The customs duties have received more consideration than any other form of revenue which has been used by either the Federal or state governments. This has been because of the economic and industrial significance rather than because of any fiscal importance which may be attached to them. Other sources of revenue of importance exist, however, which are no less remunerative. It is proposed in this chapter to discuss some of these sources from which the Federal and state governments secure funds. The treatment of a part of the sources of revenue, however, such as the taxation of incomes, corporations, property, and inheritances, will be reserved for separate chapters.
An important source of revenue of the Federal government which, like the customs duties, is not used by the states or minor political units, is what is frequently called the excise tax. Until a few years ago the significance of Federal revenues was almost synonymous with customs duties and excise taxes. The scope of Federal revenues has been extended, however, in spite of the constitutional limitation as to the levy of direct taxes, until nearly all the sources of revenue which are used by the states must also be considered as a part of the Federal fiscal system. It is only in recent years that the Federal government has levied taxes upon corporations and incomes, and it is more than likely that the emergency use of the inheritance tax during the war will remain a part of the Federal source of revenue.
1 There is no logical relation between capitation taxes and excise or business taxes. They are the remnant of an earlier fiscal system, and the brief consideration which they warrant is inserted in this chapter.
Because of constitutional restrictions, and because of the peculiar adaptability of some kinds of taxes to the use of the different political units, it is not to be expected that the different governmental units will derive their revenue from exactly the same sources. It will be true, however, that the overlapping of the sources of revenue will be more extensive in the future than it has been in the past.
The breakdown of such sources of revenue as the capitation taxes, and the continual increase in the pressure for additional funds, has led to the inclusion of new sources of revenue. One of the most important of these in the states and minor political divisions, is the use of licenses and business taxes. In this chapter consideration will be given to the excise tax, the capitation tax, and business and license taxes.