With the advance of civilization and the development of governments, the functions of the state increased. To carry on these new activities, added sources of revenue had to be sought, not only to meet the increased expense, but also to make up deficits which had been incurred by giving up some of the former sources of revenue. The citizen, naturally, demanded a reason for the increasing taxes, and the representatives of the state were obligated to furnish them, if the needed funds were to continue to be peacefully secured. One reason sometimes given was that the citizen should make a money payment to the state, since the state no longer required services and commodities, as in an earlier regime. This was the idea of commutation. The more general justification of taxes, however, was that the citizen was the recipient of benefits from the expenditure of the funds. When this conclusion had been reached, the attempt was made to go farther and measure what each individual should pay by the amount of benefit he received. This is known as the benefit theory of taxation - that individuals should contribute to the state in proportion as they are benefited by it. It was pointed out that larger exactions could justly be made from the wealthier classes because the state was giving them more benefit through protecting a larger amount of property.

Difficulties with Benefit Theory. - Difficulties at once appear in attempting to use benefit as a measure of the amount of taxes to be paid. The state gives a number of common benefits to all, such as the guarantee of life, liberty, and the pursuit of happiness. Just what the benefit of this immaterial service is worth it is of course impossible to measure. No individual can say just what good the standing army, or the navy, or the city police force is to him. No estimate could be formed until the service was removed and the situation then compared with the previous one. Not all services are of this intangible nature. In some cases a rather definite estimate can be formed of the value received from the public expenditures. It is often true, however, that those who receive the most direct benefits are able to pay the least in return. If revenues were to be exacted according to services rendered, a substantial amount would come from such public institutions as asylums, poor farms, etc. The inmates of these receive their all from the state - clothing, food, shelter, protection, and medical services. In return they are unable to give anything for this consideration in their behalf.

The benefit received from the state may explain to a rich bachelor why he is expected to contribute, but it does not convince him that it is just for him to contribute more into a fund, a large part of which is used for education, than does a man whose children are availing themselves of this utility. Likewise many other examples can be called to mind of where the payment required is so out of proportion to the direct benefit received that it is evident that some other criterion must be found for the measure of taxes.

Attitude of Courts. - In spite of the difficulties with this measure of taxation, the courts have continued to give it an important place in their decisions as to justice. The line of reasoning is that there is a relation between the amount of property held, or the amount of income received, and the protection given by the state. The recognition is made, however, that other benefits exist which cannot be measured, and that a tax based upon the benefit received from the protection of property or income is only an approximation of justice.