« AnteriorContinuar »
increasing factors that obtain the benefits arising from improvements in production; and second, to prove that these slowest increasing factors are also obliged to bear all the permanent burdens that may be imposed by nature or society upon any agent of production. The former of these two tasks has been performed by the foregoing analysis and classification of the several monopoly forces which control the distribution of the surplus. The second task can be accomplished more quickly.
The statement of the law of distribution was: The free surplus of production, the benefits of improvements which increase the free surplus, and all permanent burdens are distributed among the factors necessary to production in inverse ratio to their rates of increase. That the slowest increasing factors of production, the exclusive monopolies, must bear all permanent burdens, can be shown by either one of two lines of argument: The factors of production possessing the monopoly force which makes them differential monopolies, have that force because society has need of those factors. Society having this need gives the differential monopolies enough of the surplus to cause them to increase with sufficient rapidity to enable them to supply society's wants. If an added burden be permanently imposed upon such factors and a part of the surplus formerly obtained by them be taken, their rate of increase will lessen. This will strengthen their monopoly force. Society will lose a part of the supply desired, unless it increase the portion of the surplus given the differential monopolies by bidding higher for the products of these factors of production. The same is true of those factors which are optional monopolies. Both kinds of monopolies obtain definite portions of the surplus, portions which are safe-guarded for them by the monopoly forces whose nature and basis were outlined above. Society does not give these differential and optional monopolies all the surplus, and, as long as that is true, these factors will be able to pass the burdens, which may be permanently imposed on them, over to those factors,
a part of whose income is derived from the free surplus, and is, therefore, not insured against attack by virtue of possessing differential or monopoly forces. The truth of this conclusion has been excellently shown by every attempt to tax interest. Capital, possessing a monopoly force which enables it to command a definite portion of the fixed surplus, is safeguarded against the burdens which taxes may impose upon in terest. Such burdens are inevitably shifted to the free surplus.
The other line of argument by which the same conclusion is reached is similar and differs only in being based more directly upon the phenomena of value. The industries receiving none of the free surplus can bear no added burdens, because, if such burdens be imposed, they must either raise the prices of their products or lessen the supply. If the supply be kept intact, and prices be increased by the amount of the burden, prices of other products must fall. The burden will be shifted upon other producers, because general values cannot rise. Likewise a burden falling on an industry increasing at a medium rate will also be shifted. The amount of free surplus which such an industry is receiving is only sufficient to induce it to maintain the position it holds in production. Society gives it a certain amount of the surplus to induce it thus to maintain itself. Unless it can shift the permanently added burdens, society will find the desired supply of the products of that industry lessened. Permanent burdens therefore, rest on the slowest increasing factors.
Taxes are one form which a permanent burden, or requisition, upon the surplus of production may take. Like other burdens, they will, after they have been in force long enough for business to adjust itself to the conditions they establish, fall, in their final incidence, on the slowest increasing factors of production, the exclusive monopolies. Taxes thus stand most intimately connected with the problem of distribution and the theory of monopolies.
This relationship of taxation to distribution and monopolies can be considered to somewhat better advantage if the foregoing classification of monopolies be somewhat modified, so that the fixed and free surplus will be more definitely contrasted. Thus changed the classification becomes:
There is only one new term introduced into this classification-"restrictive.". As was said above, the differential and optional monopolies are the realm of competition. The monopoly forces do not here prevent competition, but merely restrict it within certain limits. The forces say where competition shall have sway. The exclusive monopolies, however, exist by means of excluding competition. The division of monopolies into restrictive and exclusive, therefore, is a rational one. It is a useful one for the purposes of this paper, because it puts those monopolies to be discussed into a separate class.
In entering upon the discussion of taxation we ought to keep clearly in mind both the relation which costs, the fixed and free surplus, and consumer's surplus bear to each other, and the forces which control their changes. In a progressive society the producer's surplus is increased both by a decrease in cost and by a rise of the margin of consumption. The line which divides the consumer's surplus and producer's surplus (compare Figure I.) is not fixed. Were the margin of consumption to fall the consumer's surplus would grow larger and the producer's surplus would decrease; if the margin of consumption rises the opposite will take place. Social progress implies a rise in the margin of consumption, and a consequent increase in the producer's
surplus as a whole.
Furthermore, as was pointed out on page 84 the line dividing the fixed and free portions of the producer's surplus is a variable one, the increase of the free surplus being, at present, more rapid than that of the fixed surplus.
Among the forces which have the power of altering the relation of the consumer's and producer's surpluses, or of changing the relative amounts of the fixed and free portions of the producer's surplus, are tax laws. The real nature of taxes is shown by the changes which they produce of this kind; in this way is their influence on consumption production, and distribution indicated. The best classification of taxes that can be made is one based on their power to produce such changes.
Classified upon this basis taxes are of three kinds, fiscal, social and industrial. That may properly be called a fiscal tax which takes a portion of the free producer's surplus without affecting the amount of the fixed surplus, or producing any change in the consumer's surplus. Such a tax has no effect on consumption, nor on production as a whole; it simply diverts a larger or smaller part of the free surplus from the pockets of the owners of the slowest increasing factors in production into the public treasury. That may be called a social tax which, although it falls ultimately on the producer's surplus-as all permanent burdens do-has, for its immediate effects, modifications either of the fixed surplus or of the consumer's surplus. Such modifications produce social effects through changes in production and consumption. That tax may be called industrial, which is levied for the purpose of so applying the proceeds of the tax as to increase the free surplus by more than the amount of the tax. A tax, raised and applied to the improvement of such an important waterway as the Great Lakes, would be an example. An industrial tax may sometimes take the form of a pure business transaction. Such will be the case if the United States decides to sell its bonds to secure capital
with which to build the Nicaragua Canal, and then pays the interest and principal of the bonds out of the future receipts from the canal.
To give a complete presentation of the theory of taxation, one that treated each of the three kinds of taxes fully and brought them into relationship with the theory of monopolies as presented above, would carry the discussion beyond the limits of this paper. From the sociological standpoint, the social taxes are the most important. A great deal of good can be accomplished by an intelligent use of them by the State. Their nature and influence is inadequately recognized, they demand a full and searching analysis. In this paper, however, that analysis will be waived in order to direct attention to fiscal taxes with the purpose of answering the question, how and where a tax may be levied so that it will yield a revenue without affecting either consumption or production, i. e., without having any social effects.
The source of fiscal taxes, as has been indicated, is the free surplus. The objects upon which such taxes ultimately fall are the slowest increasing factors of production. These are the exclusive monopolies, by whom the free surplus is obtained. Fiscal taxes are paid out of the tallage, the income which the exclusive monopolies derive from the free surplus.
A tax having the free surplus as its source, and the tallage received by the various special monopolies as the objects which bear its burdens, may be so levied as to have no social effects. This levy may be made directly upon the tallage, or it may be placed there indirectly by being first imposed upon objects having the power of shifting the imposition in such a way that neither consumption nor production will be modified.
A direct tax on the slowest increasing factors of production can have no social effects until the tax becomes heavy enough to absorb the entire tallage. There will be no social changes resulting from an alteration in consumption, because