Classification. Differing classifications of public revenue have been almost as numerous as the writers who have made them. Without entering into a discussion of the reasons for such differences, we may present at once a classification which is in general harmony with the usual treatment of the subject.

A. Permanent Revenues. I. Regular revenues.

1.Derived directly from government ownership. a. Revenues from public domains.

6. Revenues from public industries. a'. Industries publicly owned and managed. V. Industries publicly owned, but managed by lessees under a charter.

2.  Derived from the incomes of private persons and corporations.


b.Special assessments.


II. Irregular and miscellaneous. Fines, forfeits, escheats, gifts, etc

B. Temporary Revenues. (To be repaid.) I. Public loans by the sale of bonds. II. Public loans by the issue of treasury notes.

Miscellaneous Revenues.The class of miscellaneous revenues includes gifts, fines, forfeits, escheats, "conscience money," etc. Escheat is a legal term used to describe a property that falls to the State in default of other heirs. Conscience money is money sent without name by persons who have defrauded the government.

Gifts amount to more than is commonly supposed, although they form a relatively unimportant source of revenue. Formerly gifts were not infrequently made for the general expenditures of government. Less than a quarter of a century ago, a citizen of New Jersey left the United States nearly a million dollars to be applied to the payment of the national debt. But gifts are now more commonly made for special purposes, as when Mr. Smithson left the United States half a million dollars to be used in the foundation of the Smithsonian Institution for the Advancement of Science.

Public Domains. Public domains are a source of considerable revenue in Germany and some other countries. It has generally been thought best that governments should not keep any agricultural land, and to-day not a great deal of arable land is retained by governments, though there is not now so strong a tendency to part with it as there was a generation ago. The public ownership of forests, on the other hand, is everywhere increasing.

Public Industries. Industries, except those of a monopolistic nature, have not, as a rule, succeeded well as government undertakings. Model industrial establishments may, however, be managed by government with beneficial results. Some very important industries, such as the manufacture of fine china, have had their origin in government establishments. Natural monopolies may be made to yield a large part of ordinary revenue, especially in large cities, but manufacturing industries that are naturally competitive should be left in private hands.

Public Loans.Public loans are a source of revenue that gives rise to public debts. Great national debts are comparatively new in the world's history. Indeed, their origin is as recent as the reign of William and Mary in England. How important they have become in recent times may be judged from the following passage in Professor H. C. Adams's work on Public Debts: "The civilized governments of the present day are resting under a burden of indebtedness computed at $27,000,000,000. This sum, which does not include local obligations of any sort, constitutes a mortgage of $722 upon every square mile of territory over which the burdened governments extend their jurisdiction, and shows a per capita indebtedness of $28 upon their subjects. ... At the liberal estimate of $1.50 per day, the payment of accruing interest at 5 per cent would demand the continuous labor of three millions of men." On the whole public debts have increased largely in the fifteen years that have elapsed since the publication of Professor Adams's book.

Fees and Special Assessments. Fees and special assessments closely resemble taxes, but they are of much less significance in the fiscal system. A fee is a "payment made to the State on the occasion of some specific service rendered by the State to the citizen the service, however, being noncommercial in character." The payment demanded for recording a deed or mortgage is a fee; so, also, is any court charge, or a charge for a teacher's certificate, a marriage license, etc. A special assessment, which is even more like a regular tax, has been defined as " a compulsory contribution, levied in proportion to the special benefits derived, to defray the cost of a specific improvement to property, undertaken in the public interest." Thus American cities often provide for the paving of particular streets by laying part of the cost upon the entire municipality in the form of a tax, and placing the remainder of the burden, in the form of a special assessment, upon the owners of "abut-ting " properties in proportion to the value of such properties. In this way the entire city pays for the benefit conferred upon the city, while the people living on the street or owning business property there pay for the special benefit which the improvement has conferred upon them. The custom of municipal improvement by special assessment has been developed much farther in the United States than in Europe.

Taxes. The most important and most regular source of public revenues is taxation. Taxes are one-sided transfers of valuable things, exacted by public authority, chiefly from citizens, but also from other persons within its reach, according to some general rule, in order to meet public expenses and to accomplish other public ends. Taxes differ from fees and special assessments, therefore, chiefly in that there is no attempt to proportion the tax to the benefit conferred upon the individual. The justification of taxation lies simply in the necessity of maintaining the State. If the people are to have a State they must pay for it, and no better means than taxation has yet been discovered.

What is a Just Tax ? No question regarding taxation has been more earnestly discussed than the question of what constitutes justice in taxation. One answer that is commonly heard is that taxes should be proportioned (1) to benefits derived. But it is utterly impracticable to attempt to say what proportion of the general benefits of government accrue to particular individuals. And even if this were practicable, it would probably be found in many cases that the greatest benefits are enjoyed by the weak and the poor, who are least able to bear the tax burden.

The Faculty Theory. A theory more generally accepted by economists to-day is that taxation (2) should be proportioned to "faculty," or ability to pay. But even accepting this rule, there remains the difficult question, How is faculty to be measured ? One answer has been that we may measure ability by (a) consumption; but it is evident that the consumption of the poor is out of all proportion to their ability to bear the burdens of the State. Another suggested basis of measurement (b) is property ; but property differs widely in its productiveness, and, moreover, many persons with little property have large incomes and therefore great ability to bear taxation.

Perhaps the least objectionable measure of ability is afforded (c) by revenue or income, though even here we must note that incomes differ in permanence and security, and that equal incomes are called upon to support very unequal numbers of persons. It is not possible, probably, to reach a single perfectly just basis of apportionment of the tax burden ; but the levying of taxes on income or revenue, with variations to correct manifest cases of inequity, probably approaches as near to ideal taxation as is possible to-day.

Granting this, another question at once presents itself for solution. Shall taxes be laid in direct proportion to revenue, or shall the rate be increased as the amount of revenue increases ? The first method is called (a) proportional taxation; the second, (6) progressive or graduated. Sometimes taxes are neither proportional nor progressive, but (c) regressive; that is, the rate diminishes as the taxed property or revenue becomes larger. Such taxes every one admits to be unjust, though many such taxes are levied ; but there is no general agreement regarding the relative justice of proportional and progressive taxation. We cannot enter into a detailed discussion of the question, but must leave the further study of the subject to the student. While the progressive tax seems preferable as an ideal, certain practical difficulties make it very doubtful whether we can hope for realization of the ideal in income taxation for a long time to come.