Watson's Magazine, Vol. IV, No. 2, April, 1906

by Various

Day after day we read in the newspapers communications in reference to public questions which are signed “Taxpayer,” or “Property Owner,” as if that fact should give more weight or influence to their opinions or suggestions. Others go still further. A Pittsburg preacher in a recent sermon denounced universal suffrage, saying, “Only property owners should vote and all others should be disfranchised.” Numerous other instances could be cited which tend to show a growing tendency to consider the real estate owner as the only person who pays taxes.

Now the great majority of our people have probably not looked upon these signs of the times with any apprehension as yet; but “great oaks from little acorns grow,” and this increasing disregard for the rights of men, as men, this creating of class distinctions with a tax-bill as a line of demarcation, on the theory that one small class pays all the taxes and is, therefore, entitled to rights and privileges that are denied to others, is dangerous and contrary to all principles of Democracy.

Owing to the inherent defects of human nature, no doubt there will always be those among us who will expect and demand more than they are entitled to, but the average American is satisfied with a square deal. When deprived of what he considers his just rights, however, he is, like most other people, inclined to become indifferent to the rights of others. Sooner or later he helps to swell the large army of the discontented; and history teaches that discontent is not only the mother of progress, but the mother of trouble. “On the contentment of the poor rests the safety of the rich.”

It is not intended to discuss in this article the justice or injustice of any particular tax, but simply to consider the question of taxes—how they are paid and who pays them—in the hope that we may thereby the more intelligently render unto Cæsar the things that are Cæsar’s.

Let us consider first the tax on real estate, one of the most important illustrations of the so-called “direct” taxation which Mill has defined as “that which is demanded from the very person who, it is intended or desired, should pay it.” Now it is, of course, true that this tax is levied against the property and the tax-bill is rendered in the name of the nominal owner, who is, naturally, expected to pay it; but whence comes the money with which he discharges this debt against his property? If the premises are rented or leased, are not the taxes, insurance, cost of repairs, interest on investment, etc., all added to the rental which is asked of and paid by the tenant? There are leases drawn today which contain a clause providing “that any increase in the taxes shall be added to the rental.” And yet, during the late struggle in Philadelphia over the attempted lease of the gas works to a private corporation for seventy-five years, a gentleman appeared before the committee of councils on behalf, as he said, of the taxpayers and rent-payers.

During the passage of the mortgage bill through the 1905 session of the New York Legislature, a member of the committee appointed by the real-estate owners to oppose the measure said: “The result, should the bill pass, will be for the real-estate owners to raise the rents. It is the public who will have to bear the burden, not the real-estate owners.” So we appear to have very relevant testimony to the effect that the man who receives the tax-bill, the man “on whom the tax is levied and who is expected to pay it” really acts as an agent, collecting the tax from his tenant and passing it on to the authorities. Is the tenant then a taxpayer or a citizen? As more than eighty per cent. of the people of the United States occupy rented houses, the sooner this question is satisfactorily answered and each of us understands his own individual responsibility, the better for all concerned.

Would not the rent-payer hesitate to cast his ballot for corrupt municipal government—with its accompanying reckless and dishonest expenditures of the public money—would he not hesitate to strike or riot, if he knew that the expenses (the teamsters’ strike in Chicago, in 1905, is said to have cost the city $100,000 a month for special policemen) and losses would eventually have to be paid by increased taxes added to his rent?

The United States Steel Company is said to have done much to eliminate strikes at its different plants by selling a portion of the capital stock of the company to its employes. Every man who owns even one share now feels that he is a part of the organization, that its interests are his interests, its losses his losses; and he is not inclined to do anything that will injuriously affect himself. When property owners understand and admit it, and rent-payers realize that they are a part of the municipal corporation, of the state and of the republic, that the public interests are their interests, the public losses their losses, that we must all rise or fall together, a great deal will have been accomplished toward the creation of better feeling and a consequent improvement in existing conditions.

Adam Smith says of taxation that “the subjects of every state ought to contribute toward the support of the Government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the states.”

Montesquieu defined taxation as “that portion of a person’s property which one contributes to the state in return for protection in the enjoyment of the balance.”