It has come to be recognized that taxation can be made to play, and is bound to play, a leading part as an agency in the distribution of wealth, and thus it is the center of much of the ardent controversy regarding social reform.  Ultimately, almost every proposal of social change and betterment involves some cost.  The question then must be answered.  Who is to receive the benefits and upon whom and how shall new taxes be levied to pay the cost?  Further, it is often urged that this result of taxation in redistributing incomes is in itself (or can be made) a virtue; and some even see in tax reform the answer to the largest social questions of our time.  We are now to take up a few of the more important problems of taxation, to see the difficulties, and to suggest the direction in which their solution is to be sought.  The tariff having been already separately considered, the chief kinds of taxes we have here to treat are property taxes, general and special, and inheritance and income taxes.

Sec. 2. #The general property tax; nature and difficulty.# The rates both of assessment and of levy of the general property tax are uniform and equal in proportion to the value of all (or nearly all) property in the taxing district.[1] There are always some exceptions of certain kinds of property, or of the property of certain persons, or of property and things put to certain uses—­public, educational, religious, and charitable in their nature.

The federal government levies no general property tax, but the other branches of government[2] receive about three-fifths of all their revenues from it.

At first view nothing would seem to be simpler and juster in principle than such a plan of taxation, but those who have most carefully studied its practical operation, almost with one accord, pronounce it to be “a dismal failure.”  The chief reason assigned for this failure has been that the assessment of the tax is imperfect and incomplete.  The usual thought is that if all property could be assessed the plan would be excellent.  Undoubtedly the difficulty of just assessment has its part in the weakness of the tax, but back of, and more important than this, is an inherent fallacy in the apparently simple principle of the tax.

Sec. 3. #Ambiguity of the term “property."# Unfortunately, the word property is applied, even by the most competent courts, both to the intangible right of ownership (the fundamental meaning) and to the concrete thing that is owned, the source of the income.[3] But evidently the value of the right to the income yielded by a house, for example, is merely the value of the house.  The value of the property in the one sense (the abstract ownership, the intangible right) is merely a reflection of the value of the property in the other sense (the concrete wealth).  There are not here two independent bodies of economic wealth.  Whatever value belongs to the one is subtracted from the other.  Nor is it rational to take the