(d) The right of inheritance and gift, which we have had to mention as aggravating other sources of inequality, needs, as matters are at present, drastic curtailment. The tax must not, indeed, be heavy enough to encourage spendthrift living and lessen thrift, or to cut too deeply into the capital necessary for carrying on business. But a carefully devised tax can escape these dangers; and it is plainly not best for society, or for the heirs themselves in most cases, that they should have irresponsible use of large sums of money which they have not earned in a world where millions are starving, physically, mentally, and spiritually, for lack of what money can provide. If, however, the plan last outlined is ever carried into effect, there will be no need of restricting the right of inheritance; even the alternative plan would require little attention to inheritance after present inequalities had been approximately leveled, as there would then be little opportunity for large accumulations. A sharply graded inheritance tax may therefore be looked upon as a now necessary but temporary expedient.[Footnote: F. W. Taussig, Principles of Economics, chap. 54, sec. 5; chap. 67. secs. 5, 6.] We may conclude with the consideration of four special problems that are related, in some aspect, to the conceptions of equality and privilege.
What are the ethics of:
I. The single tax? The single-tax idea is that all the public revenue should be raised by a land tax. The push behind the movement comes from the sight of the unearned fortunes that have been made out of land. The term is used loosely by some to mean merely the taking or taxing by the State, as we have already suggested, of all future unearned increments of land value, so far as they can be computed. But, this would not now provide enough revenue for most communities, and so would not really make possible a single tax. The real single tax would involve taking in taxation not only future INCREASES in values, but ALL the rental value of land. Even this would not always produce revenue enough, as the needs of public revenue bear no relation to the land values in a given area. But it would in most places produce considerably more than enough revenue. Land taxes in New York City, for example, if trebled, would supply all the revenue; they would have to be quintupled to absorb the entire rental value of the land the city stands on. The simplicity of the scheme appeals to many-especially to those who own no land. But it amounts to a confiscation of land values by the State, which would be unjust to land-owners, however advantageous to the rest of the community. It means charging everybody rent for the land he now owns. Present tenants would be no worse off, but present owners of the land they use, as well as landlords, would be hard hit. Let us consider each in turn.
A considerable proportion of the land is owned by the users, the majority of whom are members of the middle class and but moderately well to do. Upon them the burden of supporting our increasing public undertakings would largely fall. But why? THEY are not getting any unearned income. THEY have, in most cases, paid pretty nearly full value for their land, even though that land was originally acquired for little or nothing. They have put their earnings into land in good faith, when they might have put it into industry or enjoyed its use. The single tax would work grave injustice to them. It would also be practically inexpedient, in drawing the public revenue largely from a class that can less afford it, while leaving hardly touched most of the bigger fortunes, which consist seldom chiefly of land oldings. But even as to that part of the land that is bringing unearned income to landlords is it fair to stop that income unless we stop all other forms of income on investment? One man has put his fortune into stocks or bonds; he draws his five per cent in security with no further trouble than clipping coupons; another, having put an equal fortune into land, finds his five per cent income entirely confiscated. Not by such class legislation can justice be served or equality produced. The landlord class deserves no worse than the stockholder class or the investor in a savings bank. It is fair, as we suggested above, to put an end to ALL incomes from investment, and make every man live on his earnings; it is not fair to pick out landlords for exploitation.
II. Free trade and protection?
Free trade is undoubtedly the ultimate industrial ideal; not as a natural right, but as a matter of mutual advantage, that everything may be manufactured in the most economical place and way. The geographical division of labor is as generally advantageous as the assignment of highly specialized tasks within a community. Import duties result in diverting labor into less economical channels, and hence entail a loss to the community as a whole. The prosperity of the United States has been in considerable measure the result of its complete internal free trade. On this general truth the best economists are pretty universally agreed. The argument that a tariff wall is necessary to maintain our generally higher standard of wages and living is pure fallacy, as, indeed, can be seen in the fact that wages in free-trade England are higher than in protectionist Germany. The only legitimate economic question is whether special advantages may accrue from protecting certain industries under certain peculiar conditions. For example, a new industry, in the conduct of which skill has not yet been acquired, may need nursing while it is growing strong enough to produce as cheaply as foreign competitors. Again, when foreign nations impose a tax upon our products, it may be politically expedient to impose a counter-tariff, as a means toward reciprocity and eventual free trade. But the discussion of such situations involves no ethical principles, and may be left to the economists and statesmen.
The considerations that concern the moralist are rather such as these: Is it advisable to keep our own people self-sufficing, producing all they need to consume? Is it permissible to protect (by a subsidy, which is equivalent to an import duty in other matters) our foreign merchant marine, so as to have the satisfaction of seeing our flag flying in foreign ports and the assurance of plenty of transports, colliers, etc, in case of war? Or is it better for humanity that the nations should become mutually interdependent, requiring one another's products and somewhat at one another's mercy in case of war? There can be no doubt that the narrower, "patriotic" view retards the deepest interests of humanity, and that free trade is to be sought not only as a means toward economic prosperity, but as an avenue toward universal peace.
The other dominant ethical aspect of the situation lies in the fact that the tariff plays into the hands of certain monopolies, enables them to maintain high prices and make excessive profits, which international competition would reduce. As actually used, the American tariff is largely an instrument for favoring special classes of manufacturers at the general expense, and so is to be condemned.
On the other hand, where manufacturers are enabled by the tariff merely to make fair profits, and economic considerations would dictate a removal of the duty and the shifting of labor to industries where it could be more regard for vested interests should make us pause. To ruin an industry in which capitalists have invested their fortunes and laborers have acquired skill, although it would be in the end for the general good, would work unjust hardship to them; in such cases, then, a tariff should be lowered only with great caution, or some compensation should be made to the individuals who suffer loss thereby.
III. The control of immigration? Another contemporary question is whether discrimination may rightfully be exercised in the admission of aliens to residence in our country. Abstract considerations would suggest the desirability of equal treatment to all comers. But certain practical effects must be considered.