Starting with the simplest first—eminent domain, an American doctrine which, in its simplest form, subjects the land of any one to the need of the state or, in cases authorized by the Federal Constitution, of the nation. It is questionable whether it applies to personal property. It is an American doctrine, for in England where the king remained in theory the feudal over-lord, it was not necessary for him or the sovereign Parliament, wishing to take or control land, and having no constitution protecting property rights against such action, to invent any new doctrine; but with us all land is allodial. The old charters of the original States creating tenures in free and common socage are, of course, obsolete. Everybody is a freeholder, and the States are not, still less the Federal government, a feudal over-lord. Nevertheless, the property of every one must be subject to the supreme common necessity; and the right is absolute in the States, although limited in the national government by the Federal Constitution. It is an American constitutional principle; and this principle also provides, as does Magna Charta and the early charters of England as to personal property seized by royal purveyors, that full damages must be paid; and to this general principle our constitutions have added that the damages must be paid at the time of the taking and the amount be determined by due process of law; that is to say, in most cases by a jury. Blackstone says: "So great is the regard of the law for private property that it will not authorize the least violation of it; no, not even for the general good of the whole community";[1] a new road, for instance, cannot be made without consent of the owner of the land, and the words "eminent domain" do not appear in the text of his book. But though we hold the contrary doctrine, the rights of the property owner are sufficiently protected when the taking is directed by the State, or even by a city or town. The menace to property here, with the increasing bulk of legislation, comes in the number of new uses, not only directly for the State or for cities and towns, but for public-service corporations, or often other private corporations, and associations of persons, who are permitted by legislation to take land under eminent domain, or, what is often worse, to acquire easements over it. Most of the States give damages for land not actually taken, but damaged, though our Federal courts have not held this to be necessary under the Fourteenth Amendment; but although land can still, in theory, only be taken for a public use, the number of uses which our legislation makes public Is being enormously increased. The usual national purposes are forts, magazines, arsenals, dockyards, and other needful buildings. Independent of some express permission in the Constitution, the Federal government has no power to take, or even to own, land at all within the State limits. Therefore, it is questioned whether land may be taken for national parks or forest reservations except in the Territories, where title still remains with the Federal government. But the State's power of eminent domain is unlimited, although it began only with the towns or counties taking roads for highways, and cities and towns appropriating lands for schools and other public buildings. Probably the only serious addition of a wholly public use is covered by the general expression, parks and playgrounds; but the analogy of the highway led to the taking of land under eminent domain for railroads, when they were first invented, then for street railways, then for telegraph, telephone, and electric-light lines, underground pipe-lines or conduits of all sorts, and finally, for drains, sewerage districts, public, and often private irrigation purposes. Most of the more complex State constitutions define at great length to the extent of some twenty or thirty paragraphs just what purposes shall be considered a public use under eminent domain. In the absence of such definition, or without such definition, the number of such uses is being enormously increased by statute. Thus, reservoirs, storage basins, irrigation canals, ditches, flumes, and pipes for water drainage, or mining purposes, working mines, as dumps, hoists, shafts, tunnels, are made a public use by the constitutions of the arid States, Idaho and Wyoming. So as to water only in Montana, but in Idaho also to any other use "necessary for the complete development of the material resources of the State or the preservation of the health of its inhabitants."[2] And even by private parties, land may be taken for ways of necessity in many States, and for drains, flumes, and aqueducts by the constitutions of the arid States.
[Footnote 1: Book I, p. 139.]
[Footnote 2: These provisions are collated in "Federal and State
Constitutions," p. 159.]
At common law, of course, a man or a set of men, who happen to be neighbors, would have had no right to take my land for a private way, or for drainage or irrigation purposes, however beneficial to their land; still less to take water from my stream across my land to their fields. But this precise thing can be done in an increasing number of States, although it has been held unconstitutional in the courts of one or two of the far Western States, and has even yet not been decided by the Supreme Court of the United States as to the powers of the Federal government. Under the broad definition given in Idaho and Wyoming, you can probably take land to establish a municipal coal-yard, or dispensary, or anything else that the legislature might suppose to be for the general health or benefit of the people. Yet a hotel company would not, as yet, be considered a public use, nor, probably, a private recreation park. And land taken for one use may be subjected to other and totally distinct uses without giving any new right of damages, as was decided in Massachusetts, at least, when land given or taken for an ordinary city street was afterward occupied by a steam railroad. A notable limitation on the use of streets, however, we find imposed by the statutes of New York and many other States, which provide that no railway shall be placed therein without the consent of a majority of the property owners or abutters. There is frequent legislation providing that the betterment taxes collected in case of public improvement shall not exceed the damages given for the property actually taken. In the last two or three years there has been an extension of the doctrine, authorizing cities and towns to take more land than is actually needed, for the purpose of convenience, or in order to get a better bargain, and then sell the surplus; but such laws may be unconstitutional.
Land may, of course, be taken for all municipal purposes, including public squares or parks, playgrounds, reformatories and penal institutions, levees, ditches, drains, and for cemeteries; and the right is being granted to private companies other than those above mentioned, in Colorado, to tunnel, transportation, electric power, and aërial tramway companies; in North Carolina to flume companies; in many States for private irrigation districts; in the West generally to mining or quarrying companies; in West Virginia and other States to electric power, light, or gas companies; while in North Carolina, Washington, and Wisconsin, we find the dangerous grant of this great power to electric-power companies, which are, in Wisconsin at least, expressly permitted to flood lands by right of eminent domain in order to form ponds for power purposes. It is easy to see that under such legislation everybody holds his land not only subject to public need, but to the greed of any designing neighbor. Perhaps the most important question of eminent domain is or was whether it authorized general schemes of internal improvement made by the State or by a municipality, or, worse still, by a private corporation chartered for the purpose. The Constitution of Michigan, with those of the Dakotas and Wyoming, provides that the State cannot be interested in works of internal improvement, nor, in North Dakota and Wyoming, engage in them except on two-thirds vote of the people; nor, in Alabama, may it loan its credit in support of such works; nor, also, in Maryland, Minnesota, Ohio, and Wisconsin, create or contract debts for them; nor, in Kansas and Michigan again, be a party to carrying on such works. But the Tennessee Constitution declares that a well-regulated system of internal improvement should be encouraged by the legislature. So, in Virginia, no town or county may become a party to any work of internal improvement except roads, and they are frequently forbidden from borrowing money for such purposes. There is, therefore, considerable constitutional check to legislation in this direction.[1]
[Footnote 1: See "Federal and State Constitutions," book III, secs. 92, 324, 345 370, 391, and 395.]
Taxation, of course, has from all time been the universal limitation upon property rights, though it is important to remember that until the present budget there has not in modern times been an attempt at direct taxation of the capital value of land in England; Cobbett records many "aids" of a few shillings per hide of land in Anglo-Norman times. The earliest taxation was the feudal aids imposed purely for defensive purposes, for building forts and bridges; later for foreign wars or crusades. We have traced the origin of the scutage tax as a substitute for military service and the two great constitutional principles that all taxation must be with the common consent of the realm; that is to say, of Parliament, later of the House of Commons; and must also and equally be for the common benefit. Theorists have argued, particularly with us, that under the latter principle protective tariffs are unconstitutional; but even if it be admitted that they are not for the benefit of the whole people, the exception is as old as the rule; protective tariff laws, and, earlier still, laws absolutely prohibitive of importation, being plentiful on the English statute-books before and at the time this earliest of constitutional principles appeared. There is a step beyond the protective tariffs, however, which is naturally mentioned in this connection, and that is the bounty—sums of money paid to certain interests and derived from the general taxes fund. Under the Acts of Congress there has been, I think, only one instance of a bounty; that is in the case of the Louisiana sugar-growers. In State legislation it has been a little more usual. Foreign countries, notably Germany and France, as to beet sugar, etc., have been in the habit of giving bounties. This precedent undoubtedly suggested it; but these countries do not enjoy our constitutional principles. There has hardly been a direct decision on the constitutionality of the Federal bounty, but as to State bounties we find several, with an increasing tendency to hold void such laws. There can be no question that they are utterly against our whole constitutional system. The Supreme Court, when considering sugar-bounty laws, seems to have thought that it might be sustained as a compensation made for a moral obligation, the Louisiana planters having been led into industries from which the protection was suddenly removed; of such nature must be the justification, if any, for bounties given in times of flood, fire, or public disaster, which, however, are really sustained only in the absence of objection and on the principle lex non curat de minimis. The most insidious form of the bounty, however, is that of exemption from taxation, or, still worse, granting subsidies or subscribing to the stock and bonds of public-service, or even ordinary private, corporations. Undoubtedly the exception has been established in the case of railroads. The granting of State, city, or county aid to railroads has existed almost from their invention, probably on the analogy of highways; at all events, it is too late to be constitutionally questioned now. The exemption from taxation of private profitable enterprises, such as mills or factories, is less defensible. Frequently, however, they go without question, it being to no one's particular interest to do so. The usual subjects of State bounties were, in 1890, beet-root sugar, binding twine, iron and iron pipe, potato starch, and rope, with tax exemptions to Portland-cement works. Ramie fibre continued a favorite subject of bounty for some years, with seed distributions to farmers, which were in some States held unconstitutional. In 1896 Utah gave a bounty on canaigre leather and silk culture. There was an exemption on salt plants in Michigan, but beet sugar continued the favorite beneficiary. There has been a reaction against bounty legislation of recent years. In 1908, for instance, New York repealed its bounty on beet sugar, and it may be hoped, with greater intelligence of constitutional principles, that all such legislation will be abandoned.
Coming to matters of ordinary taxation, of course the first thing to note is its extraordinary extent. In direct taxation it is not an unfair estimate to say that the States and their municipal organizations undertake to impose an annual assessment on real and personal property which would average at least two per cent. throughout the country; amounting to from one-third to one-half of the income derived therefrom. In indirect taxation, duties, and revenue taxes, a sum far greater is taken from the average household. One might very much wish that the individual householder might at least know how large a sum is thus taken from his earnings annually, for it is safe to say that in no civilized country, not even in the France before the Revolution, was individual taxation anything like so heavy. Therefore, we are beginning to find legislation, even constitutional provisions, carefully limiting the tax rate. The amount of the State tax is thus limited in probably half the States, mostly Southern or Western, and nearly all of them limit also the amount of taxation to be imposed by the counties, cities, towns, school districts, or for other special purposes. In the North-eastern States such limitation is not usual, though in Massachusetts and New York it exists as to certain cities. It may properly be said of such legislation that it does not appear to be so futile as one might have expected. There is, of course, a tendency to raise the limit, involving frequent constitutional amendment, or, in Massachusetts, for instance, where the limitation is put on only by statutes, by later statutes authorizing the borrowing outside of the debt limit; for it should be said that such limitations do usually apply both to the appropriations and to the funded indebtedness incurred. Still I have not observed in the last twenty years any repeal of such laws or constitutional provisions, but rather an increasing number of States adopting them, from which it may be inferred that they work satisfactorily. Nearly all the States purport to tax the capital value of both real and personal property, not, as in England, rents or incomes; and they tax "tangibles" and also "intangibles." That is to say, they undertake to tax stocks or bonds or mortgage debts; the evidence of property, as well as the property itself; and the debt as well as the property securing It. Some States, such as Pennsylvania, impose a smaller, more nominal, tax upon stocks and bonds in the hands of the owner, for the sake of getting a larger return, but in many States, such as Massachusetts, this legislation would be unconstitutional, as not proportional taxation.
There is a mass of legislation every year directed to the assessing and collecting of taxes, tending more and more to become inquisitorial, requiring the tax payer under oath to furnish full schedules of his property, with provision for an arbitrary assessment if he fails to do so. One effect of this has been to drive very wealthy men from Ohio or other Western States to a legal residence in the East, where the laws are more lenient, or their enforcement more lax. The problem is a most important one and I see no signs yet of any solution in the increasing mass of legislation one finds upon this subject every year. It is to be noted—what our socialist friends have never seemed to observe—that just in so far as a man's earnings or income are taken from him in the form of taxation, you are already in a state of socialism. That is to say, to that extent is his income taken from him and administered by the state. This is an observation most unwelcome to the opponents of capitalism, so-called, who resent the conclusion that if the State and Federal governments are already taking forty per cent. of his income from him, a state of perfect socialism could do no more than take the other sixty per cent. This whole problem of taxation, indeed, is evaded at present only by the miserable solution of fraud; hardly any one, except the non-propertied classes, paying what the law purports to take from them; and the non-propertied classes only pay it because their taxation, being indirect, is paid for them by others.
Coming to other forms of taxation, we may distinguish three: Income, succession, and license. Income taxation in England dates, it is said, from 1435; but (in the shape of tithes) it is far older. The power of income taxation (except upon earnings and profits) belongs here only to the States; just as the sole power of imposing duties on imports is given to the Federal government. Many of the States impose an income tax, but I observe no particular increase in that kind of taxation in the legislation of the last twenty years. A man's income is commonly taxed with his other property. It is a form of tax far more evaded here than in England, probably because the English law provides a machinery for collecting a large part of income taxation from the persons from whom the income is derived, as, for instance, from the tenant who pays rent to a landlord; just as with us a corporation is made to pay the tax on its capital stock nominally due from the individual owner. The only notable extension of income tax legislation is in the establishment of the principle of the graded income tax, which is beginning to be adopted in a few States, as in North and South Carolina in 1897.