paper document called a deed
(which is but the evidence of ownership) and call it tangible property
having a value in addition to the house itself. Yet, in fact, all
these confusions are constantly made in taxation. The term "intangible
personal property" is applied to such things as mercantile credits,
promissory notes, bonds--in general to the right to collect sums
from another person, whether these rights arise out of sales or of
loans--and all are treated as parts of taxable property. Sometimes
the evidences of indebtedness, the promissory notes or the mortgage
papers, are even called tangible property, the same term that
is applied to land, houses, and machinery. By universal practice
supported by a long line of court decisions, these rights (whether
evidenced by paper or not) are made subject to taxation, except as
by piecemeal legislation certain grudging exceptions have been made.
These views and this practice are supported by the popular desire to
tax money-lenders. The result is "double taxation" of many sources of
income. This involves a burden that is ruinous in some cases, both to
borrowers and to lenders, and that tempts in all cases to the evasion
of the tax.

Take, for example, a house assessed at $10,000 which is owned free of
debt and which has a rental value of $600. At the rate of 1.5 per cent
the tax paid would be $150. Now if the owner borrows $8000 he is still
taxable $150 on the full value of the house, and the lender nearly
everywhere is taxable $120 on the amount of his mortgage. The total
tax payable out of the one source of income, the house, is then $270.
The same analysis will show that any credit is but a contractual
claim upon some other source of income which is, or should have been,
already taxed.

If one person owns all the capital-value invested in a specific piece
of wealth, no attempt is made to tax both the capital and the wealth;
but if it happens that two or more persons share the capital-value
invested in the same wealth, the attempt is made to tax as a unit the
full value of the wealth and, in addition, some part of the capital
also. It is, however, easy in most cases to conceal this "intangible
property" from the assessor's eyes, and a comparatively small amount
of it is ever taxed. This means inequality and hardship in the
operation of the tax and, as a result, unceasing temptation to perjury
by the taxpayer and to favoritism and graft by public officials.

Sec. 4. #Vario