tion.[1] Natural laws will, accordingly, always produce an equilibrium of burden between taxed and untaxed things and persons. There is a level of profit and a level of taxation by natural laws, as there is a level of the ocean by natural laws. In fact, all proportional contributions to the State from direct competitors are diffused upon persons and things in the taxing jurisdiction by a uniformity as manifest as is the pressure upon water, which is known to be equal in every direction.
A word here in reference to the popular idea that the exemption of any form of property is to grant a favor to those who possess such property. This idea has, however, no warrant for its acceptance. Thus, an exemption is freedom from a burden or service to which others are liable; but in case of the exclusion of an entire class of property from primary taxation, no person is liable, and therefore there is no exemption. An exclusion of all milk from taxation, while whisky is taxed, is not an exemption, for the two are not competing articles, or articles of the same class. It is true that highly excessive taxation of a given article may cause another and similar article, in some instances, to become a substitute or competing article; and hence the necessity of care and moderation in establishing the rate of taxation. We do not consider that putting a given article into the free list, under the tariff, is an exemption to any particular individual; but if we make the rate higher on one taxpayer or on one importer of the same article than on another taxpayer or importer, we grant an exemption. We use the word "exemption," therefore, imperfectly, when we speak of "the exemption of an entire class of
- ↑ As applied to the wages of labor, the truth of this principle is equally incontestable.
"The sewing girl performing her toilsome work by the needle at one dollar a day, the street sweeper working the mud with his broom at a dollar and a half, the skilled laborer at two and three dollars, the professor at five, the editor at five or ten, the artist and the songstress at ten or five hundred dollars a day are all members of the working classes, though working at different rates. And it is only the difference in their effectiveness that causes the difference in their earnings. Bring them all to the same point of efficiency, and their earnings also will be the same."—W. Jungst, Cincinnati.
John Locke, in his treatise On the Standard of Value, treats of taxation, and shows conclusively that if all lands were nominally free from taxation, the owners of lands would proportionally pay more taxes than now, because the same amount of money must continue to be collected in some form, and the average profits of lands would only be equal to the average profits of other investments; and further, that the expense and annoyance (another form of expense) would be increased if the tax were exclusively levied in the first instance upon personal property; and hence the landowner would be burdened with his proportion of the unnecessary expense and annoyance. He also shows that you may change the form of a uniform tax, but that you can not change the burden; and that the change will increase the burden, if the new system is more expensive and annoying than the old. Locke wrote nearly a century before Adam Smith published his Wealth of Nations, and it would seem probable that Smith acquired his ideas relative to the average profits of investments from Locke.
