dividual effort, if it is successful in creating any visible facility within our own borders which can be seen by an appraiser: extra-effort which is indicated by a larger income; and need or consumption—these are all taxed directly or indirectly, with no consideration of the fact that in taxing effort in any form we are interposing barriers in the path of free flow, which is the essence of value; in taxing facilities—houses, factories, vehicles, railroads, etc.,—we are penalizing the elimination of friction, and restricting production; while in taxing need or consumption through the secondary incidence of income-tax, sur-tax, franchise-tax or any form of sales-tax, we are wilfully slowing down flow by interfering with demand, which is just as vital a contribution to value as supply. It is almost beyond belief that this is a system acquiesced in by a free and intelligent nation, when we have a comprehensive gauge—namely, the occupancy-value of area, the control of which can be held responsible through taxation without any interference with the normal flow of effort.
If we take concrete cases, and consider the effect of this politico-economic survival of autocracy, within the borders of democracy, we may see more clearly what happens:
Let us consider, first, the case of a very competent individual with a great surplus of wealth at his command, who would normally be keenly interested in the internal development of his own country, by creating advantageous facilities, thus eliminating friction and adding to total value. We realize promptly he faces the fact that every step he takes in this direction is noted by an appraiser and taxed. If his desired project is ambitious, requiring ten years to complete, and the property taxes are 3 per cent, he forfeits at least 15 per cent of his capital in addition to the 25 per cent loss of interest, on the basis of 5 per cent per annum. As a consequence the creation of internal facilities looks anything but desirable to such a man; and he turns reluctantly to tax-exempt securities (thus adding a burden to his poorer neighbor), or to the business of lending to a neighbor who can pledge satisfactory security and who is willing to do so because his instinct for creative work exceeds his knowledge or discretion; or he turns to foreign investments, thus throwing the weight of his fortune on the side of imperialism, which in democracy is a clean symptom of interior maladjustment, since we have not begun to do the advantageous tasks that call for accomplishment at home.
Let us consider next the case of a very moderately well-to-do individual:
