| PRINCIPLES OF TAXATION. |
By DAVID A. WELLS, LL. D., D. C. L.,
CORRESPONDANT DE L'INSTITUT DE FRANCE, ETC.
X.—NOMENCLATURE AND FORMS OF TAXATION.
(Continued from page 480.)
"REAL" AND PERSONAL TAXES.—Direct taxes are also spoken of, and in fact, classified as real and personal taxes. "Real" taxes (Latin res, thing), or taxes on realty, as is the general expression, are taxes on property—generally on things naturally characterized by immobility—without reference to the pecuniary condition of the owner, and hence without taking his debts into account. A tax on land or real estate—houses and land—is a typical tax on realty; and a tax legally assessed upon such property rests, or is a lien upon it, irrespective of its ownership.
Business taxes are regarded as real taxes, as they are taxes on pursuits or occupations rather than on persons. The same is true of taxes on capital and the rental value of land or buildings.[1] The restriction on the levy of direct taxation imposed by the Constitution of the United States on the Federal Government does not apply to the States.
Personal taxes are taxes on persons. A poll or "capitation" or "head" tax, implying a uniform payment from every poll or head of some portion or all the population of the State, would be a typical personal tax. Strictly speaking, therefore, a personal tax can be no other than a poll tax levied under the above conditions. What are usually called personal taxes are taxes assessed or rated to a person, not as in the case of a poll tax because he is a person or citizen, but in virtue of the movable property—furniture, clothing, vessels, carriages, animals, money at interest, stocks in corporations, bonds, or negotiable instruments and the like belonging to him. It is the individual that the law regards as the objective rather than his personal property—which may not be tangible or visible—on enforcing the tax; the property being resorted to for the purpose of ascertaining the amount of tax which its owner should pay. An income tax is regarded as a personal tax because it is assessed on the income that gathers about a person irrespective of its source—rents, interest, profits, salaries, and the like. A tax on land is a tax on realty, while a tax on a mortgage is a personal tax, which is equivalent to affirm-
- ↑ "Real estate for the purpose of taxation shall include all lands within this State, and all buildings or other things erected on or affixed to the same."—Statutes of Massachusetts.
