In the general property tax the basis is the entire amount of property, real and personal owned by the tax-payer. It is usually paid out of the income of the tax-payer derived from any source, but inasmuch as it forms a lien on the property it may be paid from that. The tax rests, theoretically, upon one of two ideas : (1) that property measures faculty ; (2) that property measures benefit. In the older forms of this tax, when there was little opportunity to buy or sell land, or to invest capital, it was pretty generally true that property did measure faculty. In modern times the theory that benefit can be measured by property has led to the retention of the tax. The fallacy of that theory has been shown.

The general property tax is, as we have seen, very old. It is still the main reliance of Switzerland and the United States for supplying the revenues of the component parts of the federal systems. Prussia and Holland have recently reverted to it. This reversion to a form of taxation which has been the subject of almost universal condemnation suggests the necessity of re-examining the grounds upon which those objections were based. Among many there are two of great importance. (1) It is urged that the tax is unjust because property forms no criterion of tax-paying ability. It is maintained thatincome is a far better basis. (2) It isurged that the general property tax is inexpedient because so difficult to administer justly, especially in the matter of the discovery and assessment of personal property and because of its effect on the movement of capital and forms of investment. Against these serious objections it is urged that when there is a tolerably just system of income taxation already in existence a property tax in addition thereto fulfils the requirements of justice because it imposes a heavier burden on " funded " income, which is regarded as indicative of more faculty since it is less precarious. It also supplements the income tax by making property in enjoyment, the use of which is an indication of tax faculty, a part of the base, as for example picture galleries. And, lastly, the comparative steadiness of the return from the property tax is a great recommendation from the fiscal standpoint. It would seem, then, that the objections to the general property tax as the main part of a system still stand, but that there may be room for such a tax as a subordinate part of a larger system, the demands of justice being met by the proper relation between the different parts of the system.

In Switzerland and Prussia the general property tax is part of a more elaborate system. In the United States it stands almost alone for commonwealth purposes, supplemented in a few isolated instances by other taxes intended to reach certain forms of revenue-yielding property. The universal condemnation of the American commonwealth general property tax is therefore not due to the defects in the tax itself, but mainly to the fact that it is not properly supplemented by other taxes.

The first question that arises when the general property tax stands alone, and a question which although not so prominent also arises in other cases is : Can the method of assessment be made suffciently effective to reach all forms of property, especially personal property ? The answer to this question that has been given by the experience of all nations, is emphatically in the negative. This is especially true when the administration of the assessment is left to officials popularly elected for a short term. It is also in the negative, but somewhat less unanimously so, when the assessment is under the control of an impartial bureaucracy appointed by a monarch or holding office practically for life. In the United States it is notorious that almost all personal property escapes.

The report of the extensive investigations of the Eleventh Census (1890) into the matter of local and commonwealth taxation has just been published.

The census office undertook to ascertain the true value of property, i.e. its fair selling value. This serves as a basis of comparison for the assessed values. The investigations of the census were conducted with the utmost care, and although they inevitably contain many unavoidable sources of error they are yet very serviceable. The following table shows the results of the investigations into the true value of property:

Real estate, with improvements thereon . .  $39,544,544,333

Live-stock on farms, farm implements, and

machinery.......      2,703,015,040

Gold and silver coin and bullion . . .      1,158,774,948

Mines and quarries, including product on hand      1,291,291,579

Machinery of mills, and product on hand .      3,058,593,441

Railroads and equipments, including street railroads ........      8,685,407,323

Telegraphs, telephones, shipping, canals, and

equipment.......        701,755,712

Miscellaneous.......      7,893,708,821

Total.......$65,037,091,197

The total assessed valuation was $25,473,173,418 or about 40 per cent (41 per cent if we allow for $3,833,335,225 exempt by law). Of real estate, — land and its improvements, — the true value was $39,544,544,333, of which all but $3,833,335,225 is legally subject to taxation; the assessed value of the $35,711,209,108 taxed was $18,956,556,675, a little over 50 per cent of its true value. The $25,492,546,864 of personal property was assessed at $6,516,616,743, about 25 per cent. But if we make allowance for the $1,291,291,579 worth of mines and quarries which might be well classed as real estate, personal property is assessed at about 22.2 per cent of its true value. As the statement of the total amount of personal property errs admittedly on the side of moderation, there being some forms which were not ascertainable, this showing is more favourable to the assessment than the truth would be. It is well within the truth to say that in the United States as a whole not more than 20 per cent of personal property is taxed. Probably considerably less than this is the true figure. In many important commonwealths the assessment of personal property even according to the favourable showing of the census is far below the average for the whole country. In the country as a whole, personal property is about 71 per cent of real estate or 41.2 per cent of all taxed property. In New York it is assessed at a trifle over 11 per cent of the real estate and about 10 per cent of all property. According to the census valuation there was in New York $5,817,704,667 worth of real estate and $2,758,997,324 worth of personal property. Real estate was assessed at $3,403,751,246, or about 58 per cent of its real value, while personal property was assessed at $382,159,067, or not quite 14 per cent of its real value. When it is remembered that the census report omits some unascertainable items of personal property it is fair to say that 90 per cent of the personal property in New York is untaxed, where at the same time only 42 per cent of real estate is untaxed. This means that the assessment of personal property is evaded and that real estate is assessed below its actual value. The latter fault is not so bad as the former because general under-assessment means merely a higher rate than would otherwise prevail, but does not affect the distribution of the burden. Pennsylvania, Massachusetts, and Ohio show somewhat better assessment of personal property. Thus in Pennsylvania the assessed value of personal property is 618 millions against 2042 millions of real estate ; Massachusetts, 554 millions against 1600 millions; Ohio, 546 millions against 1232 millions. But no one supposes that there is any more personal property owned in these commonwealths than in New York. In fact the contrary is the case. In some of the newer western States the assessment of personal property is larger than the assessment of real estate. Thus in Montana personal property is 58 millions, real estate 55 millions ; in Wyoming the ratio is 20 : 13 ; New Mexico, 28 : 15 ; Arizona, 18 : 10 ; Nevada, 17 : 9 ; Idaho, 16 :10. But this is easily explained. (1) In these States, land values have not yet developed. (2) The real property assessed is only such lands, with their improvements, as have fully passed into the hands of private owners. (3) Personal property is swelled by including in it the improvements upon public lands the fee to which is still vested in the United States, and upon railroad lands the title to which is still vested in the railroad companies. (4) The list of personal property is swelled by the nature of some of the industries that prevail,—cattle. A certain amount of it is due to the assessment of railroad property as personal property. (5) The possibility of concealing property is less in a country where population is sparse and the conditions for investment well known to the assessors. (6) The need of revenues is very great and real estate has not enough value to bear the burden. Personal property must, therefore, be called in to raise the necessary amount without inordinately high rates. The chart on the opposite page taken from the Eleventh Census shows the relative assessment of personal and real property in all the States.

The failure to assess personal property is due entirely to the laxity of administration ; the tax laws on the subject are universally strict enough to answer every requirement.

What constitutes personal property is explicitly stated ; the assessors have ample power to ascertain its exact amount. In a large majority of commonwealths (all but fourteen) the tax-payer is required to make a declaration of his property. In all the States the assessors have the advantage of large powers of investigation, and can ascertain the amount of the property if they will assert their power. But this is what locally elected assessors are very reluctant to do.

The questions as to the expediency and justice of a progressive rate, as to the exemption of small properties, and the like, have already been treated. The advisability of extending the assessment to legal persons so as to cover a certain amount of property that might escape in the guise of personal property, depends upon the strictness in the assessment. The stocks and bonds of railroad companies are easily concealable personal property of the individual stockholder. But the road and buildings are easily ascertainable real property of the companies. For ease of assessment, therefore, it is best to tax legal persons as well as real persons. But in that case stocks and bonds in the hands of private persons should be exempt, unless it is intended to tax such property more heavily than other property ; i.e. to introduce a partial progression. Whether in addition to including legal persons in the general property tax a special corporation tax should be imposed is a question of policy affecting the whole tax system.

When the general property tax stands alone, all tax faculty that exists in the form of receipts of the economic character of wages, — salaries, fees for professional services in independent professions, profits and earnings of management, — are untaxed. In the earlier forms of the property tax in the United States this omission was seen, and a special tax levied upon such income. But at present that method of taxation has almost entirely disappeared.

The technical arrangements for the assessment of this tax vary very much. In some cases the method of rather permanent cadastres is feasible for a large part of the property. It is necessary to make an annual investigation into the amount of personal property held by the different tax-payers, inasmuch as this changes very rapidly. But there is less necessity for such revision in the case of the real estate. A very simple cadastral system with revision every five, ten, or fifteen years, is in use in a good many commonwealths of the United States for commonwealth taxation, but annual assessments are in vogue for almost all local purposes. Thus, in Rhode Island, the Assembly fixes the assessment or apportionment of the commonwealth taxes whenever there seems need of revision ; in Michigan it is done once in five years ; in Vermont once in four years ; in Ohio once in ten years. No matter what changes may, meanwhile, occur in the value of property in the towns, the share of each remains the same for commonwealth purposes. Most of the commonwealths, however, require the regular addition of improvements and alterations.