Friday, June 20, 1913.
THE STATE JOURNAL.
9
The Course That Tax Reform Should
Take in North Carolina
By R. F. Beasley
An address before the Committee on Revenue and Taxation of the Commission on
Constitutional Amendments, Greensboro, N. C, May 26, 1913.
GENTLEMEN, it affords me a great
deal of pleasure to have the op
portunity to speak very briefly to you
on the subject which bears so impor
tant a relation to the welfare and
continued prosperity of our State. I
hold a brief for nothing except that
which my own study, observation,
and investigation lead me to believe
to be the common welfare and the
best public policy at this critical junc
ture in our history, when by univer
sal agreement our ancient system of
taxation has broken down, both as a
revenue producer and as an equitable
distribution of public burdens and
common opportunity. I am not here
to advocate the shirking of obligation
of any class of citizens or property,
nor to ask the burdening of any oth
er, but to point out what I believe
to be the way we should proceed at a
time when we are called upon to al
ter our fundamental law, in order
that we may ultimately draw the
public revenues from the sources
whence they should properly come
sources from which revenues can be
most easily drawn, and with least
hindrance to both labor and capital.
I believe that taxation can be so laid
that it will not hinder business, but
will help it; that it will increase the
profits of the legitimate business
man, multiply the rewards of labor,
and keep open all the revenues of
progress and opportunity that are
now fast closing in the face of the
mass of mankind. But the details of
this system cannot now be written
in our Constitution; we can put there
only the possibility to allow the sys
tem to be worked out gradually by
the law-making power of the State
as the people become ready for it. My
first point, therefore, is that
(1) The constitutional amendment
should give as much latitude as pos
sible to the Legislature in forming
a system of taxation. The first rea
son why we should lay down no hard
and fast conditions in our Constitu
tion is that the public mind is at
present all at sea on the subject of
taxation. With the breaking down of
our present system there has been
general disgust expressed, but so far
there has been little suggestion of
remedy. The newspapers tell us that
we have the worst system in the
world, that it is slipshod and unjust.
Ever since we began talking that
way, I have watched to see who
would suggest a remedy and what
that remedy would be, but so far I
have been disappointed. Men who
are well informed on nearly every
other subject seem to lack definite
ideas as to what taxation reform
phould be. We are all utterly dis
gusted and worn out with the old
system, so far as public expressions
indicate the mind of the people; but
who knows what should tako the
place of the old?
We must have time to work out a
new system. And the public has got
to have time to make up its mind
what it wishes, if we are going to
have any reform. The slight change
made in the law of 1911 was prompt
ly repudiated by the Legislature of
1913. If no one has come forward
with suggestions that would lead the
people to demand a simpler, more
just, more scientific system, how can
the Constitution be now changed so
as to fix for decades the details or
tha restrictions to which Legisla
tures must conform? To undertake
to go into details or to lay down hard
and fast conditions in our Constitu
tion now would be disastrous to real
progress hereafter. Were we now to
lay down conditions that would ham
per us in the future, we should be
under the necessity of doing again
exactly what has been done in the
past forty years that is, being un
able to make the reforms that the
times and the conditions demanded,
we would have to go to patching
again and laying a tax right and left
where it should not be, in order to
raise enough revenue for the needs
of the Government. Not only are we
confronted with the necessity of revo
lutionizing our State taxation, but
the problems of local taxation are no
less insistent. All these the Legisla
ture must have time to work out and
to formulate into law the demands
of the public, once its mind has beer
made up.
THIS is a matter with which we
must trust the Legislature. We
cannot get around it. The man (or
influence) who now seeks to pc.'in
restrictions in the fundamental law
must be afraid to rest his cas upon
its justice. He must be seeking to
either secure a privilege or to rc-p
a responsibility. Not only should we
not be afraid to trust the LegMa'urc,
but we must bear in mind that by
laying down restrictions now we urc
really attempting to legislate for a
future that should be able to legis
late for itself, and will doubtless be
far more able to do so than we are.
We are now suffering from the mis
takes of the past, or rather w: re
suffering from the fact thit we must
now conform to what seemed to be
the best for the past, regardless as to
whether it is the best for us or not
Conditions are changing with great
rapidity, and even the most conser
vative had as well be willing to trust
the future on taxation, since the;
will be compelled to trust it upon
other vital things.
(2) Should it be deemed not wise
to leave full discretion to the Legis
lature, we must at least abolish those
conditions in the present Constitu
tion that are responsible for great
hardship and inefficiency, such as the
poll tax provision and the uniformity
clause. Surely the day for these has
passed. No reform can be worth any
thing that is approached merely from
the standpoint of revenue production.
Thus, an equal amount of poll tax
laid upon each head will raise reve
nue, but the injustice involved in
laying a tax like that under present
conditions is monstrous. Thus, too,
the law that lays the same rate of tax
upon the sewing machine with which
the widow earns her daily bread in
a garret and upon the unearned in
' crement of a corner lot whose owner
lives in idleness upon the industry
of the community, is savagery. Yet
the highly prized Constitution of
North Carolina does these things,
and we never blush in talking of the
greatness and glory and justice of
our State!
Having abolished the require
ments that compel injustice, we
should substitute those which will
permit the maximum of efficiency in
producing revenue with a minimum
of burden upon the men and wo
men who, by the toil of hands and
the energy of brain, produce the
wealth of our State, and a minimum
of hindrance to the free and easy ac
tion of capital which assists them
in the production of wealth. There
will be no such thing as tax reform
unless the Legislature is given pow
er to classify property and to make
a rate suitable to such classes. That
is the beginning of reform. The
next step is to give it power to sep
arate local from State income in
their origin.
I shall now go more into detail as
to what direction I think the course
of tax reform shall take, not because
I think this should be put in the
Constitution, but as an argument to
substantiate my assertion that the
utmost possible latitude must be giv
en the Legislature to work out a
simple, automatic, and scientific sys
tem. While few people now know
much about the matter, and do not
care a great deal, the time is coming
when we will have the same insistent
and irrepressible demand for a just
system that is now rumbling round
the world. All we ask is that the
law-making power of the people be
given the opportunity to enact their
wishes into law when once those
wishes have been made up.
THE CLASSES of property which
stand out in clearest distinction
are public-service corporations, pri
vate corporations, land, regardless of
improvements upon it, improvements
which now go to make up what we
now consider real estate, solvent
credits, and other personal property.
I think it is clearly admitted by stu
dents of taxation that solvent credits,
taxed at a moderate rate, will yield
many-fold times the revenue that
they do when taxed at higher rates.
This point is so clear that it is scarce
ly longer in the field of controversy.
Public-service corporations, being
monopolies in their nature, whose
charges for the service rendered
must sooner or later be fully regulat
ed by the public, should be taxed up
on their gross earnings. Whenever
thorough public regulation is estab
lished, the tax rates charged against
these corporations must simply be
added by them to the expense ac
count and taken out of the public
pocket. Hence we may regard them
as standing alone as taxable units
and solely as a means of distributing
public taxation. But this will be a
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