paper document called a deed (which is but the evidence of ownership) and call it tangible property having a value in addition to the house itself.  Yet, in fact, all these confusions are constantly made in taxation.  The term “intangible personal property” is applied to such things as mercantile credits, promissory notes, bonds—­in general to the right to collect sums from another person, whether these rights arise out of sales or of loans—­and all are treated as parts of taxable property.  Sometimes the evidences of indebtedness, the promissory notes or the mortgage papers, are even called tangible property, the same term that is applied to land, houses, and machinery.  By universal practice supported by a long line of court decisions, these rights (whether evidenced by paper or not) are made subject to taxation, except as by piecemeal legislation certain grudging exceptions have been made.  These views and this practice are supported by the popular desire to tax money-lenders.  The result is “double taxation” of many sources of income.  This involves a burden that is ruinous in some cases, both to borrowers and to lenders, and that tempts in all cases to the evasion of the tax.

Take, for example, a house assessed at $10,000 which is owned free of debt and which has a rental value of $600.  At the rate of 1.5 per cent the tax paid would be $150.  Now if the owner borrows $8000 he is still taxable $150 on the full value of the house, and the lender nearly everywhere is taxable $120 on the amount of his mortgage.  The total tax payable out of the one source of income, the house, is then $270.  The same analysis will show that any credit is but a contractual claim upon some other source of income which is, or should have been, already taxed.

If one person owns all the capital-value invested in a specific piece of wealth, no attempt is made to tax both the capital and the wealth; but if it happens that two or more persons share the capital-value invested in the same wealth, the attempt is made to tax as a unit the full value of the wealth and, in addition, some part of the capital also.  It is, however, easy in most cases to conceal this “intangible property” from the assessor’s eyes, and a comparatively small amount of it is ever taxed.  This means inequality and hardship in the operation of the tax and, as a result, unceasing temptation to perjury by the taxpayer and to favoritism and graft by public officials.

Sec. 4. #Various temporizing policies.# The general property tax in practice is unjust and demoralizing.  What, then, shall be done about it?  Various policies have been followed.  One has been to declare that the law would be good if it could be enforced, but that as in practice it cannot be, the best thing is to go on as before, catching a few “tax dodgers,” and letting the rest go.  Another policy is to hire “tax ferrets,” paying them large commissions to discover cases where intangible property of this sort has been concealed from the assessors.  This method, no matter how stringently applied, has never reached more than a small proportion of the cases, and becomes a potent agency of political favoritism and corruption.