arly that amount, thus fostering cloth-making by
a premium on the product, while only a few discover the added burden of
the tax. Yet these modes of taxation are usually costly to the people.
Even if free from complications with either preventing vice or fostering
industry, they require a separate body of officials from those provided
for direct taxation. They involve investment by every wholesale and retail
dealer of extra capital in taxes, upon which extra interest and profit is
expected. The actual consumer bears this extra burden with only partial
realization of its bulk. If duties are high, the temptation to smuggling
and fraud becomes great, and a force of officials must be stretched around
the borders of a country to prevent it.
_Custom, or duty._--Duties are said to be either specific or ad valorem.
Specific duties are a definite sum upon every pound, ton, yard or other
unit of measure, applied to the article taxed. They are easily assessed,
and misrepresentation or fraud is scarcely possible. Ad valorem duties are
a certain rate per cent upon the invoice value of the goods. In these,
frauds are abundant, and experts are required to prevent them. Specific
duties are relatively heavy upon the consumers of goods of cheaper
quality. A tax of 25 cents on each yard of cloth worth a dollar is five
times as heavy as the same tax on cloth worth five dollars. Equalization
is frequently attempted by combination of specific duties upon all goods
of a certain character with ad valorem duties upon all such goods above a
certain quality.
_Excise collections._--The same difficulty is experienced in adjusting
taxes by excise under our internal revenue system. Such revenues are
largely collected through a sale of stamps, though the dealer himself may
be required to pay a license fee, to secure the necessary inspection.
Here, too, the tax is specific and bears most heavily upon the users of
the poorest grade of goods. If attempt is made to grade it by quality,
expensive machinery for preventing fraud is necessary. This is well
illustrated in the list of officials required in connection with
distilleries and bonded warehouses. Both the manufacture and the sale of
alcoholic liquors must somewhere be under the inspection of an expert
officer. All this necessary expense of collecting must be borne by the
consumers. The bonded warehouse itself must not be mistaken for a part of
this machinery, though it is essential to the collectio
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