The neabg Bl,ueBook of CaUlolnin

Hm\,TY M. Po&TER
Aecokd !ic" Prcsidefrt
Los Angcles Rcalt| Board
224 The ReatrtyBlua Boolcol Cal,ifornit

Taxation
B? H. M. PoRTEB

Genesis ol Torafion-EarlA Anprtrun T@rcs -Thp LL-

hcritoltrc T " .Mia.puctneous Stctp Texes_Wherc Tar
Fund.s Go-Mackiner.! f or Ta,fi Col,Lectio11,-ScLle
ltL,t,oloes Tar
Liabilitu-The Singl,e Tq,ft Plan-lllti,fonL Equi.tabte SustenL

HE subject of [axation. like the VolsteadAct. is a dry subjecl,,

bul neverthelessit is full of inleresting facrs. Taxadon ij foi
the purposeof providing for schools,asiylums, policeand fire ile-
partltrents, anal those features of modern society. _Taxation is the
dl'namicforce that has brought lhrough the agpslhe high staie of civ_
lllzalron of whtch we are now so proud. The word tax comesflom
the Lal,in root "Taxare'-,,1o touch',-and we havebeen.,touched',in
each succeediDgage. We are ta-xedfrom the moment we are botn or
befole. WF sre bom under a taxed roof; we spendour lives eaiine
food that is taxedi and we are finally taid to r;sl in a cofrin thal ii
IAXeO.
GENDSIS OF TAXATION
. Tn the beginning man lived by himsell He never gave ajd or
askectard from anybocly. Al last he garheredinto tribes. Each lribe
had a leader. The only form of taxal,ionthal existed was mililarv
servicein time of war. In time of pea.ejhe leaderobtainedhis food
and meansfrcm his foilowers. As interchangejncreasedthe tribe
gave up ils moving about,ils nomadiclife, and setueddo1,1,,n in a fixed
location. Ihe leadernow becamea king or ruler. It now became
neeessaryto build roeds, bridges and iqueducts; and taxes were
nccassaryfor lhe adminishalion of {he kingdom. lt was soon found
t}Iat in timp of war il was ne.essaryfor thtkins io Dav larse tribute
to the victor. In tirnes of peace he fed his a-rniy a;d gained
rood ror rhose.underhlm by sendingout collectomand takjng a por_
non.or nrs sxoJect s property. part of their slaves,grain and live
stock..As ci{ies-and townsbpganto springup in his kingdoma form
or excnangern the tbrm ot moneyhad to be devisedso thai taxation
camebobe in the forrn of moneytaxation.
As early as the time of the C reekswe 6nd the Dublicbeinq taxed
on personalproperty, family proppny and slaves,horsesand b-usiness
vocalions. In EglTt and portionsof Asia Minor they had {hesetaxes
at the time of Christ. The custom was at that tim; to send out tax
collectors.and to give them all over a.ertain sum 1,hatthey were to
bring in lrom certain territories. Thesetax coilectorsbecamever.v
rich. this is vhere the te1m "dch man', in the Bible camefrom. The
"rich man" ref€rfed to \ilas a tax collector. No wonder it .w.as,,Easier
 Tlk Eealtu BLueBoak of Cdli.foijtiLL 225

for' a camel to pass thrcLrgh the eye of a needle, than for a rich man
to enter the Kingdom of Heaven." Aftel the downfall of Rome in the
fifth century, all EuroDe \'!as brokeD up into smatl principalities. It
was natural that the people should suppo* someleader in time of war
and expect protection in time of pcace.
It ras ther the feudal system splang up. The men would render
militarv seNice iu time ol !r'ar',and iD rcturn hold certain lands in fee.
Through this sJrstemevery tenant held lald for life, but there .!vasDo
inhe tancc. Later lalge tlscts of land $rele lurned o\.er by the ruler
to the chulch oI to his favo].ites. These lands rere ir1 tun siven to
r h a ! r s s n l qo n A I a r b a s i : . A " d i r $ r . ' i , . . . r h i i r ' l . f , r r d r f . r ' s t c '
. p | a r , gr r na r r d , a n n i r l o I r . . T l p ! r c J l l s J . l I I o r d I a ' r r ' d o f l i ^ p ;
but it soon becane a denand that they ir$erit this tand, and through
a tax iD fee this \{.as :rllowed. .lrd the fir'st inhe tance tax came into

EARI]Y.{MERICANTAXES
Thele *-as thus a heavr bulden of taxatioD on ihe larld oll.1rer.s.
They wADted sonrenethod of relief, so thel' got together and stalted a
tax that could be levied on the Door peolle without theil tmowing it.
So they starte.l the excisetax, knonn in this country as the intemal
reverue tax; that is, a t:lx on commodities. If sugxr. $as selling for
twelve cents a pourd they would laise it to fourteen. and so with other
commodities. PeoDle paid their taxes \dthout realiziDg it, paying
it in ihe increasedlrjce of ploducts. This has been one ofthe main
for-msof taxation in thc \1or'ld evef si ce. Itl:1 r rv:r|s h:rve alisen
ovei this lo|m of taxation. Chatles the First of EnEland lost his head
thlough Ih;q ,x\. It \\_:rsrhe ca .F of l-. \rrpricrn tpro urio''.
In the United States, Drior to the last war, our. taxes $.ere raised
lrcm trvo soluces: Flom custom dutics, excise taxes or inter.nal
revenue taxes. Cushms duties ,tre tnxes on all eoods. war.es. or
m p t ,h ^ n d i s . h r ' o u g l ^' rr ' r . r h c U r , i r e dS , c L p sf " o n t i . o r p g c n r u r u y .
Excise tax is ^ tax on goods, \yares, .)1'melchaldise, Uoduced in the
United States.
When the great war camc o , it \\'as {ound that it was inpossible
to r'aisesullicient Dloney from these sources,and theF $'as added the
lncome tll\ and Lhe fcderal esl,at€tax. These are discussedrt lenqth
^ l s a $h . f c r ' r h i . \ o . r m . .
In addition to the tecleral income tax 1.hegolehment has the
estatctax. 'lhich is not .lrr inheritancctax.
,I!IE INHERITANCETAX
lI a nlan dies and leaves an cstrte of S150,000.in California. the
heils nust rcpolt that to the Fcderal Go\.cl nrent. Thc \fife gels
half the estate. so t'ou deduct g?5,000as the lvife's sharc of the estate-
That lcaves $75,000 to be inxed. Out of that 1j75,000]'on cnn deduct
all funeral and administratioD cxpenses, then you have a deduction
of $50,000on $,hich you pa-vno tax. That leares g25,000on whicl to
pay a tax. The excess\ror.ld then b€ $25.000on an estate of 9150,000
You need not repolt under 950,000 estatcs.
In California \,!e have a peculial situation. All of our state taxes
comefrom trvo sourc€s,tax€s from corporation franchises and an in-
heritarcet:rx. Oul o1'.rllthe taxes faisedhere last year (940,000,000)
 226 TlLeRe(LltuBlue Book of Ca.Iilornia

$34,000,000was paid by the coryorations and g6,000,000by the inheri-

tarce tax. If a Inan dies in Califomia with an estate of 91b0,000,as
with the Federal Government, 975,000 go€s to the widow. He leaves
thrpc children, ona ol agc. $25.000goes ro each child. Betore lhe
Inhentanre tax is figured you firsr deduct. as with rhe federalta-x,
all iuneral and a.dmiDis{ration Fxpenses. We will assumplhet there
is slill $25,000Iell tor each child. Ch;ldrel| undcr aee hare e aleduc-
lion of $24.000.which lpave!onlv $1,000to be {axedof rhosechildren
under age. Those ovFr age have cn exemprionol g15.000. Thus the
total tax on a 9150,000 estate as mentioned above would be onlv
$170.00. Il a man leaveshis propprtr io hjs wife and brorhers and
sislers.t\p ra-xwould be higher.. The brolhers and sisterswould onlJ
be allowed a dpductionof $2,000each. That would brinq it up much
higher. Uncles.aun(s and .ousins cre allo$cd 9t,000 dpaucli6n and
all oth€r persons 9500. AII gifts to charitable or educational irstitu-
tions are exempt from this tax.
MISCELLANEOUS STATETAXES
In addition to the iDheritance tax there is a corDoration tax. the
"franchisp tax, prid b) p\erJ corporalion in rhe .iate. Thp public
servrcecorporations.eyplps.. railroad. elpcrric lighr companies,pay
from 4 to 5 per cent of their gross earnings to the state ai a tai ind
pay no tzrx any piace else. The insurance companies pay tuo per cent
of their goss premiums to th€ state as a tax ; and all banks pay one
rnd ona-fi{th per cent o rhplr capilal stock ro the srarp. The total
lrom .orporationswrq $34.000,000 lasl Jpar.
\!'HDRE TAX FUNDSCO
W}lat does the state do with the money it raises from taxation ?
We produce in the State ot Califor.nia g160,000,000a i,ear. Of this
amount 9100,000,000goes to the schoots,of which sum the state Days
abour 20 per cFnr. That is someth,ng lhal dops nol ffcur in the
other states. If there happ"ns1o be a poor coLnry in thc othpr sLares
they have to employ cheap teachers, and children have to go to school
fewer days in the year. But in the state of California thd state pays
part of the cost. For every pupil lhe slate pays $30.00. Thp avaiagp
daily a-ttcndanca muhiplied Ly lhe 930.00is what thp eommuniuygels
f r o m l h e s r a l e . l n 1 8 7 0i r c o s r$ 1 5 . 0 0p e r p u p i lp F r v e a r ; n o * r h e i o s t
is $30.00 for eA.h .hild artpndirg ar elamFnrafy school, and
$200 for those ir1 high school. In Los Angeles county $.e have an
assessedvaluation of one billion dollars, and the assessealvaluation of
Los Angeles cit.v''is one billion. That makes two billion of assessecl
valuation; and rre raised here.last )'ear 960.000,000.Out of that
sixty million, thirt). million went to schools, and thirtv million to
other purposes.
MACI]INERY FOR COLLECTION
How ar,e taxes paid? In every county and city and hamlet in
California the Tax Collector.sendsout his tax assessorson the first
Mondayin March. If he comesto personalpropertl, that has nothing
to secureit, he makesI'ou pay the ta-x ght then and there. He starti
out in Malch to make the assessments and makesthe retur-nthe fiIst
Mondat_in JLly. By the first Monday in July all of the property in
 ?he Req,l,tABltue Boot of Cq,tiforntia 227

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SALE INVOLWS TAX LIAIIILITY

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PERSONAL PROPE&TY TAXES

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THE SINCLE-TAX PLAN

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224 The natl,ta BLueBook oI Col,ilornia

advocated and the single tax on lard proclaim€d by IIenry George

is the last plan of singletax propounded.
The reasons advocated for a single land tax are the following:
Land is th€ creation of God, therefore no one is entitled to ownership
of land. Increasein land valuesare causedby growth of the commu-
nity, thereforeth€ unearnedincrementor advancein value belongsto
society. The governmentshould,thelefore,take sll land for the bene.
fit of the whole community,
The defects of the single ta-y system are pointed out as follows:
The single ta-\ would prevent €quality of taxation, would divorcethe
int€rest of people from the govemment, wolild discriminate between
profits on land and profits from other sources,would not raise suffi-
cient r€venue in poor communities,would exempt a large part of
property from taxes without brirging relief, eliminate ability or
faculty, and put the burdensof the many on the shouiders of the
UNIFORM EQUITABI,ESYSTDMLACTING
In the organization and co-ordination of business the United
Statesleadsthe world, but, paradoxicalas it may seem,in the build-
ing up of a uniform equitable machine for the assessmeniand collec-
tion of tax€s in this country we have been a failure. In every staie
t}ere is a completevariation ol systemand conflictof laws. In twenty-
onestates,personalproperty includes€ver,4hingexceptrcal property;
in eighteenslaLes, peEonalpropefly is (onfinedto particularit€ms:
in eleven states three to fifteen class€sof taxable property are recog-
nized; in twenty states improvementsare not separatedin making
assessments,and in eleven states improvements are assessedsepa-
rately. The United Statesis the only nation taxing credits. In some
states debts are deductedftom c].editsand in others not. In some
states mortgages and bonalsare taxed; in others .a small ta>( is im-
posed,and in still othersno tax at all is leviedon this classof property.
fn some states raihoads are tax€d on their general property; in other
states on their franchises; in other states on the amount of their
issuealbonalsend stock, and in other stateson a percentageof either
their gross or net earnings. In Iova ten stands of bees are exempted
from iaxation. In Idaho and Nevadaall property of Free Masonsand
Odd Fellows; in Massachusetts,all prolerty of old maids; in Miss-
issippithe property of the deaf and dumb; in the Distdct of Columbia
all jei'elry; in Alabamaonesewingmachine;in Connecticutsll church
musical instruments, and in New York, New Jersey and California
depositsin SavingsBanks. In Mississippibarb€rstr|aya state license
tax; in Tennesseecloak and hat rooms; in Texas for operatingcock
pits and dog ffghts; in Alabama sleight-of-handmen; in Connecticut
osteopaths;in Inuisiana oculists; in Mississippiarchitectsand piano
and organ agents; in Tennessee second-hand clothing merchantsand
undertakers;in Alabama,vendoN of brass knucklesand dirk knives,
ancl in Louisiana operators of slaughter houses, chute-the-chutes and
caHan dancers; in Mississippi contractors employing more than teD
men and in Virginia, g}asies.
REAI,TY BEARS BUBDEN
In the United Statesthe valuesof real estateand peNonalprop-
 TlLeEealt! Bhe Book ol Calilor is, 229

erly are about equal, bur }pal estate pays over eighly-nve per cent of
au laxas. tnls ls tnevttatrle undef our aystem of taxation. Here in
Califomia, for instance, a wido'i{ left with a tract of uncultivateal lsnd
valued at. say, $25.000.00,jf in Los Arjgelescounly, would pay aD
annual tax ofl from 9300.00 lo 9400.00. She mav have no income from
which to pay this tax and will be compellFd to moflgage her land to
securemoney to pay her taxes, provided the land is not alreaalvmort_
gaged. On the olhpr hrnd. a sucresslulphysician,law\er or c;rDora-
tion executi\e, with an incomeor salary o[ 925,000.00 or more a vear.
canlive in an expensiverented home,invest his surDll,sin tax exemnt
bonds. and not pry any taxeq, receiving all the benefils oI a motlern
city and a civilized community.
Remarkable gro{4h in the increasing burdeD of taxetion in th€
U0ited States is revesled jn a report recently made public bv the
National Induslrial ConferenceBoard. The Board calli alr€ntion to
lhp mFnaceof the constantly rising amounLol property wli"h has
Deenrerioeredb) varrous meanspxempt from te\ation Jnd the valuc
0l whrch.isgivpn as 954,000.000.000 in.19ZZ. This stuperdoussum of
non-taxable propedy in the form of tax exajpt securities represents
a little less than one-fifth of our national wea.lih and is equai to one-
third oJ aI property assessedunder the gereral property_tax, which
fbrms the bulwark of state and local government dnance.'
. Summarizingl!e growlh of the.ountrJ s tax bill. reporl shows
lhat lhe nation paid last year in taxes approximately
$?,000,000,000
compare-dwith $2.194,000.000 in 1913 and $1.A82.000,000 in t908.
laxes ot slate and toral go\emments have greatly incrpased. Sl,atp
l,axesIncreasedfrom $30?.000.000in tgtg to $846.000,000 in 1922.
ine tcx bhlden tigured in lerms of pach persons incomein l92Z was
$64.63per capita as compared yrith g1Z.O?per capita in 1913.
TNEND OF TAXATION
The preseDt trend of taxation in the United States is towarats
co-ordination in the assessmentand collect:on of taxes and the sub-
stitutionol income lor property as the besjsol tcxation. ft is sener_
ally Fcogrized that a s),stemoI propedy taxaiion, exfepr in soiar as
ceflain forrns ol reel e.tale are concerned,is ulsuited lo modem eco_
nomicconditions. Ihp time is not frr otr when the vast expenseof
re-duplica{ion ol taxrng ma.hinery will bc eliminated,when rll'federal.
3tal,e.counly. schooland cily taxes will be asscssedand collectedal
onetime by the United States Governmeni and re-apportionealto the
vadous divisions, or will be assessedand collected und_eran efficiendv
orga.nizedTax Commission in each state made up of federal and state
selection.competenr.trained men. well paid lor their servicesand
Fhosepositionsare lree ffom l)oliri.s. Thp asseslorsuDderrhentwould
hold-ihpir Fositionsdur':ng goud bpha\ior, bp fraid adequalcsalatips.
work the entire yeer and be free lrom polirical control. The laxpaver
wrll make but one return. Rel'enuF will bp derived from the taxiLlon
of lranchiseof the corporation.tax on incomp,iax on inheritances,tax
ohtangrble propertyand tax on business.Theresull willbeacoordi-
natronol taxation thar will maka a far more equiiabledistribution of
theburdenoflaxation and bdng grearcr.ornJoit ana lappin.ss lo ihe
Iax-payrngpublic.