Tax systems may and must be looked at from many angles - from the revenue standpoint, the ease of administration, the effect upon the individual or industry upon which the burden is placed, and from the social consequences. In the formation of fiscal systems some one of these phases generally has an outstanding influence. In a system of indirect taxes, for example, much importance is attached to the consideration of revenue and the administrative problems. Frequently a consideration of the individual has been the center of thought - each individual should bear tax burdens in accordance with his ability. And through the attempt to apply this idea of ability, the studies of shifting and incidence, of proper administrative machinery, and of the effects of borrowing, have resolved themselves into studies of the individual and his burdens.

Faculty and Utilitarian Principles. - In recent years the idea of faculty has begun to take on a more expansive aspect, and social considerations are beginning to have a place. The fact is being recognized that privileges granted by the state are factors which contribute to the ability to meet burdens, and these are being included in the basis for taxes. This takes a variety of forms, but two of the best examples occur in the taxation of the privilege of inheritance and in the privilege of corporate organization. This same tendency is also seen in the wide extension of the use of the license system, and in the use of taxes for sumptuary and regulatory purposes. While taxes may not be the best method of handling undesirable practices, yet their use for this purpose shows that social aspects have received consideration.

More consideration is also being given to the general social effects of taxes, or what was designated in an earlier chapter as the utilitarian principle. It is recognized, for example, that two industries may have exactly the same ability to meet burdens, yet the curtailment of one by a tax, or the increase in the price of its products through a process of shifting, would work a much greater hardship upon society than would a similar tax placed upon the other industry. Consequently, in the formulation of fiscal principles, more attention is being directed to the ultimate effects and burdens, and a greater effort is being made to secure the greatest good to the greatest number.