Some Economic Idiocy

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Title:     Some Economic Idiocy
Author: William Cowper Brann [More Titles by Brann]

A correspondent calls my attention to the recommendation of a commission appointed by the governor of Massachusetts, to the effect that "all taxes on intangible property be abolished." He adds that, "as much of the wealth of Massachusetts is in stocks, bonds and mortgages this would relieve the rich at the expense of the poor." I could recommend that my correspondent be placed in a well-padded cell in a lunatic asylum and fed on Ladies Home Journal literature. The idea that what he calls "intangible property" should be taxed is quite prevalent among the ignorant and a perfect hobby with the half-educated. No writer distinguished for economic erudition recommends laying a tax on notes, stocks, bonds and other such evidence of wealth. Such a tax should never be laid by a government guaranteeing equal right. It is class legislation--it is DOUBLE TAXATION. This statement may not be at all palatable to the West and South, but the proposition is impregnable. It taxes both the lender and the borrower on the same property and the latter has to pay for both. It must be remembered that such securities are not wealth per se, any more than a cook-book is a square meal--they are merely evidences of ownership. Let us say that I hold $10,000 worth of stock in the Illinois Central railroad: The road is my property to the extent of my stock--I am a small partner in the enterprise. It pays taxes to the State of Illinois and to every county and municipality through which it passes. Having paid taxes upon my property in Illinois, where it is located, must I pay taxes upon it again in Texas, where it has no existence? If I must pay taxes upon my railway property, then pay it again upon the certificate that I own it and am entitled to its usufruct, why not compel me to pay taxes on my business block, then pay it again on the deed thereto in my possession. My certificate of railway ownership and my certificate of realty ownership are on an exact parity from an economic standpoint. Each is evidence that I possess tangible property upon which I am paying taxes, and I emphatically object to a double dose. Exactly the same principle applies to promissory notes and bonds. A bond is nothing more nor less than a note. Suppose that I hold Illinois Central bonds to the extent of $10,000 instead of stock: The corporation has borrowed the money of me and invested it. It is paying taxes as well as interest on my property in consideration of use. As the corporation is using the property it must earn all the taxes, by whosoever directly paid, for I can earn nothing with property not in my possession. If I am taxed on my bonds, I must "put it in the bill," just as the merchant puts rent, interest and insurance. If Massachusetts owns ten million dollars of Texas securities she has simply transferred that much tangible wealth to this state for us to tax. If the paper evidence that this property is located here be taxed in Massachusetts, Texas must pay the piper. Let it never be forgotten that a tax is but a toll and can only be taken of something tangible. You cannot get blood out of a ghost or wealth out of a paper evidence of property. The blood must come from real veins and the tax must be drawn from something tangible. It is a contravention of justice and a violation of economic law to tax this man's property once and that man's twice. That the one is rich and the other poor does not mitigate the infamy--it is a fundamental principle of this republic that all men shall be equal before the law. Some years ago a howl was raised that reached high heaven that Jay Gould was worth 50 millions and paid taxes on but 75 thousand. Economic idiots gnawed a file because the ex-house-trap maker objected to paying his taxes twice, and charging his patrons on both the amount and the cost of collection. There are many abnormal fortunes in this country, but confiscation through taxation is not the proper remedy. If the government toll be an ounce in the pound let it BE an ounce in the pound, whether the citizen possess ten pounds or ten million. Let every citizen contribute to the support of government in exact proportion to his means. To exempt the man who makes $500 a year and place the entire burden upon the man who earns $1,000 a year and upwards is to make of the first a political pauper. The graduated income tax, so-called is wrong to one class of citizens and an insult to the other. Let us tax all property once and only once; but let us see to it that unctuous old hypocrites like Rockefeller are not permitted to rob the public--that they do not build collegiate monuments to their own memory with other people's money.

[The end]
William Cowper Brann's essay: Some Economic Idiocy

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