any established business thus becomes incorporated after a time in its price and in the prices of the products, and any purchaser pays a price based on the net income remaining to the owner of the wealth after the tax is paid.  Viewed in this way, taxes are seen to be borne to some extent by every one, by those who do not as well as by those who do actually meet the tax-collector face to face.  The citizen with no taxable property is affected, far more than he realizes, by extravagance of government and by inequities in taxation, for the effects of most taxes are diffused so that every self-sustaining member of the community has some share in them.

Sec. 15. #Taxes as costs.# Now if a new tax is levied, or an old tax changed in amount or in its incidence, it becomes a new influence in industry.  Some occupations are made more attractive, others less so.  Some places are made more, others less, desirable to live in.  Property thus fluctuates in value, and investments become more or less remunerative.  If the new tax reduces the net income of any productive agent, it reduces likewise its value, which is but the capitalization of its net rental.  If taxes are taken off of factories and put upon farm rents, factories rise and farms fall in value in the hands of their owners.  The immediate change in value is much greater than the annual tax, for if five dollars is to be taken permanently from the annual rental of the farm, nearly one hundred dollars is taken at once from its selling value when the prevailing yield on investment is 5 per cent.  The rate of adjustment varies greatly under different conditions, and the inflow and the outflow of labor and capital are more or less rapid in the various industries.

Taxes that enterprisers are unable to shift to others are reckoned by them as a part of their costs of production whenever the conditions of competition and of substitution make it possible to do so.  Every new tax that curtails the supply of any necessary agent must raise the price of the products and cause more or less of the tax to fall upon the consumers.  In the Civil War an increase in the tax on whisky increased its selling price, and distillers who owned stocks on which a smaller tax had already been paid reaped profits of millions of dollars.  When the tax on tea was increased in England, all dealers that had accumulated a stock before the law went into effect were gainers.  Every change in taxation inevitably affects, either favorably or unfavorably, many interests.  The chance to anticipate a change in tax laws or to get, from those in power, information of a proposed change, makes speculation possible and political corruption profitable.

The fact that a change in taxation is a disturbing element in price is not to be deemed insignificant merely because “all comes out right in the end.”  Every change in taxation is an element of uncertainty in business and increases the fortunes of some men at the expense of others.  Hence no considerable change should be made without good reasons in its favor.  The older taxes have the virtue of stability, but in many cases they have grown out of harmony with the industrial conditions.  While, therefore, from time to time there is a real need of a reform in the tax system, it should not be undertaken without recognizing the many and complex interests involved.