PRINCIPLES OF TAXATION. 151 



to collect the revenue. A very general feeling, therefore, natu- 

 rally prevails that it is a laudable thing to cheat or rather rob the 

 Government whenever opportunity offers.* 



Limitations in the Sphere of Taxation. Attention is 

 next asked to the fact that the foregoing propositions respecting 

 the unlimited power of a state to compel contributions, or to tax, 

 and which (as shown) have received the sanction of the highest 

 judicial authorities, are predicated on the assumption of complete 

 sovereignty on the part of the state. But in a truly free state 

 such sovereignty does not exist, and the conditions which make it 

 free necessarily preclude its existence. Thus in every such state 

 the two great functions which constitute its sovereignty, namely, 

 the right to interfere with the liberty of the citizen and with his 

 property, have been called into existence and can be rightfully 

 exercised for certain purposes only, which admit of precise defi- 

 nition. In such a state the fundamental and essential purpose of 

 governvient is not to abridge the liberty of the individual citizen 

 in respect to his person, or his possession and use of property, but 

 to increase it ; and this result (overlooked in a great degree by 

 economists and legislators), as has already been pointed out, can 

 only be attained by taking a part of the property of the citizen 

 which the existence of the state has enabled him to acquire, for 

 the purpose of maintaining instrumentalities for preventing any 

 encroachment upon his rightful liberty and punishing those who 

 attempt it. In fact, in every free state there are limitations on 

 the exercise of the taxing power, growing out of the structure of 



* It is enough to see how railways are built by the Government of Italy to form 

 an idea of the openings aiforded for rascality and fraud in their construction. " They 

 are not built by contract, but on estimate. A building company estimates that a 

 certain line will cost a certain sum and receives the job, which is always indeed a ' job.' 

 The Government guarantees a certain income per kilometre, and the constructor makes the 

 road as long as possible ; but when the grant (which is made in bonds of the state) for the 

 amount authorized is exhausted, the constructor coolly tells the ministry that the road must 

 stop there unless the ministry makes another grant, which is of course done, and the inva- 

 riable result is that the original estimate is nearly, or quite, or even more than doubled ; 

 with the consequence that none of the roads, as they are made, ever pay their expenses and 

 interest on their cost of construction. More than that, they are so burdened with deadheads 

 that it is estimated that only forty per cent of the passengers they carry pay full fare, the 

 remaining sixty per cent paying from nothing up to seventy -five per cent of the fare. Depu- 

 ties and senators travel free everywhere in the kingdom, but as the state pays a block sum 

 for their privilege, it is not a dead loss, though, as every deputy who travels insists on having 

 a whole compartment for himself, the road becomes anything but a profitable one. Every 

 employee of the great systems of Italian railways has the right to make three journeys a 

 year on each one, where he likes, and with his family, and the consequence is that some of 

 them ruin themselves taking long railwuy journeys for which they have not the money to 

 pay the expenses. And they are sixty thousand, with as many more pensioned off who 

 have the sanie privilege ; and, as all travelers know, the railway fare is the smallest part of 

 the expense of a journey." Correspondence New York Evening Po.st, June, 1S9G. 



