PREFACE. THE present publication is the general part of a larger work which has been in preparation since the autumn of 1892. It includes a discussion of the problems of double taxation, particularly as they appear under the methods of direct taxation practiced in the United States. Reference is made to the actual facts to illustrate the discussion and to present a general view of the law and practice. Citations have generally been restricted in this place to some of the important cases, but in the detailed examination of the laws of each state, both statutes and decisions will be cited with extensive quotations. It is hoped to secure thus the greatest possible accuracy in the statement of the law. This detailed statement, revised to date, is now nearly completed. No pretense is made to any great originality of thought, but it is believed that the classification is, in some repects, new, and that the discussion has been given a systematic form. In regard to the individual points of theory the writer has found that almost everything has been stated either positively or negatively in the multitudinous legal arguments and opinions. This question has been treated in this country by Prof. Seligman, in his articles on "The General Property Tax" and "The Taxation of Corporations" in the fifth volume of the Political Science Quarterly. Numerous pamphleteers, especially in Boston, have discussed some of the questions fragmentarily. The reports of occasional tax commissions of the several states also give valuable material. In foreign countries little seems to have been done except in Germany and Switzer land, where federal complications similar to those in the United States are found. The principal works are by Zürcher, "Verbot der Doppelbesteuerung," and Schanz, “Die Steuerpflicht," in the Finanz Archiv, 1892. In conclusion the writer wishes to express his obligation especially to Prof. Seligman, of Columbia College, under whose instruction he acquired his chief interest in financial questions, and at whose suggestion this study was undertaken. To Dr. Munroe Smith, Professor of Comparative Jurisprudence, and to Prof. Goodnow, Professor of Administrative Law, the writer also is deeply indebted. BOSTON, May 10th, 1895. TABLE OF CONTENTS. Introduction, the importance of financial questions. Prob- lem defined. Basis and nature of taxation, income or property, personal or material. Forms of double taxation within a state. Property and debts, property and income, property in its direct and representative forms (capital stock and "franchise," etc.). Double taxation arising from a conflict of jurisdiction. Considered in relation to politics; the nature of political allegiance and jurisdiction. In relation to jurisprudence, the legal situs of property; realty, chattels and choses in action. In relation to econom- ics; the actual productive force of the state and not con- sumption is the basis of taxation. Tabular analysis of personal liability to taxation. Question of incidence . . The federal form of the United States government and con- flicts of jurisdiction arising thereunder. The taxing powers of the general government and the state governments and their constitutional limitations, expressed and implied. Property and debts; the negative character of credit prop- erty. General and unsecured indebtedness. Book debts. PAGE Property and income. General income taxes. Income from particular forms of business; gross receipts and pre- Property taxed twice. Capital stock taxes. Specific or Jurisdiction in taxation; property and persons. Consid- ered, first, within the state; realty, tangible personalty and Jurisdiction in taxation; business and corporations. Con- sidered, first, within the state; property taxes, capital PAGE Conclusion. The solution of the problem in accordance with actual worth and economic situs depends on the question of debt deduction and the taxation of the non-res- ident creditor. Debt deduction considered as to residents and non-residents in respect to unsecured debts, mortgage debts, corporate debts and public debts. Interstate char- acter of the security of corporate debts and the exemption of public debts make a satisfactory solution impossible. Taxation of tangible property only, gives a consistent but unequal result. Possibility of federal interference consid- ered in regard to the taxation of non-resident bondholders. Public securities should not be exempted from taxation.. 127 DOUBLE TAXATION. CHAPTER I. THE increasing complexity of modern social conditions and the actual magnitude of the interests involved have led to a demand for a more detailed consideration of financial problems. To this necessity we find no exception in the problems of taxation, which are perhaps the most difficult, as well as the most important, in the range of public law. Though these questions of taxation are, indeed, the only ones which have attracted any considerable attention from English and American writers, the treatment of them until recent years has been only of a very general character. The present theme is an inquiry into the actual condition of the law in this country in regard to the question of double taxation. In taxation, next in importance to adequacy, in the view of public policy, is justice, and it often rises superior; for while inadequacy of revenue may embarrass and hamper a government, injustice in assessment will demoralize and corrupt it. The most prevalent notion of justice in taxation is the requirement of equality; but, both in the ideas of justice and in the determination of equality, there are extremely divergent views. Double taxation is one form of unequal taxation. It consists either in taxing the same source of wealth twice in a given state, or in two different states taxing the same source of wealth. The problems presented are two-fold 1 1 Cf. Seligman, General Property Tax, Political Science Quarterly, v, 32; The Taxation of Corporations, Political Science Quarterly, v, 637. |