Internal revenue duties are those taxes collected by the government from its own citizens upon a small class of articles produced in this country. The chief items of this class are distilled liquors, tobacco, and oleomargarine. In 1889, out of the $130,894,434 received from internal revenue, there was derived from spirits and fermented liquor $98,036,041; tobacco, $31,866,861; oleomargarine and miscellaneous, $991,532. These duties are collected by Government collectors stationed in every United States district, who visit the distilleries, collect the taxes, and see that the law is enforced. In several Southern States attempts to evade the law are very frequent and difficult of detection. The expenses of the vast postal system conducted by the Federal Government are very nearly defrayed by the charges made for postage, and the amount received by fees more than equals the expense of the Patent Office.

#The State and Local Taxes# are generally, for convenience, collected at the same time, and by the same officials, but independently of the Federal government. The Constitution of the United States forbids the States to derive a revenue from duty upon goods imported or exported. The States are, therefore, for the most part, restricted to a direct tax on property for the support of their governments.

The general method for raising this tax is as follows: The legislature of the State, having determined what income is needed, apportion this sum among the counties, or, in New England, directly among the townships, in proportion to the value of the property situated within them, or establish a certain percentage tax on all property, to be collected in the same manner. So, similarly, the counties apportion among the cities and townships within their areas, in proportion to the value of their taxable property, not only what they have to pay to the State, but also the sums they have to raise for county purposes. Thus when the township or city authorities assess and collect taxes from the individual citizens, they collect at one and the same time three distinct taxes—the State tax, the county tax, and the city or township tax. Retaining the last for local purposes, they hand on the two former to the county authorities, who, in turn, retain the county tax, handing on to the State what it requires. Thus trouble and expense are saved in the process of collection, and the citizen sees on one tax paper all that he has to pay. The chief tax is the property tax, based on a valuation of property, and generally of all property, real and personal. Of this, by far the greater sum is realized from the tax on real property, (land and buildings on it). Cities and other local subdivisions, as has been stated, are raising their revenues more and more from the sale, taxation, or operation of such public franchises and rights as street-car lines, gas and waterworks. Those who fix the value of taxable property and thus determine the amount the owners are to pay, are called assessors. Those collecting taxes are called collectors. The revenue of the States is seldom large in proportion to the wealth and number of the inhabitants, because the chief burden of administration is borne not by the States, but by the Federal government, on the one hand, and the local subdivisions of the States on the other. The total revenue of all the States is barely one-third that of the Federal government.

#The Expenditures# of all the governing bodies, Federal, State, and local, are kept entirely independent of each other. Those of the Federal government are for the benefit of all the States, while those of the other bodies are only for their own individual benefit. The Federal government receives much more than it expends, and has yearly a surplus on hand in the Treasury. The States and local bodies have in the past expended more than their revenues, making up their deficiency by loans on their credit.

The chief objects of Federal expenditure (in addition to the postal system already considered and for the most part supported by its own revenue) are: 1st, interest on the public debt; 2d, pensions to disabled soldiers; 3d, for the support of the civil branch of the government; 4th, war and naval expenditures.

Total expenditures for the year 1889 were $299,288,988. The chief items were:

1. Interest on the public debt, $41,000,484 2. Pensions, 87,624,779 3. Civil service, 80,664,064 4. War and Navy, 65,815,079 5. Indians, 6,892,207

Money can be expended by the government only after it has been appropriated by Congress in its annual appropriation bills. The appropriation of supplies by Congress is the most important business that it transacts. Every year the heads of all the different departments frame estimates of the amounts of money needed to support their departments during the following year, which estimates they send to the Secretary of the Treasury, who, after considering and revising them, transmits them to Congress in his "Annual Letter." This letter is considered by the Appropriation Committee, whose duty it is to consider and frame bills for the appropriation of moneys. Though guided by these estimates, supplies frequently depart widely from them. After being reported to the House and passed, money bills are sent to the Senate, where they are invariably amended by increasing the appropriations and are returned to the House. A conference committee is then appointed from the House and Senate Committees on Appropriations, who, after mutual concessions, agree upon such appropriations as will be passed by both houses. The House then amends the bill as agreed upon, passes it, and sends it to the Senate again, which in turn passes it, and sends it to the President for his signature. All bills for raising money must, by the Constitution, originate in the House. Besides the appropriations for the expenses of government there is annually authorized a large expenditure for improvement of rivers and harbors. Many of the expenditures authorized by these bills are undoubtedly unnecessary, but they are passed by general consent of the members, each of whom desires to increase his popularity at home by getting public money spent in his district.

The expenses of the State governments are not heavy, and are devoted to but few objects. The chief expenditures are for:—(1) the salaries of officials; (2) judicial expenditures; (3) the State volunteer militia; (4) grants to public schools; (5) public charities and institutions, as prisons, insane asylums, etc., (6) interest on State debts; (7) internal improvements and public buildings.

The methods of appropriations are similar to those employed by the
Federal government.