86% of its copper manufactures, 94% of its cordage, 88% of its gingham, 65% of its glasswares, 99% of its rubber goods, 94% of its printing ink, 92% of wooden wares, 91% of tinware, 90% of wall-paper, 72% of paper wares, 98% of ploughs, 97% of engines, 99% of sewing-machines, and 90% of miscellaneous machinery.