The Nonpartisan Leader Newspaper, February 10, 1919, Page 8

i, 18 L S First Principles in State Housekeeping New Zealand Leads the Way in Lightening Tax Burden on Industry— Publicly Owned Utjlities More Than Self-Supporting The ninth of a series of ten articles by Mr. Mills, weil-known writer and lecturer, author of “DEMOCRACY OR DESPOTISM,” on “New Zea- land Before the War.” BY WALTER THOMAS MILLS 27| HE word economic means good 2| housekeeping. As applied to the government of a country it has reference to the collect- ing and expenditure of the pub- lic revenues. Good housekeeping as ap- plied to a private home means the securing of the largest rev- - enue for home purposes with the least possible burden on the industrial and commercial employ- ments of the family unit and the expenditure of this revenue in such a way as to se- cure the largest possible returns as related to the highest good of all the members of the family. This term as applied to a nation should mean the same thing, that is, that the national -revenues should be secured in such a way as would be the least burdensome on the produc- tive and commercial activities of the nation and the expenditure of these revenues made in such a way as best to promote the welfare of all of the people. : . THE PAYING AND THE BEING PAID Public enterprises are of two gen- eral classes: Public undertakings which are themselves income-produc- ing, such as railways, warehouses, elevators and flour mills. Then there are the public undertakings, such as schools, prisons, hospitals and the common defense. Such public activi- ties involve large expenditures, but yield no revenue. ; It is coming to be agreed among all students of national economy that income-produ¢ing government under- takings should provide the revenues essential to their building, equipment and oper- ation, from the earnings of the enterprises them- It is also held by such students that pub- lic activities which do not, can not or ought not to be income-producing, should be provided for with public funds secured by the levying of taxes of selves. some sort. taxes. In New Zealand and in all other countries where there are large public debts incurred in the building and equipment of state-owned enterprises, if the value of the property of these enterprises be deducted from such debts, it is always true that the balance falls to the public credit, and under any rational system of bookkeeping the undertaking is at once seen LR benefits of civilization available to the common people. aid even for the helpless and unfortunate rather than merely a policeman and It also made the beginning of a system of taxation in the interests of the people as described on this page by Mr. Mills. a flunky of the big interests. Debts incurred in the building and equipping of income-producing enterprises should have placed against them on the public ledger as credits the value of these buildings and equipments and these debts paid out of the earnings of the enterprise. The debts created in connection with government activities which are not income-producing should stand as a claim against funds to be obtained by R to be a public asset and not a puBlic liability at all. Fees charged for the services of public officials, . fines assessed in court and accounted for to the public funds, licenses and tariffs are all forms of taxation as well as taxes on personal property, cor- poration earnings, incomes or inheritances. NEEDLESS AND DECEPTIVE TAXES There is an old maxim and a very infamous one, that a very wise way to collect public revenue is to do it in such a way that the people will pay the tax without knowing that they are being taxed. In the effort to do this a tax has been assessed against an express wagon. The expressman must add the tax to his charges, and a woman paying for the carrying of her trunk to the station helps A sanitarium owned and operated by the New Zealand government. the Labor party in that country captured the government there it made the to pay his tax, but she does not object because she thinks she is paying the expressman. A tax is put on aleoholic beverages. The tax is added to the cost of the business and to the selling price of the drinks. When a customer pays for a drink he helps to pay the tax, but he doesn’t realize that he is paying a tax—he thinks he is paying for a drink. When a tariff 4s added to any article it is included in the selling price, and when a mother is buying clothing for her children she must pay this added price, but she does not realize she is paying a tax—she thinks she is paying for the baby’s clothes. i - There is another maxim which is equally in- famous, and that is not to tax an individual at any particular place high enough sc that he will se- riously feel the burden at that point, but tax him just a little everywhere and in a way that even the wisest of men will never be able to know just what sums they are really paying in taxes. A Real students of national economics contend that taxes ought to be so placed that the tax- payer would always know the amount of his tax and know when and where the payment is The age-old, perplexing problem of taxation is given unusually clear treatment in the article on this page from the pen of Walter Thomas Mills. Our taxation system has come down to us with very little change from the time when the English nobility, through political power, devised the laws which exempted their great estates from taxation. The burden was put on productive business and the consumers, on the improvements and the labor of the people. The power to tax is the power to build or destroy. By the old methods, which still survive with us and work their evil, the prosperity of the common people is held down and special privilege is able to capitalize its tax-fixing for vast sums. Thus the raising of the protective tariffs on trust products booms their profits and their consequent capitalization, while it digs into the pockets of the farmer and werkingman. New Zealand has made a small be- ginning in the other direction of using taxation to promote the welfare of the common people. The League farm- - - ers of North Dakota are likewise on the right road to bringing the big property owners to book and in shifting the taxes from improvements to land. L PAGE EIGHT The state became an made. They further contend that as there are _ vast values which are being created all the time by the public’s own activity, that such values ought to be appropriated for public pur- poses before any tax shall be levied against the current earnings or the accumulated earn- ings of any individual. - The place where all values socially created are found finally to make their appearance is in un- improved ground values. 2 It is not the improvements on a vacant lot, for there are no improvements, which give it value It is the existence of the improvements on sur- rounding lots and the presence and the needs of the people who might have occasion to use the lot which give it value. Such values are not the indi- vidual creation of the absent owner; such values are the joint creation of the community. There is probably not remaining anywhere any sincere and. capable student of the subject of taxation who is not_ready to agree that the community should first appropriate for the purposes of the community these values which are created by the community through a tax on land; exclusive of all improve- ments, before any tax shall be levied on any personal property, services, occupations, licenses, fees, fines or tariffs of any sort whatsoever. AGAIN ‘NEW ZEALAND LEADS - There are many persons- who justify tariffs, fees, fines and licenses, for purposes of protection or as a means of punishment, but all admit they are unfair and unjust and would be alto- gether unnecessary under a just and rational system of taxation se far as the purpose of revenue getting is concerned. S When New Zealand was the first country in the world to recognize the wisdom of a tax against values created by the community and not by the indi- -vidual as the proper subject for tax- ation. 2 This proposal was made by a man who was just beginning the practice of law at the time, but he is now ‘the chief justice of New Zea- land. I had many interviews with him and his statement that the adoption of the measures pro- posed by him had been more of a victory for an idea than for a working plan for carrying it out is quite correct. A general law was adopted some 40 years ago providing that there should be no other property tax levied for national purposes than the tax on unimproved land values. But there was no prohibition against levying taxes under the name of fees, of tariffs, of licenses, and by means of revenue stamps, and while the land tax has been the law the principal revenues have not been secured in that way. The revenue secured from the tax on tobacco equals the umimproved land tax. . The annual public revenues before the war were about $50,000,000. Of thus sum only $3,000,000 came from the tax on unimproved land values. Fifteen million dollars came from the tariff, $2,000,000 from the income tax, about $6,000,000 from licenses, and the balance, amounting to about (Continued on page 14)