GENE JAN 191920 UNIV. OF MICH EDITED FOR THE ACADEMY OF POLITICAL SCIENCE IN THE CITY OF Bernard Bosanquet's Philosophy of the State R. F. ALFRED HOERNLÉ 609 Lamartine-A Study of the Poetic Temperament in Politics Reviews: Spargo's Bolshevism, Kerensky's The Prelude to Bolshevism, Gourko's Russia 1914-1917 Memories and Impressions of War and Revolution and Kritchewsky's Vers la Catastrophe Russe (654)-Turner's Ireland and England and Creel's Ireland's Fight for Freedom (659)-Wheeler's China and the World-War (663)-Scott's Syndicalism and Philosophical Realism (665)Reckitt and Beckhofer's The Meaning of National Guilds (668)-Laski's Authority in the Modern State (669)-King's Industry and Humanity (671)Meulen's Industrial Justice through Banking Reform (675)-Kellogg, Vernon and Taylor's The Food Problem (676)-Abbott's The Expansion of Europe (678)-Beer's A History of British Socialism (681)-Glover's From Pericles to Philip (683)-Cerf's Alsace-Lorraine since 1870 (685)-Corwin's John Marshall and the Constitution (686)-Bulletin de l'Institut Intermediaire International (688)-Gephart's Effects of the War upon Insurance (690). LANCASTER, PENNSYLVANIA COLUMBIA UNIVERSITY, NEW YORK GINN & COMPANY, 70 FIFTH AVENUE, NEW YORK Entered at the Post-Office, Lancaster, Pa., as Second-Class Mail Matter. Copyright 1919, by the Editors of the Political Science Quarterly. THE POLITICAL SCIENCE QUARTERLY The Quarterly is published by the Academy and edited by the Faculty of Political Science of Columbia University. It is devoted to the historical, statistical and comparative study of politics, economics and public law. Its list of contributors includes university and college teachers, politicians, lawyers, journalists and business men in all parts of the United States and European professors and publicists. It follows the most important movements of foreign politics but gives chief attention to questions of present interest in the United States. On such questions its attitude is nonpartisan. Every article is signed; and every article, including those of the editors, expresses simply the personal view of the writer. Each issue contains careful book reviews by specialists, and in March, June and December large numbers of recent publications are characterized in brief book notes. A valuable record of political events throughout the world is printed as a supplement to the September issue. Communications in reference to articles, book reviews and exchanges should be addressed: Managing Editor, Political Science Quarterly, Columbia University, New York City. Intending contributors are requested to retain copies of articles submitted, as the editors disclaim responsibility for the safety of manuscripts. If accompanied by stamps, articles not found available will be returned. The Quarterly is sent, together with the Proceedings, as part of the membership privileges, to all members and subscribing members (libraries, institutions etc.), who pay five dollars annual dues. Single numbers, not including supplement, one dollar. Supplement containing Record of Political Events, one dollar. Back numbers and bound volumes can be obtained at prices quoted upon request. All business communications should be addressed to THE ACADEMY OF POLITICAL SCIENCE, Kent Hall, Columbia University, N. Y. POLITICAL SCIENCE QUARTERLY Τ THE NEW YORK INCOME TAX HE enactment of the New York income-tax law in 1919 marks an important stage in the fiscal history of the United States. It is the purpose of this article to put the law in its proper setting and to explain the wider aspects of a significant reform. I For many years the state and local revenue system of New York, like that of all other American commonwealths, consisted of the general property tax. Under the economic conditions of the period and especially where the burden of taxation was comparatively slight this constituted a relatively satisfactory method. It was not until after the Civil War that complaints began to multiply. As in every advanced industrial and commercial community, it became increasingly difficult to reach personal property; and as the expenditures of government gradually rose, this inequality of burden became more and more patent. In New York, as the foremost industrial state of the Union, the incipient discontent took the form of the appointment of an investigating commission. Mr. David A. Wells, who approached the subject flushed with the success of his efforts in reforming the federal internal revenue system, went so far in his reports of 1871 and 1872 as to recommend the abolition of the personal property tax. This suggestion, however, was so radical and premature that nothing came of it. The disparity, however, between the growing expenditures and the dwindling receipts from the general property tax led in the next decade to the beginnings of a new system, namely, that of supplementing the property tax by so-called indirect taxes, a term which now gradually came to include all other imposts. In 1880 a tax was introduced upon corporations, assessed in some cases on capital stock and in others on gross receipts. At first, however, not much was derived from this source. In the early '80's it was the privilege of the present writer, who had returned from his university studies abroad and who was beginning to pay some attention to tax problems, to be consulted by the legislative leaders as to the best methods of extricating the state from its growing fiscal difficulties. Having come to the conclusion that the general property tax was no longer suitable as the chief form of revenue and realizing the impossibility of making a successful frontal attack on the personal property tax at that time, he decided that the most promising prospect of reform lay in what soon came to be called the principle of separation of source. The two glaring defects of the general property tax at that time were the inequality in the assessment of real estate and the escape of personalty. The unequal assessment of real estate was a result largely of the utilization of the tax for state purposes. For the lower the assessment in each county, the less would be its share of the state tax. It therefore seemed clear that if the state revenue could gradually be secured from other sources, the time would come when the direct tax could be reserved for local purposes. In the second place, the conviction was borne in that while it was manifestly premature to attempt to abandon the personal property tax, it might be possible, especially under the liberal provisions of the New York constitution, to levy separate taxes on various kinds of personalty which would gradually pave the way for the disintegration of the general property tax, even for local purposes. But It is with considerable reluctance that these personal details are presented. it is thought that it might be of interest to show not only that the history of the movement has not been one of mere chance but also that even in a democracy the rôle of the reputed expert has sometimes been of more importance than is often believed. Under the influence of these ideas, an effort was made to induce the legislative leaders to work along the lines of separation of source as the most promising avenue of reform. From time to time, as the political situation favored, steps were accordingly taken in this direction. In 1885 a collateral inheritance tax was introduced; in 1886 the organization tax on corporations was imposed; in 1887 the racing tax laws were enacted; and in 1890 the collateral inheritance tax was converted into a direct inheritance tax. The result of these laws was gradually to provide for state purposes an independent and increasing share of the growing expenditures; but the relief afforded was inadequate to attain fully the ends desired. The new taxes constituted after all only a modest beginning of the process of separation of source; and while they prevented, perhaps, any exacerbation of the evils, they did not afford any marked relief. In fact the inequalities in the assessment of real estate persisted, and personal property continued to slip still more markedly out of the assessment lists. Accordingly, in the middle of the '90's, a more determined effort was made to attain the ends originally planned. In 1896 the liquor-license law was passed, with the introduction of a new principle, namely, a division of the yield between state and locality. Thus the second part of the program was initiated. The principle of separation of source-utilizing new sources of revenue for state purposes alone-was intended ultimately to get rid of the state direct tax. The principle of division of yield-apportioning the proceeds of a centrally assessed tax between state and locality-was designed to lessen the local pressure upon personal property invested in business or otherwise and thus to speed the day when the tax on personalty as a part of the general property tax might be abandoned. The system inaugurated in 1896 was gradually perfected during the next decade. In 1901 a tax at a special rate was imposed upon banks and similar institutions; in 1905 the stock-transfer tax was introduced; in the same year an annual mortgage tax was created with a division of yield between state and locality, replaced, however, in the following year by a mortgage-recording tax; and, finally, in 1911, the secured-debt tax law was passed. |