The Relation Between Federal and State Taxation

Abstract

In the past the United States for the most part has collected its revenues from duties on imports, but at periods of unusual need has levied taxes on land, occupations, incomes, deeds and other contracts, and many other subjects. Since the Civil War taxes have also been levied on certain manufactures. The national revenue in the fiscal year 1913 aggregated $724,111,230, exclusive of postal receipts. Of this sum, $318,891,396 came from customs and $344,416,966 from internal revenue, which is, of course, chiefly from the manufacture and consumption of whisky, beer and tobacco. In the year 1914 a third important source of revenue has been added, namely, the income tax. The states, in their turn, are practically free to tax the persons and property within their borders in any way they may see fit. In the past the federal government and the states have selected their fields of taxation from the standpoint of opportunity and expediency, rather than according to the methods of logic or the principles of finance. If we may judge the future by the past, each jurisdiction will likely continue, for sometime, to use that field of taxation which best suits its convenience. For that reason I deem it wholly unwise and unnecessary to map out any so-called fieldof taxation either for the federal government or for the state governments. In other words, the scope of this paper must be the practical problem of the relation of federal and state taxation, rather than the theoretical problem of the proper field for each jurisdiction. Omitting this purely academic discussion, we still have left the serious problems of assessment and collection-surely a field big enough to engage all our energies. I believe if the problem is examined in this practical way, the investigation will finally lead to co6peration among the present overlapping and conflicting jurisdictions, and ultimately will give us a solution of the problem of the field.