There are two other theories, which, independent of the idea of sacrifice or of increased economic power, attempt to justify a higher rate of taxation for higher incomes than for lower. These two theories adoptthe hypothesis that the common benefit is equal, and demand that the inequalities in wealth should be removed in order to make it easily possible to tax according to this equal benefit. There are, first, those who argue that the inequalities in wealth are due in large measure to the action of the State, and hence the State is justified in abandoning the idea of equality of taxation and in taxing those who have much wealth more heavily than others, for they have gained from the State's own action. This has been called the compensatory theory. Others, again, starting from the same hypothesis, urge that taxation cannot be equal, because evil economic forces have changed the abilities of the tax-payers and that it is the duty of the State to offset these forces by readjusting wealth through taxation. This has been called the socialistic theory. Neither of these theories can justly be called scientific ; they both cut loose entirely from existing conditions.

We cannot within the limits of this work attempt an exhaustive criticism of all the different theories as to justice in taxation. Indeed, we have already exceeded the limits of pure scientific inquiry. But the conclusions reached by Professor Seligman after an exhaustive study ofall the different theories are too important tobe omitted.1 He finds the benefit theory, like the socialistic and compensatory theories, wholly inadequate. But the faculty theory is satisfactory and seems to him to justify a moderate progression. Greater faculty is represented by the higher income: (1) because, after the initial disadvantages have been overcome, it is easier to acquire more ; (2) because the sacrifice of the same proportion of the larger income is less than in the smaller income. Neither of these reasons suggests a definite rate of progression. He says : " If therefore we sum up the whole discussion, we see that while progressive taxation is to a certain extent defensible as an ideal, and as the expression of the theoretical demand for the shaping of taxes to the test of individual faculty, it is a matter of considerable difficulty to decide how far or in what manner the principle ought to be actually carried out in practice."

1 Prog. Tax. in Theory and Practice, pp. 190 ff.

It would seem, then, that, in general, faculty is the ideal base of taxation ; that faculty can be measured either by property or by income, but best by the latter ; that faculty increases somewhat progressively and is affected by the consideration of relative conditions, as the kind of property, the source of the income, or the burdens already resting upon the individual or property. All these considerations have to be applied in determining whether the tax system of any country complies with the rules of justice. They do not apply with the same strictness to the separate taxes.1

1 The recognition ofthe principle of progression in the recent reforms of taxation is very marked. See Seligman, Essays, 305 ff.