466 POPULAR SCIENCE MONTHLY. 



PRINCIPLES OF TAXATION. 



By DAVID A. WELLS, LL.D., D.C.L., 



CORREgPOlfDANT DE l'iNSTITCT DE FRANCE, KTC. 



IX. NOMENCLATURE AND FORMS OF TAXATION. 



{Continued from page 1S5.) 



THE nature and scope of the "legal" and wholly anomalous 

 definition (to which reference has been made, see page 173) 

 that has been given in the United States by its Supreme Court to 

 a direct tax,* and the interesting judicial and historical circum- 

 stances in connection therewith are substantially as follows : 



The Constitution of the United States provides that "repre- 

 sentatives and direct taxes shall be apportioned among the several 

 States according to their respective numbers" that is, popula- 

 tion "and excluding Indians not taxed." The origin of the 

 idea thus incorporated in the Constitution of proportioning direct 

 taxes according to representation, or population, rather than upon 

 property, is not certainly known, and has been made the subject 

 of speculation. Hamilton, subsequent to the adoption of the 

 Constitution, suggested that the writings of the French econo- 

 mists of the eighteenth century, with which a number of the promi- 

 nent members of the Constitutional Convention were familiar, was 

 its source. These held that "agriculture was the only productive 

 employment, and that the net product from land, to be found in 

 the hands of the landowner, is the only fund from which taxation 

 can draw without impoverishing society." They were accordingly 

 led to class taxes habitually as direct when laid immediately 

 upon the landowner, and as indirect when laid upon somebody 

 else, but in their opinion destined to be borne by the landowner 

 ultima,tely. Precedents for levying taxes by apportionment were 

 also to be found in the French taille reelle, which was a tax on the 

 income of real property and laid by apportioning a fixed sum 

 among the provinces and requiring from each its quota. The 

 English land tax, established under William III, embodied a like 



provision.! 



\ 



* Chief-Justice Chase on more than one occasion judicially intimated that the definition 

 of direct taxes by political economists can not be used satisfactorily for the purpose of con- 

 struing the phrase in the Constitution of the United States. Thus, a tax on the circulation 

 by banks of State bank notes was held not to be direct (Veazie vs. Fenno, 8 Wallace, 533- 

 546), and so also of a tax on incomes of insurance companies (Pacific Insurance Company 

 v.i. Soule, 7 Wallace, 433). 



f For further discussion of this subject, see paper by Prof. Charles F. Dunbar, con- 

 tributed to The Journal of Economics, for July, 1889, and entitled The Direct Tax of 

 1861. 



