In the course of its development many changes have occurred in the nature of the general property tax. At its inception it was distinctly a personal tax levied to secure revenue for local purposes. In the modern use of the tax the property itself, rather than the owner, is the fundamental basis of the assessment. The practice of requiring personal declarations continues to be followed in a number of localities, but where these cannot be secured an assessment is made against the property. This method of procedure illustrates the importance which is attached to the property aspect. Assessors are usually instructed to assess all the property in their district, whether ownership be located there or not. As the functions of government grew the services rendered by the locality were supplemented by those of the state and county, and need for a larger revenue appeared in these larger political units. The most feasible process to follow to supply the necessary funds, it seemed, was to use the machinery already in existence, and to add a state and county tax rate to the one for local purposes.

Classification of Property. - The classification of property has come with the development of the property tax. The attempt has been made to designate two general classes real property and personal property, with the further division of personal property into tangible and intangible property. In general, real property refers to land and that which is attached to it, while personal property designates movables, or those objects which are more closely related to personal use than they are to land.

Property does not fall naturally into the above classes, and the inconsistencies and difficulties which are encountered in the various states in the attempts at classification but illustrate the arbitrariness of such a division. A tree in the forest, for example, is real estate, but as soon as it is felled it becomes personal property; gravel in the creek bed is real estate, but as soon as it is thrown out on the bank it becomes personal property.

One may find court decisions which have classified property in a purely arbitrary manner. Many legislatures also make arbitrary classifications for administrative purposes. The state of New York, for example, classes the special franchise value of public utilities as real estate. It is impossible, then, to generalize as to what property belongs in each division, but one must rely upon the more or less arbitrary decisions of legislatures and courts, the lack of uniformity of which, in the different states, is striking.

Property and Ability. - Changes in economic institutions have resulted in the situation that the possession of property no longer represents ability to meet tax burdens. In a purely agricultural community, in its primitive stage of development, property was an approximate test of ability, for here each individual was concerned with realizing a return from his land, and the amount of land was a measure of opportunity and ability. As industries and trades developed, however, livelihoods came from other sources than the ownership of property. Some ability to bear tax burdens must be recognized in the receipt of a salary or wage, even though there be no possession of property.

The forms of property have also differentiated with economic development, so that all property does not have the same ability to bear burdens. The real criterion of taxpaying ability is the productiveness of the property. In the case of two factories or farms, each of the same value, one may enjoy a profitable year and the other meet with reverses; the one be able to bear tax burdens and the other not. In our modern economic organization property represents ability to meet burdens only as it is a productive entity.