PRINCIPLES OF TAXATION. 3 



never as yet fully tested experiment of universal suffrage, have 

 become, at least theoretically in the United States, the sole arbi- 

 ters of the policy of their Government and of the selection of the 

 legislators who are to enact laws in conformity with such policy.* 



The problem of the acquisition of wealth having thus been 

 solved, that of the proper distribution of wealth logically and 

 necessarily follows, and the character of the measures which 

 directly or indirectly involve what is called taxation for the at- 

 tainment of such result, which seem to commend themselves to 

 the people of the United States, are especially worthy of attention. 

 They are indicated in part by the adoption of a pension system 

 unlike anything of the kind ever known in history, and which 

 necessitates an annual expenditure of money (raised by taxation) 

 to meet the military expenses of the country army, navy, and 

 pensions in excess of that entailed by the immense military estab- 

 lishment of any of the countries of Europe, and the enactment of 

 an income-tax statute whose primary object was not to raise reve- 

 nue for the support of the Government, but an unmistakably po- 

 litical and socialistic measure, which threatened to annul the most 

 important and exceptional feature of the Federal Constitution. 



That the diminishing rate of returns, in way of interest or 

 profits, by the force of laws which no combination of capital can 

 resist, is seriously impairing the relative value of wealth, and may 

 eventually reach a minimum which will greatly diminish the in- 

 ducement to individuals to economize or save it, although not gen- 

 erally recognized or appreciated, can not be denied. And neither 

 is it recognized that the current rate of taxation on capital in all 

 civilized countries even now approximates, and to an extent actu- 

 ally exceeds, the current rates of interest or profit on its use. 

 Thus, for example, the rate of discount at the Bank of England 

 during the greater portion of the years 1894 and 1895 has not 

 been in excess of two per cent, and the discount (borrowing) rate 

 for three months during this period was not infrequently less 

 than a rate of three quarters per cent per annum. If taxes, ac- 

 cording to popular theory, do not diffuse themselves, but remain 

 a burden on the person, business, and property subject to their 



travel they gather knowledge, but they are, after all, subject to recollections mixed with 

 regret ; their affections are weakened by being extended over more objects, and they learn 

 new habits which can not be gratified when they return home." 



* " The great, the unanswerable argument in favor of universal suffrage is, not that it 

 insures a better or purer government, but that all must be contented with a government in 

 which all have an equal voice. If it be deficient in this particular, if it fail to protect the 

 poor against the oppression of the rich, or the rich against a destruction of their property 

 by the poor, it is pro tanto a failure, and another method of representation should be 

 adopted." Address of Justice Brown, United States Supreme Court^before the Law Depart- 

 ment of Yale University, July, 1895. 



