Something the towns seeking to attract Amazon's proposed 2nd Headquarters might consider:
TO ATTRACT INDUSTRIES
To the Editor of The Inquirer:
Our State Legislature has appointed a committee to find out the reason why our industries do not increase faster and why more new industries do not locate here.
This committee should recommend that inducements be held out to industries seeking a location and at the same time it should cut down the burdens that injuriously affect Industries now here.
There is a simple, sure and just method of doing this.
Abolish altogether the foolish, unnecessary and harm-working tax on buildings and concentrate the entire present real estate tax on the socially made values of land. This will make for exceedingly low-price site values and tax-free buildings. No other plan can offer the benefits that this would confer.
Try it out in Pennsylvania and see how new industries will flock here and how our home industries will grow.
HAROLD SUDELL
Philadelphia. Nov. 19.
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Public Policy: Jul.-Dec.,1900, Volume 3 November 17, 1900
BY ENOCH ENSLEY.
INTRODUCTORY.
BY LAWSON PURDY,
Secretary New York Tax Reform Association.
The following letter was written in 1871 by Enoch Ensley, a landowner of Tennessee, to Governor Brown. Mr. Ensley was a pioneer in the cause of tax reform, and his letter, written nearly thirty years ago, is just as true and applicable to present day conditions as it was to the conditions of Tennessee when he wrote it. So far as known, Mr. Ensley's thought was original with himself, for with the exception of some few advanced thinkers in the state of New York, no one had advocated in this country the exemption of personal property from taxation.
The general property tax had naturally grown up in this country as an inheritance from Europe, and in the early days of the republic, when conditions were primitive, it was comparatively easy to tax all forms of property. The original theory on which the general property tax was based seems to have been that men should pay taxes in proportion to their ability, and that the amount of their property was a fair index of their ability to pay. At the present day it is not uncommon to find the theory advanced that equality of taxation requires the equal taxation of all property.
Both these theories are condemned by their impracticability, but the theories themselves will not stand examination. There is no reason why different principles should be advanced to justify payments to the state from those which justify payments in business dealings between man and man. All ordinary business dealings are based on the exchange of equivalents. The storekeeper does not grade his prices according to the income of the purchaser, but exacts a payment in proportion to the value of the article sold. This is the natural principle to be applied in the affairs of state, and each taxpayer should be called on for the equivalent of the pecuniary benefits he receives, from the state—no more, no less.
Mr. Ensley approaches the subject from what may be called the practical rather than the theoretical standpoint, and shows the unwisdom and disadvantage to"the interests of all in attempting to tax movable property. The text which he says should be engraved in letters of gold in every legislative hall remains and will remain supremely true:
Value to Your State, that Would Run Away,
or that Could and Would Come to You.
Dear Sir:—As a citizen of the state over which you have the honor to preside as governor, feeling a deep interest in its prosperity, I desire to submit for your consideration and the consideration of the people of Tennessee, some remarks on the subject of taxation— what I deem the correct principle or system of taxation, as compared with the unwise and incorrect system now in operation in our state; and in doing this I desire to cast no reflections upon you, as governor of the state, nor hold you in any way responsible for the present system—for the evil, as I understand it, is in our organic law, the constitution of the state, and cannot be remedied short of a change of said constitution. Further, I will say that if you were, to some 'extent, responsible", I would be prepared to excuse you, for the evil exists not only in Tennessee, but in many, if not all, the states of the Union. But.mot-, withstanding it may exist in all the states, it is, nevertheless, an evil—a wrong system working against the interests and prosperity of the states wherein it exists, but perhaps, owing to the peculiar surroundings, not so much against the prosperity of any state as our state of Tennessee.
The clause of our constitution I refer to is the one which requires all property, real, personal and mixed, to be taxed alike. Under this clause all money, trade, etc., are sought to be taxed. It requires not only that the state tax should be levied on it, but also that the county and city tax in the various counties and cities of the state, for their respective uses, should be levied on it, and said various counties and cities cannot exempt from taxation, even if they should be disposed, when the tax is entirely for their own. purposes, for they are left no discretion in the matter. In addressing you these lines, I do not hope just now to effect any change so far as the state tax is concerned, for the people of our state, I fear, have too long had their minds directed in the fallacious channel for their error to be explained to them suddenly, owing to the difficulty of presenting the matter properly to them and, further, owing to the fact that many parts of the state are not so directly and vitally interested in an immediate change as other parts; but I do hope that, so far as the county and city taxes are concerned, to show you the necessity for steps being taken to bring about a change at as early a moment as possible—the sooner the better— and if not very soon that important interests to the state will be lost and may be lost forever, and that certain valuable counties and cities in the state will be comparatively slaughtered.
I propose to show that, whilst every part of the slate and each and every citizen of the state, no matter what his vocation, occupation or trade may be. would be benefited by a change of the entire system, including state as well as county or city, some parts of the state absolutely demand a change, so far as the county and city tax is concerned; and to bring about a speedy change, as you are the only person clothed with the necessary power to take the initiatory steps, I take this liberty of addressing you upon the subject, hoping that good may come of it.
In showing or proving what I have above promised to show, I will proceed thus:
First, I will present you with a rule or motto which I think it would be well for the state to adopt and have cut into the stone at the capitol (in large letters and have them gilded), in the senate chamber, the hall of the house of representatives and in the governor's office, for I think it entirely harmonizes with the correct principles of taxation in every particular, to wit :
Never Tax Anything
That Would Be of Value to Your State
That Could and Would Run Away, or
That Could and Would Come to You.
There are two kinds or natures of property in the world only, movable and immovable; the former, as its name implies, can be moved from one place to another, as its owner chooses; the latter is fixed and cannot budge an inch, no matter what its owner chooses. I hold it to be true that immovable property has no value till it is occupied or located upon, or brought to subsist or employ movable property, and as a rule, the more it employs, or subsists, the more valuable it becomes, and the greater the inducements or attractions it offers movable property, the more it will have locate upon it.
For instance, the best acre of land in America is worth nothing until man goes upon it with his ax, horse, cow, etc., and cuts the timber off, builds his log cabin, puts it in cultivation and brings it to subsist himself, horse, cow, etc., and from that moment it commences to have a value, by reason of the fact that it employs or subsists the man (who, if he can be called property at all, is certainly movable property), horse,cow,etc. (the horse, cow, etc., are movable property). And if this acre of ground, from any cause, should become attractive to and employ double the amount of movable property, as a general rule it will become doubly valuable and so on; if it should become attractive to and employ profitably ten or a hundred or a thousand fold more movable property, it would become, in like ratio, more valuable, even up to the value of Mr. A. T. Stewart's acre of ground on Broadway, New York, which is worth perhaps two million dollars, by reason of the fact that it offers attractions and has employed upon it profitably five, ten or fifteen million dollars' worth of movable property. (Of course, when ground gets beyond a certain value it must be put to other uses than agriculture.) Just this process the Stewart acre of ground has doubtless passed through since the Dutch first landed on Manhattan Island.
There are exceptions to this rule—that immovable property is valuable as it has movable property employed directly on it, for it frequently has a greater value than the movable property employed directly on it would warrant. It has a value reflected from the employment of movable property on immovable property near by, as in the case of residences in or near cities. For instance, the use of Mr. Stewart's movable property on his Broadway lot not only gives great value to that, but also gives a value to his residence up town, by reason of the fact that it is sufficiently near and convenient for it to be in demand for him to live there and transact his business daily at his store, all of which, however, is attributable to the employment of movable property on his Broadway acre.
The thrift or profit which immovable property offers to movable property helps to regulate its value. For instance, a man owns two pieces of property alike—say in different towns—rented out to merchants of equal capital; one is enabled to make 7 percent per annum only on his capital, for the reason that he has to pay 3 percent tax on his capital, and the other makes 10 percent net, and pays no tax; the property paying 10 percent will be the most valuable, for it will pay the largest rent, because there will be more applicants for it than for the 7 percent, and, the law of supply and demand governing, it must rent for more. It is, however, impossible as a general thing for these two merchants to remain of equal capital. The 10 percent man will soon have more capital from his extra thrift, and the 7 percent man, seeing his prosperity, is apt to pull up stakes and quit his town and move to the 10 percent town, and other merchants will perhaps do the same thing, until, by competition increasing in the one town by other merchants coming in, and decreasing in the other by their going out, may make profits the same. This, however, is not apt to make profits the same in a country like ours, for there is generally new trade to be looked up to keep pace with the new comers. So the result would be that new comers would continue to go to the 10 percent town from the 7 percent town and other places, until the one becomes a large and prosperous city and the .other a dilapidated, languishing town. It will be easy then to say which storehouse is the most valuable.
I hold that of all men the real estate or fixed property man is the most interested in the rule or motto I have adopted. To illustrate nearer home, I will say that there is an acre of ground in Memphis, Tenn., say, in front of the Peabody Hotel, Overton block, that is worth at the rate of $200,000 per acre, whilst the writer has an acre six miles below the city, quite as good naturally, and even better, than the Overton block acre, because it will produce more corn, cotton, pumpkins, peas, potatoes, cabbage, etc., than the Overton acre will, or ever would, and my acre is not worth one hundred dollars per acre. Now, why is it that the Overton acre is worth $200,000 per acre and mine not worth $100? The reason is that there is employed on the Overton acre, profitably, two, three, four or five hundred thousand dollars of movable property, while upon mine there is employed the sixteenth part of a negro, the sixteenth part of a mule, plow, hoe, etc. Now, if you will manage in any way, either by taxation or otherwise, to drive from this Overton acre the two, three, four or five hundred thousand dollars, and render the Overton acre so that this capital, or any part of it, cannot be employed on it with a profit, it will not be worth more than my acre—in fact, not so much—for there is nothing so valueless as ground covered with houses when there is no demand for said houses. And, further, if you do anything to make the two, three, four or five hundred thousand dollars pay less profit you will damage the ground or lessen its value more rapidly than you will decrease the profits—not in the same ratio, but more rapidly. Suppose, for instance, the profit has been 10 percent net on the capital employed, and. the property is paying a rental on $300,000; if you reduce the profits permanently, in any way, to 5 percent net, the property would not pay a rental on $150,000—in fact, it would hardly pay any rent at all, for 5 percent would be too small to induce a business at all in this country.
Movable property always seeks and locates on immovable property where it thrives and multiplies most rapidly.
A spot of ground, a city, a country, a state, or even a nation, that offers the greatest thrift, will be sought and located upon by the greatest quantity of it, and the greater the quantity the more value and thrift will the land have. (This statement is on the presumption that such country is not at war, and that there are law for its protection.) Any tax levied upon it lessens its thrift and consequently is in violation of the correct principle, though it may not be enough to perceptibly affect it, yet it will have some effect. Though it may not drive any away, yet it will to some extent keep other movable property from coming.
It is said that it was the last feather that broke the camel's back, whilst the first had as much to do with it as the last. An oppressive tax, such as exists in some parts of our state, drives off a good deal of movable property and absolutely forbids any more coming to such parts, unless it comes relying upon dodging or evading the law, which large capital never does. Men of small amounts of money, goods, etc., such as one can hide, may come, but men of large amounts of money, to go into open banking or merchandising, on a scale that cannot be hidden, or evade the law, will not come.
Of course, all mankind, where they have lived for a time, form local and social ties and will submit to some oppression, though their property be all movable, before they get their consent to move away, bur with the millions of dollars of movable property we desire to attract to us, no such ties exist, and, if we do not offer quite as much thrift as other localities, and even more, when the property may be already located, we need not expect to attract it to us, but it is just as certain as,that the law of gravity will cause the apple to fall toward the earth when it leaves the tree, instead of toward the sky, or as that water will run down an incline, if we in Tennessee do offer greater attractions than other localities, we will attract it toward us, and the quantity, and the rapidity with which it will come can and will be measured by the amount of thrift we offer. It is about as important to induce a man with a given amount of capital to come to us as to retain one we already have in our midst with the same amount. We cannot expect to develop our state or build up large cities rapidly from our present population and their natural increase, but we must invite others, with their capital, to come and settle among us.
As I have said, any tax levied upon movable property; consequently it is incorrect in principle, whilst a heavy and oppressive tax is absolutely prohibitive and suicidal. Embraced in the rule I have presented in the beginning, never to tax anything that would be of value to your state, that could and would run away, or that could and would come to you, are two or three kinds of movable property which I regard as most important, and which I will mention, to wit:. Money, merchandise and capital to be used in manufacturing. These pertain to cities mostly. There are many other kinds of property which, perhaps, would come under the rule, but for the present I wilt speak of these three, because through them great wealth generally enters the state.
And here I desire to call your attention to the fact that the great bulk of the movable property generally enters a state or nation through its cities and towns, money and merchandise or trade always, and capital for manufacturing purposes most frequently, and from the cities and towns its beneficial effect is radiated throughout the state far and near, greater the nearer the city, but beneficial to some extent even to the utmost bounds of the state, particularly when we owe a common debt, as most of the states of the American Union do, and as our state of Tennessee certainly does, to the extent of over $20,000,000. And here I wish to note the fact that there exists in Tennessee, in the minds of some of our farmers, or people living in the country, a prejudice against the cities. They imagine that the interest or prosperity of the cities is entirely separate from theirs, if not antagonistic, and again, the people of one part of our state imagine their interest to be separate from other parts of the state, which is incorrect in toto. This idea or feeling has to a great extent been manufactured by demagogues or ignorant politicians and by newspapers actuated by incorrect motives or ignorance of the correct relations between cities and country and the different parts of the state. This is all wrong, and the sooner the people turn a deaf ear to all such the better it will be for all parties. There is no antagonism of interest between them, but, on the contrary, a unity of interest. For a city to grow large, rich and prosperous within the borders 6f a state that owes a debt to be paid by all parts of the state in proportion to the wealth of the respective parts, of course, cannot be against the interest of any part of the state or country, and vice versa, for the country to become rich and prosperous it cannot well hurt the cities, for east Tennessee to flourish cannot hurt middle and west Tennessee, and so on. But, on the contrary, the prosperity of one is and must be advantageous to the other, not only so far as paying the common debt is concerned, but in divers other ways, such as the country patronizing the trade and manufactories of the cities, etc., and the cities, in return, buying what they may consume of country products from the country and offering a near and convenient market for many of their products that cannot be shipped to more distant markets, besides shedding or radiating an increased value on their lands in every direction, for miles and miles. To attempt to enumerate the various reciprocal advantages is useless, for, the mind once directed to the subject, they become apparent by the scores.
And here I desire to call the attention of the farmer or countryman to a fact that many have never thought of, which may tend to abate their hostility toward the cities. It is this, to wit: Whilst it is impossible for a rich and prosperous farming country to surround a city without contributing to the prosperity of said city, yet it is possible for a city to be located within the borders of a state and grow to be rich, prosperous and large and to add great value to the lands around and to the state without receiving a corresponding value from the country of said state. In fact, such is always the case where the city is large; for instance, the great city of New. York is not indebted to the country or farm lands of New York for one one-hundredth of her prosperity and wealth. She reaps her wealth not only from all the states of the Union, but from all the civilized parts of the world, yet she doesn't contribute a dollar to the payment of current expenses and state debt of any state in the Union or any part of the world except the state of New York. She gives in her immense wealth to be taxed solely for the State of New York, thereby relieving each and every farmer in the state. St. Louis reaps a majority of her prosperity from other states than Missouri. New Orleans reaps four-fifths of her prosperity from other states than Louisiana, and of our city of Memphis it can be said she has reaped of whatever wealth and prosperity she has from a half to two-thirds of it from Arkansas, Mississippi, Southern Missouri and Southern Kentucky, yet she does not contribute a dollar directly to the payment of current expenses or state debt of any of these states, but it is all taxed to supply the wants of our state of Tennessee alone. Nashville is similarly situated, to some extent, and perhaps Knoxville and Chattanooga, just to the extent that they may have prosperous trade beyond the state. Hence it will be seen that the farmers or country people should not be prejudiced against the cities located within their state, for they receive more aid from them than they give in return, and are consequently the gainers. So the practical operation of large cities seems to be to receive trade, and become rich out of it, from other states more than their own, and allow their own state alone to receive the full benefit, as far as her demands go. This, it strikes me, should not be objectionable to the farmer or countryman, or to the state or any part of the state. Consequently, by no means should they desire any law of any kind to exist in the land whereby the cities are oppressed and kept from growing, when by its repeal or modification they would not be harmed a particle, but, on the contrary, be benefited, as is now the case in some parts of Tennessee, and as I expect to: show before I close this communication beyond controversy. Thus far it has
been my object to show that it is unwise and in violation of the correct principle of taxation and against the interest of the state and every part of the state and against the interest of every individual in the state and every occupation in the state, and especially against the interest of the real estate or immovable property owner of the state, to tax or in the least oppress movable property, and whilst I have no doubt of the correctness of the principle or policy, as I have before said, I do not hope to get the state, as far as the tax of forty cents on the hundred dollars is concerned, to make any change, but I do hope to get our laws changed, so far as our counties and cities are concerned, so that they may be allowed, at their option, to levy their county and city tax for their county and city purposes, on whatever species of property they may see proper, thus giving some of them that are literally blighted and crushed the privilege of throwing off the great bulk of their oppression.
If St. Louis, Cincinnati, Louisville and other points will levy and rigidly enforce on their trade, money, manufactures, etc., the tax we to-day pay in Memphis, and let us not enforce any, I will guarantee to take millions upon millions of their trade, and money to do it with, from them the ensuing season, and if they will continue it for the next ten years I will guarantee to show you a real estate or immovable property at Memphis more valuable than at St. Louis, a real estate that will pay a much larger rental, and I will show you a town with more people, more trade, more money and more everything that is desirable. This may sound as an extreme, but it is not. Further I will say, if you will levy and enforce and collect the tax that is sought to be collected in Memphis today on the money, trade, etc., of the great city of New York, and you charge no tax in Boston, Philadelphia or Baltimore, I will guarantee to transfer in a short time hundreds of millions of the trade, money, etc., of New York to those cities, and if she will continue it five or ten years I will guarantee to show you, in either of these cities, more trade, more money .and more people than in New York. I will guarantee to depopulate her more effectually and more permanently than a plague ever did a city, and impoverish her more effectually than ever a war did. Yes, I will hurt her infinitely worse than fire that might burn every house from Castle Garden, from river to river, to Central Park. I will make it entirely safe for women and children to cross Broadway at City Park, Astor House, Wall street or elsewhere without the protection of policemen. I will reduce the value of the real estate of Mr. Astor from $100,000,000 (it is said to be worth $100,000,000) to $25,000,000, or $10,000,000, and perhaps even less, and the estate of every real estate or immovable property holder in the same ratio, but I cannot say that I will greatly injure the movable property man, for he may go to Boston, Philadelphia or Baltimore and do quite as well as he did in New York City with his money, goods, etc. The truth is, it would entirely bankrupt the great city, for the demand for immovable property would not be sufficient to pay a rental sufficient to pay the interest on her city, county and state debt. I do not think these assertions on the extreme or the picture overdrawn, and if so how can we of Memphis expect to build up a large city under a rate and system of taxation that would pull down a large city already built?
And if the picture is not overdrawn, and even say it is overdrawn by 50 percent, who would be the injured party in New York by the enforcement of such a law? Would it be Mr. Claflin, Arnold & Constable, Chittenden or Jeffrey & Sons, merchants who, for aught I know, rent their houses from Mr. Astor? Or would it be Mr. Astor, the great real estate owner of New York? In other words, would it be the movable property man with his goods, money, etc., who can take it and go to Boston, Philadelphia or elsewhere and perhaps do quite as good a business as he did in New York, or would it be the immovable property or real estate man who has to stay where he is and pay his city and county debt without tenants or rental from his property? Hence I say that of all the men of our state who should object to oppressive and, to follow the principle, I will say any taxation at all on money, merchandise or trade, manufactories, etc., it is the man who owns the real estate or immovable property. His position should be this: He should say to the thousands of men in the civilized world, with their money in their pockets, looking out a favorable locality to go to banking, merchandising, manufacturing or farming, etc., "Come, locate on me; I will not oppress you; come to me, for I can't go to you, and we must come together or I am worth nothing, and, knowing this, I will not tax you and oppress you.
Other localities make you pay a tax; I will not; consequently I offer that advantage over other localities." Heretofore it_ has been the merchant who has done the complaining about the tax levied on him; he is not the one to do it; it is the real estate man, and the writer being one of those men owning real estate almost entirely, say, nineteen-twentieths of what he owns being in farms and other kinds of realty or immovable property, and; hot owning a dollar's worth ct merchandise of any kind for sale, and not being a lender of money, but, on the contrary, a borrower, and not being a manufacturer of any kind, and not being the owner of machinery except a steam sawmill and a steam cotton gin establishment, but beingwhat is known as a plain farmer or planter by profession or occupation, thinking he sees his interest in the system he is advocating, consequently therein is to be found the moving cause of this letter.
I contend that this system will enlighten the burdens of taxation on real estate, and after a very short time the rate of taxation will really be less. To illustrate further, I will say what I said to a prominent real estate owner of Memphis, in a conversation on this subject a short time ago. He said to me: 'Do you say that such a merchant or banker shall make from 10 to 16 percent on their capital and pay no tax, and I make only 6 or 8 percent on the houses they are occupying and pay all the tax? Yes, says I.' You seek to tax them and that is the reason you get no larger percent on your property. If they make 100 percent per annum on their capital you should not want them to pay a copper of tax. Why? Because if they made 100 percent per annum next year you would have forty applicants for the house they are doing business in, and if you should you would certainly get a full rent for it, more than the extra tax, and as only one of the forty could get the house, and .the other thirty-nine would be unaccommodated, and if your tenants should be making this large percent, it is reasonable to presume that they would be making it, or something near it, all over town; consequently there would be near the same number of applicants for every house in town, but as only-the present tenants or their number could be accommodated with houses, the result would be that you would not only get exorbitant rents for all the houses in town, but you would have demand for the hundreds and thousands of vacant lots throughout the city to build storehouses on; they would either buy them or offer you such enormous rents as would induce you to build them houses on lots that you have been paying taxes on for years and received no rental from. Soon there would be houses going up all over the city, block after block. The brickmaker would have more than he could do; the lumberman would have more orders than he could fill; the carpenter, bricklayer, stone mason, foundryman and all descriptions of mechanics and laborers would have more than thev could do, so the builders would have to send to Cincinnati, St. Louis, Chicago and elsewhere for mechanics, and they would come in by the thousands, and when these new comers get their storehouses then they would want residences for their families and they would be to build also, and then there springs up a demand for the thousands of vacant lots around the city, lots that have always been vacant, and upon which more taxes have been paid than they are now worth, without ever before having paid any rental at all. Thus, you see, you would bring into demand and make pay a rental thousands of lots that have never paid anything, and you give active employment to all the mechanics you have and besides bring thousands of others from other places.
Let us go a little further and see how it affects all and everybody in the city. These new comers get their houses and then they want furniture and they patronize your furniture man; they want a carriage or wagon for family use and they patronize your carriage man, and then horses and patronize the horseman, and then the blacksmith to shoe them, and then the retail dry goods houses, mantua makers, milliners, grocery men, butchers, vegetable market men, and, in short, every kind of retail establishment throughout the city, thereby giving vigor, life and thrift to all, and thus it would go on until before you would be aware of it you would have a city of hundreds of thousands of people and be worth and pay a rental on hundreds of millions of dollars. Of course, no general trade would pay 100 percent per annum. If it did, we could have a city of Memphis as large as London in twenty years, but I adopted it to illustrate the principle, which is the same. Trade paying a less percent will increase in proportion until you get down below other localities where it may go. Memphis with money, trade, etc., made free from tax would soon offer attractions sufficient to become a city of 100,000 inhabitants and would then be worth and pay a rental on one hundred millions, as well as she does now on twenty-five millions. Then where would be your city and county debt and a necessity for a high rate of taxation on anything? And where would be the oppression when you have got four times as much to pay with? 'just so, in a few years, when the Legislature came to fix the rate of taxation for the state, it would discover that a spot of ground down here in west Tennessee, called Memphis, which heretofore has been worth and paid a tax on only $25,000,000, is now worth and can pay on $100,000,000, just as easily as they did some years ago pay on $25,000,000. Consequently they would see that the tax to pay current expenses and interest on state debt, etc., need not throughout the state be put so high, for the reason here is $75,000,000 additional property in the state and the rate may be reduced from forty cents on the hundred dollars to thirty or twenty-five cents, and even less, perhaps; for the same causes, if adopted, would operate on other cities in the state and they would be affected likewise, and hundreds of millions would be added to the state.
It might be asked by some of them how is it and why is it that this town of Memphis has grown so rich? It could be answered that she a few years ago had abolished the ruinous rate of taxation on her money, trade, etc.; since then her trade and general kinds of industry had become so prosperous that she had attracted forty, fifty or sixty thousand more people there from New Orleans, Vicksburg, Natchez, Louisville, Cincinnati, St. Louis and a host of other places, and they had come with their movable property, say, money, merchandise, tools, machinery, etc., and they were occupying hundreds of houses and paying good rent for them, when said houses heretofore had paid but little rent, and that they had built and were occupying thousands of houses where heretofore there had been no houses, and consequently had paid no rental, and by this means the rental of the city had been increased 300 percent, and consequently its property is worth four times as much.
Here I wish to state a truism which, perhaps, many owners of real estate in Tennessee may never have thought of. It is this, to wit; The renter or lessee of real estate must always prosper before the owner of the real estate can expect to prosper. This is certainly true as a rule, when taken for a series of years in a country like ours where land is abundant, and the people free to go where they please. This will apply to all real estate, whether farms, storehouses, shops or other kinds of realty. I do not mean that he must have greater prosperity, but that he must prosper first.
The system of non-taxation of certain kinds of movable property, which I am advocating as the correct system, whilst it is the best to be adopted in every state in the Union, yet it will not make a rich state out of every state in the Union, nor will it build up every town in the Union to be large cities by any means. For instance, you may apply it to North Carolina and you could not induce movable property sufficient to go there to make her a very rich state for she has not within her borders sufficient inducements to offer. She is naturally a poor state, and it would be impossible to develop great wealth out of her, as it is impossible to grow rich and luxuriant crops out of poor land; besides, she owes a large debt and is poorly adapted by nature to pay it, consequently her taxes are high and must remain so, for she cannot attract to her, tax or no tax, sufficient movable property to build her up sufficient to make them low; consequently her real estate and other immovable property must be very low and non-paying. Still if there is any way possible to bring her out this is the one. Just so, the city of Raleigh, her capital, can never be a large and prosperous city for it has not the natural surroundings, as St. Louis will thrive and grow in spite of the incorrect system she has on her to some extent, because of her extraordinary natural surroundings. But even she cannot stand a radical and extreme violation of the correct system. I will guarantee that if you will apply Memphis taxation to her trade, money, etc., and enforce it with the Tennessee assessment law, you can check her up and put her on the decline.
I think I have shown beyond question all that I promised to show in the beginning of these remarks —that it is not in harmony with the interests of anyone in the state to tax money, trade, manufactures, etc., and that, of all other, the owner of fixed or immovable property should demand that the present system be changed—that they should say, don't adopt any system that has a tendency to drive movable property from me, but, on the contrary, adopt a system that will attract it, for we are worth nothing without it and the movable property man may go elsewhere and do quite as well.
Whilst I have shown that any tax upon movable property is incorrect in principle, yet, as I have before twice said, it is not my hope to have any change made at present, so far as the state tax is concerned, and, as I before said, it is to get the laws changed so as to allow the counties and cities, so far as their county and city taxes are concerned, to be allowed to levy the tax on whatever species of property they may see proper. I think I have shown the absolute necessity for a change, so far as two of our counties and cities are concerned, and perhaps more of them, and one of them, Memphis, that is almost a life and death matter with her, and whilst I think I have shown that her surroundings are as good as those of any other city, inland, in the United States, yet it is impossible for her to grow and become a large and prosperous city under the present system and rate of taxation. When taxes are very small, the correct system can be violated without perceptible harm—yet harm will be done; but when they get to be high and oppressive a violation is ruinous.
To illustrate: For instance, suppose it was necessary, in Nashville and Memphis, in order to pay current expenses, interest on debts, etc., to levy a tax of 10 or 15 percent on all kinds of property, real, personal and mixed, and that it was rigidly enforced. Does anyone suppose that there would be any movable property there in twelve months to collect the tax from? No, sir; you would hardly be able to find a pocket handkerchief or a pound of coffee in either of these cities. But all the real estate, houses, etc., would be there still, but without tenants, and consequently, on account of the high tax and want of occupants, worth nothing. Suppose, again, it was possible to adopt a process to make the real estate worth something, could it be done by running the occupants off and receiving no rent whatever from it? No; it could only be done by adopting a process which would fill all of your houses with tenants, and secure to you a rental from them, and that could only be done by allowing movable property to thrive and by attracting a sufficient amount of it to you to occupy additional ground and to pay additional rental until your rental would be more than the tax. This process, at any rate, and under all circumstances, would be better than have these cities entirely deserted.
I have mentioned this subject in the last twelve months to many of the first minds of the state; at first they would oppose me, and invariably they would say it is right and just for all kinds of property to be taxed alike; they .all receive protection from the laws alike, and of course they ought to pay alike. Justice is not violated by the system I propose, for there is no oppression. Injustice is done, to the real estate owner under the present system, for it injures him. I will not injure anyone, and consequently will not violate justice. However, it is due to the system I am advocating to say that of the aforesaid first minds of the state I have met, that I never, with scarcely an exception, failed to convince them they were wrong, and that my position was correct.
To undertake to enforce a very oppressive tax on money is ridiculous nonsense. It is impossible. The Maker of all things has forbidden it, in giving to all things their peculiar nature. He has forbidden an oppressive tax on money, by giving it that easy mobility that it can go in a fortnight from Tennessee almost to the uttermost parts of the world. And just so, to some extent, with other kinds of movable property. It would be about as wise for the Legislature to pass a law enacting that, from and after this date, the great bulk of the water of the Mississippi River shall flow toward Cairo instead of toward New Orleans, as to enact that the great bulk of the money of Memphis shall pay 4½ percent tax per annum. It is wise in man to deal with things as they are, and 'will be in spite of him, and not as he may think they should be. Don't kick against the pricks!
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