(d) Taxes may be on expenditure (sometimes called taxes on consumption).  This is but another mode of attacking income, for in the long run most income is spent, not always by the individual who earned it, but by some one, and thus it is reached by a tax on expenditure.  Usually in the United States the tariff duties are accounted to be taxes on expenditure, as also the internal revenues (also called excises) of the national government.  In time of war, internal revenues are extended in the United States to a multitude of articles, but usually they have been limited (with minor exceptions) to liquor and tobacco.  Most of these taxes are in fact levied not at the time of purchase by the ultimate consumer, but upon the specific goods in the hands of some merchant or business agency, and some of them are essentially special property taxes and others are business taxes of the kind next to be mentioned.

(e) Taxes may be levied on selected agencies of industry or on the process of business; such are business taxes, licenses, taxes on investment in business, and corporation taxes.  These burdens are diffused and rest eventually on some income, rarely to be ascertained exactly.

Sec. 10. #Defective tax “systems."# The actual tax laws of each division of government in a country combine the various forms in different proportions.  Most of the federal taxes are from tariff duties and from internal revenues; the latter include a variety of special business and property taxes and, since 1913, the federal income tax.  The largest receipts of states, of counties, and of minor divisions are from property taxes, some special but most of them general in form.  Among the various states a wide diversity is found.  Some use the general property tax for all the divisions (state and local), while others (several of the Northern states and California) have separated the sources of state and local taxation, taxing corporations for state purposes, and most other forms of wealth for local purposes.  Some states, particularly those of the South, make large use of licenses and taxes on business both for state and local purposes.  The tax laws of many states have been much modified of late and are still in process of change.  It is only in a loose sense that one can speak of the tax “system” of any state, made up as it is of so many diverse elements, each used to tap in some independent way some source of private income for public purposes.  Every tax “system” has grown up more or less accidentally, guided by no more of a general principle than the advice of the cynical old statesman—­so to pluck the feathers of the goose that it will squawk as little as possible.  Thus, everywhere, the existing situation must be largely accounted for by custom and ignorance, by the weakness of some classes and the undue influence of other classes, rather than by clearly thought out principles soundly administered.