PENDING PROBLEMS IN PUBLIC FINANCE 191 



The first point is well summed up in the alleged conflict between 

 the fiscal and the social principles of finance. I say alleged conflict, 

 because in reality there is, from a deeper point of view, no such conflict 

 at all. It is sometimes asserted that the fiscal object of taxation is 

 simply to secure revenue, while the social object is to effect some 

 desirable change in social relations. This antithesis rests upon a 

 failure to observe that finance, like economics, is a social science, 

 and that even from the narrow political point of view of the relation 

 between the government and the citizen, the government cannot 

 derive any revenue - - that is, cannot take any part of the social 

 income - - without inevitably affecting social relations. The fact 

 that the government has in mind solely the fiscal aim of securing 

 revenue does not alter the social consequences of the particular 

 revenue system. In modern times social conditions are influenced 

 to a large extent by changes in wealth. Every tax necessarily 

 affects the wealth of individuals, and if we could in all cases trace 

 the final consequences of even a " purely fiscal " tax, all kinds of 

 unforeseen results, social as well as fiscal, or perhaps better, social 

 because fiscal, would disclose themselves. Economics and finance 

 deal not with intentions, but with results. The function of fiscal 

 science is to point out to the legislator the necessary results of his 

 actions. 



The distinguishing mark of modern social science is that it en- 

 deavors to explain not only what is, but also what should be. All 

 practical action is thus brought to the crucible of justice, and all sys- 

 tems of taxation are put to the test of conformity with this principle, 

 irrespective of the intentions of the legislator. The great problem 

 which still remains, however, is to elucidate the exact nature of this 

 economic justice. Every one agrees that the essential ingredients of 

 this scheme are equality, or uniformity, and universality of taxation. 

 When, however, an attempt is made to interpret them and to outline 

 the practical form which these principles should take, there is con- 

 siderable disagreement, because the actual nature of the principles 

 has not been thoroughly analyzed. It betokens, however, a step 

 forward in all practical finance that a more or less conscious effort 

 is everywhere being made to bring the tax system into some manner 

 of conformity with the principle, however dim its outlines may be. 



II 



The second point, which differentiates modern taxation from that 

 of the past, is the emergence of the new economic substratum of 

 society. These new facts of fiscal importance may be summed up 

 under the following heads: 



