The caption, " general property tax," is somewhat misleading, for specific kinds of property are generally relieved from the application of the law. In some of the earlier states one of the privileges which attended citizenship was the freedom from paying taxes. Exemption from taxes to some extent is still practiced by most governments. Difficulty in administering the tax laws has been responsible for some exemptions, while others are granted in an attempt to make the tax system more just.

Agitation for Exemption. - The inability to administer the tax laws in a satisfactory manner has led to much agitation for the extension of exemption provisions. Thus several states, because mortgages were not being assessed, have exempted them from the property tax. Many authorities urge the exemption of all intangible personal property from taxation, and would reach the ability thus represented in other ways. Some, who feel that taxpayers should know the burden of the taxes they pay, see injustices in indirect tax systems, and would have these abolished. A few would even go so far as to exempt all bases for taxes except land values. The question of exemption takes on a somewhat different form, according to the nature and advancement of a country, yet it forms an important feature of all tax systems.

Kinds of Exemptions. - One of the most common of the exemptions from property taxes has been a minimum amount of property. This has been for two reasons: first, because there has been the desire to recognize, as it were, a minimum of subsistence; and second, the administrative duties in finding and assessing small amounts of property proved entirely too burdensome for the returns in revenue. Consequently a few hundred dollars are usually exempt from taxes. Frequently, also, particular classes of property, such as mechanics' tools, are placed in the exempt class. Exemptions are sometimes granted to industries during the developmental stage, or as an incentive to get them to locate in particular localities. Much variation, however, can be found in the practice of the various political units.

Other kinds of property which are free from taxes are imported goods in the original package, and goods in the process of transportation. Most states exempt the deposits in savings banks. Public property of the various political units, such as buildings and parks, likewise enjoys freedom from the burden of taxes. Public welfare institutions receive similar treatment. Under these come such institutions as churches, hospitals, cemeteries, horticultural societies, and the various charitable institutions, such as county farms, almshouses, and homes for orphans and the aged. Property used for educational and developmental purposes is treated in like fashion. Not only does this include public institutions, but it generally extends to endowed colleges, libraries, and various kinds of scientific and literary organizations.

It seems no more than just to make the burdens upon public uplift institutions as light as possible. In many cases, where the institutions are owned by the state, taxation would simply mean the transferring of the amount of the tax from one pocket to the other. The exemption of such property when owned by individuals has not always been accepted in good faith, but, on the other hand, has frequently been abused. Property holdings far in excess of the need for carrying on their operations have been accumulated by some of these institutions. Tax exemption has been claimed, although the returns from the property are much more of an individual than public nature. This condition has led to considerable agitation, in some localities, for the removal of the tax exemption privilege upon this class of property.

Governmental Activities. - A common source of tax exemption is found in the securities issued by different political units - Federal, state, and local. It has been the practice of the Federal government to exempt its securities from most taxes, and it has been held, in the famous McCullough vs. Maryland case, that the states cannot even indirectly tax the instruments of the Federal government. It has also been the common practice and belief that the Federal government cannot tax the instruments that the states use in their functions.

These two views create a large class of tax exemptions that has become particularly significant since the introduction of the income tax. The freedom of the income of Federal, state, and municipal bonds from the income tax, while the income from the bonds of commercial enterprises is taxed, sometimes places a hardship and disadvantage upon the latter class of securities. Inequality likewise is placed upon different classes of citizens. There is little reason, for example, why a salary of $5,000 received by an employee of a corporation should be taxed, while the $5,000 paid to an employee of a state should not be taxed.