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THE UNIVERSITY OF NORTH CAROLINA
Published Weekly by the
University of North Caro
lina for the University Ex
JULY 8, 1925
CHAPELIHILL, N C.
THK UNIVERSITY OF NORTH CAROLINA PRESS
VOL. XI, NO. 34
Editorial Uoardi E. C. Branson, S. H. Hobbs. Jr., L, R. Wilson, E. W. Kniitht D D Carroll T R Rnllitt ttwna™ rr-j ji ...
_ L. o. Carroll, J. R. Bullitt. H. W. Odum. Entered as second-class matter November 14. 1914, at the Postoffice at Chapel Hill, N. C.. trader the act of AuKust 24, 1912
PRCI€EAM FOR TAX STUDY CLUBS
11. KIHDS OF TAXES
Those which are actually borne
by tlie person upon whom they
are imposed. Taxes on buildings,
land*^ incomes, etc.
'Those which can be shifted
from the person who pays them
to o^laer persons, andjf are there
fore indirectly paid by the people
genei'any. Excises and customs
are indirect taxes. Excises are
taxes on commodities produced in
the United States, such as the
stump tax on tobacco, playing
cards, drugs, chewing gum, etc.
Customs, or tariff duties, are
taxes on commodities imported
from foreign countries.
When the tax is collected on a
fixed percentage basis, regardless
of the total value of the property
Progressive or Graduated Taxes:
When the percentage rate in
creases in accordance with the
value of the property, or amount
of the income.
Income Tax, schedule D.
Inheritance Tax, schedule A.
Business 'faxes, schedule B.
Franchise and License Taxes,
Motor Car License Tax, tax on
gasoline, and other sources
General Property Tax.
not alone what one pays that determines
the burdensomeness of a tax but what
he has left. It is a greater hardship
for a man with an income of $1,000 to
pay a tax of 2 percent than for a man !
with an income of $100,000 to pay 20
percent. The purpose of a graduated
tax is to raise a given amount of rev
enue with the least amoupt of hardship;
consequently a heavy tax is put on lux
uries, a lighter one on comforts, and
still less on the necessities of life. Of
course, it is possible to put the rate so
high that it destroys the source of in
come or, in other words, to “kill the
goose that lays the golden eggs.”
A subsequent outline will be devoted
to State .taxes so it is only necessary
to list them here.
As the county is the main subject of
our study, county taxes will claim our
attention for the next eight weeks.
They are listed here simply to distin
guish them from State taxes.
If this outline is being used for a
study of municipal taxation, it will be |
necessary to give attention to several i
Before people had any heart-filling
sense that America was beautiful,
she was recognized under many other
aspects. For the Spanish explorers
she was El Dorado, rich in gold, jew
els, and spices. She was Christ’s
Kingdom for the Pilgrims. For the
Adamses, for Washington, she was
Republican Rome restored, and
stocked with Plqtarchian heroes. For
English and French Revolutionists at
the .end of the eighteenth century,
she was Utopia, Arcady, and the
Garden of Eden. For one chorus she
is the land of the free and the home
of the brave. For another, she is
the land of slaves and yokels; and
Babbitts. America refuses to be
put; sh^ is constantly being dis
covered and lost again.—Stuart P.
Sherman, panegyrist of American
STATE GOVERNMENT COST
North Carolina, on a per inhabitant
basis, ranks fortieth among the states
in the cost of state government, or
so in 1923. The table which appears
elsewhere, based on data recently re
leased by the federal Bureau of the
Census, ranks the states according to
total expenditure for all current state
governmental cost purposes on a per
inhabitant basis. The table covers
every current expense for every pur
pose, whatsoever for each state for the
fiscal year ending in 1923. It does not
include expenditures for permanent im
provements, which are not properly
current charge; but interest on bonded
dpbt and bo:^rowed funds is included.
taxation. These articles are appearing
Expenses of general departments for
the year 1923 amounted to $13,687,789.
This amount covers the cost of general
government; protection to person and
property; development and conserva
tion of natural resources; health and
sanitation; highways (not outlays for
highways); charities, hospitals, and
corrections, education, recreation, and
sources of revenue that a county does, . , t ... j t ; >
not have. The outline calls attention : “ University News Letter, and I, other miscellaneous expenditures.
to some of them.
sincerely trust that all club women will j Interest on borrowed moneys amount-
. : give them earnest study. | ed to $1,863,547,. and expenses of public
t. yisestions I No question is of more vital impor-j service enterprises amounted to $30,449,
Which is more easily borne, a direct; ^^nce nor of such general interest as ' making a total expenditure for current expansion m functions and
tax or an indirect tax? ! that of taxes, both state and. local. The ! purposes of $16,571,786, or $6.85 for f^pen^ditures for outlay purposes follow-
Which costa the taxpayer more for uninformed taxpayer pays most grudg- i every inhabitant in the state. And on materially in-
the amount of revenue yielded? | ingly and at the same time makes the ! a per inhabitant basis only eight states,
Which is fairer, a proportional or a Jniost demands on his government, ; all southern except one, ranked below
progressive tax? ! while the citizen who has a patriotic; l^orth Carolina.
How high should the largest incomes j interest in hia duty as a, tax^iayer de-1 For outlay purposes. North Carolina
be taxed? ivelopsa high regard for his govern-i spent $27,830,140, but it is not proper
Suppose for every income of $100,000 , ment’s interests. I to charge this amount against the cost
' Let US take advantage of this oppor- 1 Rovernment for the year 1923 since
If $36,000 has to be raised by taxation. ; informing ourselves on a sub- i ‘*>6 funds come from bond issues which
which would be tairer-to tax ‘he one . concerns the wel-' will be repaid over s long period of
large income^32 percent and the ^others i our government and ourselves.— I carrying the debt is i ment for the forty-eight states of the
4- .,11 1.1 ' E. L, McKde President North ^ ^ ‘Charge, and is included ! Union for all cuiTent;purposes in 1923
CarolinaFederationof Women’s Clubs.tbe table. The table appearing in | was $8.64, or about 48 percent above
amount for any state. Almost all the
Southern states fall into a group at the
end of the table.
Six Southern States Ahead
A rather interesting point in connec
tion with the table is that there are six
southern states in which state govern
ment cost more per inhabitant than in
North Carolina. These states are Vir
ginia $8.93, Texas $7.71, Louisiana
$7.63, West Virginia $7.18, Florida
$6.96, and Mississippi $5.96. It is gen
erally conceded that North Carolina is
doing more to develop herself than any
other southern state, yet for current
purposes the state governments of
nearly half of the southern states are
more expensive than North Carolina’s.
Either we are getting our money’s
worth, or we are not doing as much a.s
we have received credit for.
The Cost Increases
The cost of state government is
steadily increasing, and naturally so
since we have so vastly expanded the
functions and activities of our govern
ment. In 1918 only one state spent less
per inhabitant on state 'government
than.North Carolina, while in 1920 we
ranked last of all the states. Due to
Business Taxes, schedule B. | S'percent or to tax all alike at 12 per-
P.-^ncliise and License Taxes, i cent?
creased, yet there seems to be no im
mediate need for alarm since 39 states
still spend more per inhabitant than
North Carolina, or so in 1923, and’those
familiar with our state finances know
that the cost has not increased much
since 1923. ,
Getting Value Received
Thb average coat of state govern-
I When, if ever, should inheritances be !
j exempt from taxation? I
[ Should inheritances be subject to I
I both a state and a federal tax? | Beginning with the next issue, the
! Is the protective, tariff an economic Letter will print a series of brief
Additional County Revenues:
Fees, fines and forfeitures.
Allotment from State Equaliza
tion Fund, in most counties.
Additional Revenues of Munici-1 source of revenue?
what is meant by the “single tax”?
What is meant by a “progressive
Sale of franchises.
Earnings of public utilities.
Fines and forfeitures.
I land tax”?
articles on how electric power may be
made to serve the rural community and
individual rur^l home. The use of elec
tricity on the farm has not been adopted
I What do you think of the general | rural areas in North Carolina to any-
I property tax? ’ | rhmg like the extent it has in middle
Should ail property be taxed alike? ] and far western states. It is hoped
Can you suggest any satisfactory sub- ! j^at this series of ,articles will point out I
For the most part the above tax club !
stitute for the general property tax?
Can you suggest any new sources of
study outline is self-explanatory. Cit ?
federal, state, and local governmehts,
must all raise revenue without tapping |
the same sources too much, without i
putting too great a burden on any one j
class of taxpayer's, and without exciting |
undue opposition. It might be desirable j
if each could have its own sources, and '
t^xclusive use thereof. This hardly seems •
possible for the present, however. The ;
i taxation for the State? the County?
Does your county get an allotment
from the State Equalization Fund? If
so, how much?' Why that much?
What is a “pauper county”?
\Yhat privilege or licence taxes does
your county levy?
Should everyone pay taxes? Does
.X ^ , 2. J A 4. ' Should - anyone be permitted to vote
federal government and some state ■ ^ -o i.- ^ o
. , , ... ^ ' that has not paid his taxes?
governments depend on the income tax i ^
as the largest single source of revenue. ; D. Sources of iilform&tion
Thx: re is a strong feeling that the fed-; Hughes, Community Civics. Allyn
r^ral government ought t;o relinquish ! and Bacon, Boston, 1917. pp. 290-291;
enu iiiiieritance tax and leave that j 3(JO-302. (Any good Civics textbook may
source exclusively to the states. Three : be substituted.)
states—North Carolina, California, and I Magruder, American Government.
Pennsylvania—have, temporarily at! Allyn and Bacon, Boston, 1937. pp. 387-
■ least-, ceded exclusive yse of the general i 392.
to rural inhabitants of this state prac- i
tical methods whereby the great bene
fits of electric power so generally avail
able to city dwellers may be equally
serviceable to them.
The Articles will begin by describing
how electricity is generated either by
falling water or^by steam, and the dif
ferent economic conditions underlying
generation and transmission of electric
ity by the larger power companies as
compared with small community or in
dividual generating plants. The various
factors of stream fiow, dam site, fall,
storage, gnd character of use of power
as affecting small power plants will be
described in non-
Volume X, No. 11, of the News Letter, ! the average for North Carolina,
showing the cost of state governmentsThere are fourteen states in which
for 1922 includes expenditures for out- j state government cost from two to
lay purposes and is not comparable with, j twines as much as in North Caro-
the accompanying'table. [ i„
Nevada First i below North'Carolina, state govern-
- ... ; ments are almost as expensive as in
On a per inhabitant basis Nevada this state,
ranks first in the cost of state govern-! four state-supported lines of work
ment, the amount being $24.22, or more Carolina leads all states of the
than four times the average for North i ftTtes o”f uiuon,-staSS'”’high®
Carolina'. As a rule the Far Western : ways, public health, education, and
and New England states spend largest \ public welfare. \ ^
: sums per inhabitant on their state gov-' mind what the state of •
. rr AL ' North Carolina is doing along construe-
ernments. However, there are many, lines, it is rather ■ '
exceptions to the rule.
The state government of Arkansas
cost $3.90 per inhabitant, the smallest
note that our state government is still
relatively cheap, compared with other
states.—S. H. H., Jr.
COST OF STATE GOVERNMENTS
Per Inhabitant for the Year 1923
The following table, based on Financial Statistics of vState Governments for
1923, shows the per inhabitant cost of each state government for all current gov.
erhmeiital cost purposes, for the year 1923. The table does not include expendi
tures for permanent improvements where the money came from bond issues,
but it does include interest on bonded debt, and all governmental cost payments
of every sort as: General government; protection to person and property; de
velopment and conservation ■'of natural resources; health and sanitation; high-
,-technicarirnguage" jpayments); charities, hospitals, and corrections; education;
The different kinds of small water power tI" other words, evpry current governmental
property tax to the local governments.
Taxes may be classified as direct or
indirect, depending on the manner of
payment. The indirect tax is a tax in
disguise, ora means by which to “pluck
North Carolina Revenue and Machin
ery Act, 1925.
North Carolina Public Laws, 1921.
Chap. 2, sections 28-32.
The last report of the State Com-
the goose (taxpayer) with the least | missionerof Revenue.—Paul W. Wager,
amount of squawking.” The federal
STUDY TAX PROBLEMS
During the last two years the most
government collectsboth customs duties
and excise duties in this manner. In
the case of a customs duty it is paid by
the importer who charges the whole- j popular subject for club programs
saier enough extra to reimburse him-; throughout the state has been North
' self, and the wholesaler and retailer do i Carolina history, 'ihis fact is a source
likewise, so that the ultimate consumer I of gratification to those who are watch-
pays the tax. In the case of an excise ! ing the trend of club women s thought,
the manufacturer pays the government [ signifying, as it does, not only the in-
and he passes it on in the same way. i terest of club women in the history and
Indirect taxes cause less remonstrance j traditions of their state, but a whole-
than direct taxes but are usually more j some desire on their part to base their
burdensome in the end. j services to the state >n an intelligent
Direct taxes may be either proper- j and a sympathetic understanding of her
tional or graduated. The property tax I past.
is a proportional tax because the tax : With this knowledge of our state’s
bears a direct ratio to the value of the I history as a background, I believe it
, property. That is, a man who lists $10,- j would be a splendid thing to follow up
000 worth of property will pay twice as j these programs with a study of present-
much tax as a man who lists $5,000. ! day issues.-
A proportional tax, at first thought, | Anticipating our needs, as is its cus-
seems just, but it is not strictly in ac- i tom, the University's Extension Divi-
cordance with “ability to pay”. Itis isionis planning a series of articles on
developments suitable for use in this
state will be described and some ideas
of cost given. The methods of storing
power by storage batteries, and the
possibilities of auxiliary steam used and
fuel oil engines will be outlined. It is
hoped in these earlier articles to give
the ordinary non-technicai person an
idea of the economic conditions under
expense is covered in the table.
For all current purposes the State government of Nevada cost $24.22 per
inhabitant, while Arkansas averaged $3.97. The average for North Carolina
was $5.85 and our rank was fortieth among the states.
The average expenditure for all the states for all current governmental
purposes was $3.64, or nearly 48 percent above the average for North Carolina.
S. H. Hobbs, Jr.,
Department’of Rural Social Economics, University of North Carolina
dicate when they can be profitably un
dertaken, and where they are likely to
be failures. North Carolina is dotted
with abandoned small water and steam
power plants which were badly con
ceived, and the failure of which has
served to hinder the development of
many small water powers which might
be helping to relieve rural life of many
of its drawbacks.
In later articles there will be outlined
the practical methods for utilizing elec
tricity on the farm, including a descrip
tion of electrical machinery and appli
ances and the methods under which
rural power lines may be built and
maintained. In order that one may
thoroughly comprehend the subject of
rural electrification as it is developed in
these articles, it will be very desirable
either to read each article as it appears,
or to keep the entire series and read
the articles together.—Thorndike Sa-
! Rank States
New Hampshire ...
. . 4.71