We have already classified expenditures according to the character of the benefit conferred.1 Now the almost uniform practice is to collect compulsory revenues from all the citizens for those expenditures that confer a common benefit, or one that is so treated ; then to collect special compulsory revenues for a part of the cost from those persons regarded as specially benefited by expenditures of class three ; while the revenues for meeting the fourth class of expenditures are raised by the sale of the commodities or services.

Professor Seligman finds that there are three distinct classes of revenues, each resting on a different justification.2 The first of these three we will call taxes.

1 See Part I., Chap. I., sec. 6.

2 See Seligman, "Classification of Revenues," in the Quarterly Journal of Economics, April, 1893, and April, 1895 ; Essays, Chap. IX. In my opinion Professor Seligman has not improved his classification by the refinements introduced in the second article. Nor is the necessity for distinguishing between fees and special assessments clear. Special assessments are a kind of fee, even within

This is a slightly narrowed use of the term. In the broadest sense an exercise of the taxing power of the State occurs whenever a compulsory contribution of wealth is taken from a person, private or corporate, under the authority of the public powers. But such a broad definition of taxes would include, also, the charges for expenditures of the third class, levied to pay the cost or part of the cost of a special service. As these are certainly different from those charges levied to meet the expenditures conferring a common benefit, it is necessary to adopt the narrower definition. In this sense then taxes are general compulsory contributions of wealth levied upon persons, natural or corporate, to defray the expenses incurred in conferring a common benefit upon the residents of the State. A tax is justified, but not necessarily measured, by the common benefit conferred.

When a distinct attempt is made to levy the charge only where a traceable or assumed special benefit is conferred, and to make it cover the cost, or a part of the cost, thereof, the compulsory payment is a fee. In the broadest sense fees are taxes, but they are not taxes in the narrower sense defined above, and compose a large and important class by themselves. A fee has a different justification from the terms of the Professor's definition of fees. Nothing is gained by raising classes logically secondary in character to first place. It is sincerely hoped that the simple general outlines of Professor Seligman's classification, as given in the text, may find general acceptance.

a tax. A fee never exceeds the cost of the special service rendered. A charge for a special benefit that exceeds the cost is best regarded as consisting of two parts, one a fee, the other a special tax. A fee may be defined as a compulsory contribution of wealth made by a person, natural or corporate, under the authority of the public powers to defray a part or all of the expenses involved in some action of the government, which, while creating a common benefit, also confers a special benefit, or one that is arbitrarily so regarded. The third category of revenues is called by Professor Seligman prices. The price of the commodities or services made or rendered by the government differs in no essential particular from the price paid for similar commodities or services rendered by individuals. The price is the value of these commodities expressed in terms of money. If the State has a monopoly, it may act as a private person would and take " all the traffic will bear," or it may forego a part of the possible gain, and the payment becomes or approaches a fee. If the State has no monopoly, it must, perforce, act as an individual would, subject to competition. Every civilised country has these three categories of revenues, and combinations thereof, and no more than these. Every civilised country recognises the same justification for each contribution. Every government appeals to the same motives to induce the payment of each class. In the case of the first two classes the motive is compulsion, in the last the government withdraws and allows the interest of the individual to bring him forward and induce him to make the contribution. This class has been called voluntary. If this term meant merely the absence of compulsion, the spontaneity as it were of the contribution, it would be satisfactory. But generally there is the danger of confusion arising from the implication in the term that the contribution is without return, of the nature of a gift. Hence, in order to show the character of the payment, Professor Seligman has called it contractual. There are serious objections to this term also, although it is of such a characteras to admit of a technical application very easily. But in lieu of a better and for sake of uniformity we will adopt it.