The general property tax consists of a number of different parts which are best considered separately.

1 See Chapter VII. for shifting to foreigners.

2 See pp. 140 ff., and p. 177.

Such a separation is legitimate since the tax falls apart in the practice of assessment. It falls naturally into at least two great divisions, a tax on real estate and a tax on personal property. The tax on real estate may be regarded as of two parts, a tax on land and a tax on buildings. In the general property tax, the tax on land is assessed according to the selling value. When the land is used for agricultural purposes the incidence of the tax lies between the owner and the user of the commodities produced.1 Can the owner shift the tax to the consumer ? If this happens, it means a rise in prices which again means an extension of the margin of cultivation, marginal lands being untaxed, as having no price, or less heavily taxed. But such a rise in price may affect consumption and lessen the demand at the same time that it tempts to the creation of a new supply, thus inducing a fall in prices. But as cultivators of land do not readily withdraw from their position, those on or near the margin of cultivation will suffer severely, but will generally hold on until their profits are gone, often until they are ruined. The conditions under which agricultural products are sold to-day are beyond the control of any one set of producers. The full burden of the taxes upon agricultural land, therefore, falls upon the farmers.

1 For America, the tenant may be considered as a consumer of utilities, residence, etc. ; so few farms, or productive lands, are rented that they need not be considered.

In the United States, inasmuch as the farmers are seldom the owners of any considerable amount of untaxed personal property, they bear far more than theirproportionate share of the commonwealth taxes and often also of the local taxes.

When land is used for other purposes than agriculture, it is generally best considered in connection with the buildings on it. The incidence of the general property tax on houses and the land they occupy will vary from locality to locality with the demand for such houses and the supply. Houses cannot be readily torn down or fundamentally altered without great loss: consequently if the supply of rentable houses is larger than the demand, the tax on the buildings will fall wholly on the owner. It can be shifted to the tenant only when the supply of houses is very limited. In America these two cases are both frequently illustrated.

The incidence of that part of the general property tax which is assessed upon personal property or upon invested capital is very difficult to trace. If the tax were well and universally assessed upon all such capital, it could not, regularly, be shifted from the owner at all. There is no free field for this capital to invade. But when the tax is evaded by a considerable proportion of the capital, then the tax can be shifted to the borrower and will be so in the main.1

It will be seen even from this brief statement of the facts of shifting concerning the general property tax that the incidence is different from the intended incidence wherever that tax fails of forming a complete system.