_Principles of taxation._--Since taxation in general is simply a way of distributing expenses to those for whose benefit expenditure has been made, the first question is one of fairness in distribution. The benefits from government expenditure ought to be universal, but are not necessarily equal. Like all the good things of nature, the benefits of the government are not appreciated by all alike. No one would probably suggest the possibility of distributing the expenditure exactly in accord with advantage received. Wherever the service is distinctly personal, as in the regular mail service, an attempt is made to charge each person the average cost of the service. Even the large miscellaneous mail distribution at less than cost may be fairly borne by those who use the mail for personal advantage, since this is likely to be in proportion to the intelligent activity shown in correspondence. Some few taxes upon special commodities of questionable advantage to the multitude, like liquors and tobacco, are supposed to be paid by those who gain the only advantage received by anybody in protecting their use.
Some more general principle, however, must be found for adjusting the burden of general expenses so that each individual will bear his share. If the burden belongs to all, it should rest fairly upon all. Hence equality is usually given as the first principle of taxation. But it is evident that in this case equality means equity, not a mathematical division by the number of taxpayers. The interpretation is therefore "according to ability." According to Professor Rogers, the student of economic history, "_Equality of sacrifice is the only honest rule in taxation_." This means, in practice, that any system of taxation should be planned with distinct effort to distribute the common expenses according to the ability of different members of society to meet them.
It is evident that no exact gauge of ability is at hand. If the actual income of every citizen could be distinctly known, and the burdens of a dependent household clearly expressed, a basis for equal sacrifice, so far as wealth is concerned, might be reached. But no such basis has been or can be actually found. If found, it would not give an accurate gauge of sacrifice, because the actual wants for comfort of different individuals are so widely varied. Two distinct approximations toward this equity are found. The first is in the total annual consumption of the individual taxpayer, especially of such articles as meet wants above the mere maintenance of healthy existence. In this the government assumes that all will spend according to their ability. The second is in a total accumulation of property. In this the government assumes that every man saves for future consumption all that he gains above his present needs. Both assumptions are untrue in individual cases, and only approximately true anywhere. In many instances the expenditure of a given year upon more continuous wants than ordinary, like a home or farm buildings, will count also as wealth laid by. So, in any combination of the two systems of taxation, the more thrifty and far-seeing will bear a double burden. Yet even this combination may not transgress the rule of equity, since such foresight is itself proof of ability.