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The Right to Tax and the Obligation to Pay Taxes


§ 192. The evolution of the right to tax on part of the coin monwealth, and of the liability to taxation on part of the individ ual members of the community, goes on paripassu with the evolu tion of the state itself, as the conditions of its development are the same.

The relation of the individual citizen to the state generally, as well as the special relation of his participation in the covering of the public expenditure, depends, after a certain stage in the development of any nation is passed, on the degree of the inti macy of connection between the whole and the individual. This connection will soonest find a lodgment in the consciousness of the members of the community in cases where the group is a small one—where the interval between its center and its environ ment is consequently slight. But inasmuch as the inevitable trend of history is toward a progressive widening of the social groups and a continued increase of the population comprised in each group ; since this course of development goes hand in hand with the growth of the demands of advancing culture and the increasing ability to obtain the means of subsistence ; there arises a discrepancy between the circumstances that condition the development of this connection and those which condition the advance of culture. A discrepancy of the kind which we observe at various stages of the historical development, and which also presents itself for solution in more than one direction at the hands of the nations of the present day.

The tax system of the German cities of the Middle Ages and succeeding centuries is the correlate of that political maturity which here first developed itself, in these oases of political liberty as it were.' Machiavelli' accords high praise to the republican vir tue with which the ancient property tax of these cities was duly paid ; and we find survivals of it (in Bremen) in force even in our day. Outside the city republics, the idea of an obligation to pay taxes finds acceptance only very slowly, in the course of the struggle of a developed concept of the state against the indi vidualist claims of a constitution based on class privileges. It is true that even as early as 1664, speaking from the standpoint of the absolute state, J. F. Horn says optime sibi constat respublica in qua imperantur tributa, non rogantur. But about the same time (1654) the delegation of Braunschweig-Wolfenbuttel in the Ger man Reichstag declares it "an immutable principle that taxes and imposts are fundamentally at variance with the nature of a commonwealth ; inasmuch as it is only with a view to the con servation of one's effects that one enters into civil relations ; men become citizens precisely in order to be able to retain their belongings in peace and And even as late asthe Lord Bishop of Salzburg was rebuked by a conclusum of the High Court of Judicature for having presumed to assert that in matters of taxation the will of the sovereign was the only law, and that taxation was one of the royal prerogatives.' The systematic thought which prepared the way for the state and the public economy of the nineteenth century made its first decided step in advance at this point.

§ 193. The Political Philosophy and the Political Economy of the era of the enlightenment erected an ambitious .structure, in which the motives of the individual are claimed to be in full har mony with the interests of the community. The result of their labors is an imposing scheme, a sort of ideal to be worked out practically in the development of a new concept of citizenship. The speculations of these theorists disregarded the differences which divide the concrete man, whom the earlier era transmits to the new, from the great abstract concept of the commonwealth.

For more than a hundred years past, science has been at work to enforce the consciousness of the duty of tax paying, and there with to further the development of a fuller sense of citizenship. And it is never to be forgotten that in the earliest beginnings of an independent science of economics the point of departure was the subordination of the economic individual to the concept of the state, and therefore to the idea of taxation. At this point the German Cameralists are at one with the French Physiocrats.

Justi says, to cite but a single utterance out of many that we have froth this eminent man : "There is no doubt whatever but that the subjects are in duty bound to render this contribution towards the great expenses of the state ; the private property of individ uals, in so far as the common welfare of all subjects unites them into a single body or moral person, is, at the same time, the com mon, though not immediate property of the state, and the state is therefore fully competent to make use of this its mediate prop erty for the purposes of its own welfare whenever its immediate property is insufficient. Since the subjects have once volun tarily organized a commonwealth for the furtherance of their common welfare, they cannot refuse the means required for the purpose . . . . so that they are bound to contribute towards all proper expenditures and necessities of the state, not only a part, but the whole of their incomes, and even, in cases of extreme necessity, to place the body of their possessions at the disposal of the state . . . ." The Physiocratic theory of the net product, which is the corner stone of their structure,' is but an expression of that idea of the state which dominated all their economic thinking. (The same is true of the German Cameralists, cited above, who wrote in the time of the Physiocrats.) As is the case with so much else, this doctrine too has been laid at the door of the later political economists of the English school because neither the origin of the doctrine nor its historical connection was known. Its con nection was this, that private economy figured as the foundation of the state's finances and the prosperity of private industry was regarded as the basis of a productive tax system. The idea of the rising absolute state, according to which men are but the ways and means for the purposes of the state, was taken over by the phil osophy of the new economists. It is true they lay down new

principles for a rational system of taxation which is to clear away the old empiricism ; but the course of argument, which con ceives of private industry as the means and th6 economy of the state as the end, is the same as ever. Hence the peculiar views, so foreign to us today, which are frequently misconstrued when expressed by the later theoretical writers on the doctrine of the net product. Quesnay, for example, "It is not so much men as riches that are wanted for the development of a country ; for the greater the riches employed in agriculture the fewer men will it employ, the more will it prosper, and the larger a net product will it yield." Whereas a numerous peasant population produces but little more than the necessary costs of cultivation, and can scarcely afford the lightest tax.

And in order to make the close connection between produc tion and taxes perfectly clear, Quesnav says in a neighboring passage in the same work " Next to the means for cultivating the soil, it is the net product and the tax that are the things most urgently needed by a state, in order to protect the subjects against scarcity and against the public enemy, and in order to maintain the prestige and the power of the monarch." In beautiful accord with these ideas of his time, the German poet shows us the ideal of the modern citizen [Staatsmensch] as contrasted with the Phil istinism of the Just as he alone, says Lothario, is a good father who first serves his children at the table, so is he alone a good citizen who lays aside what he is to contribute to the state, before affording any other expense. But Werner assures him that he has never in all his life thought of the state.

§ 194. In the state of today, the state's right to tax and the individual's obligation to pay taxes are a matter of necessity, and correlated with this necessity is the external constraint to pay taxes. This necessity rests on the universally accepted idea of the state and of the national economy, and the varying require ments of a modern national constitution and the rights of popular representation which it specifies do not limit, but only confirm it. The right of granting taxes by a representative body does not imply a lessening of this requirement, but only provides for a discussion of the kind and volume of the growing national wants, and of the taxes necessary to meet them.

This element of coercion—the expression of the consciousness of the necessity of the payment of taxes in the modern the tax liability of today from the shifting phases of the state's finances in earlier times. It is no longer possible as was the case down to the end of the eighteenth century, and even later, for the state to place its dependence in its own domanial posses sions. This is the most convenient manner of obtaining public revenue, for it does not arouse the citizen's slumbering sense of duty towards the commonwealth. In the constitutions and the tax leg islation of many modern states this form of income is still retained as the normal basis of the public finances, very much as a tale that has been handed down from the olden time. It is no longer possible to make use of the circuitous method of government prerogatives, which seeks to obtain the needed revenue by humoring the individualistic notions of the citizen in offering its services in a palpable form and requiring payment for them. It is no longer possible to depend on taxation by voluntary extraordinary grants, with their narrow, anxiously specified time limit and their specific appropriation to certain definite, tem porary purposes.' For the modern state the tax and the national finances are indissolubly bound up together. The possibility of a change lies entirely in an alteration of the relation subsisting between private economy and the public economy. So long as private property continues to be the fundamental institution in modern society and the basis of industry and of the public econ omy, the tax must also necessarily continue to be the foundation and the corner-stone of the public finances.

The socialism embodied in the radical party programs of today is quite right in regarding the system of taxation which they demand as nothing more than a part of the "transitional meas ures" which are intended to further the interests of the laboring proletariat; abolition of indirect taxes, exemption of a subsistence minimum, a single progressive income tax for state and commune —all these are measures calculated to serve the social-democratic class interests only so long as the existing legal relations of our economic system endure. These measures presume a national and communal fiscal system which depends on private industry and on private production carried on with private capital, and which therefore draws its revenues from the same source as pri vate establishments, in so much that it requires its share of the means of subsistence from the latter. And this share is the taxes.

So soon as socialism has traversed the region of transitional measures, it abandons the institution of private ownership of pro ductive capital, and therewith it abandons the method of produc tion by private enterprise. Under the socialistic method of pro duction all the incomes of private individuals are transmuted into official salaries drawn from an all-comprehending state activity: The ideal of the coming commonwealth and of the coming national economy becomes identical with the type of the primitive national economy, with its comprehensive national possessions and its revenue drawn from them.

For the present, and, in point of actuality, for the future as well, private ownership, and therefore the necessity of the tax, remains. This logical consequence should not be lost sight of by the political parties that wish to preserve the state.

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