Benda emphasized, in a somewhat exaggerated fashion, the social aspects of the income tax, and especially its efficacy, when levied at a high rate on the wealthy, in cutting down the public debt.1 A far weightier production was that of Sparre, an official who, as we are told, had occupied himself for twenty-three years with the Prussian class tax. He called attention to the fact that while at the time the income tax was everywhere so warmly desired, most people did not know what was really meant by it, or how it ought to be arranged.2 Sparre held that a direct income tax was far preferable to what he called indirect income taxes, based on mere presumptive evidence. He worked out in detail the administrative methods of his suggested impost, taking up among others the moot questions of differentiation and progression. He freely admitted that the country was not yet quite ready for the income tax, but he predicted for it a "great, even if a distant, future," and maintained that it would gradually take the place not only of the most burdensome existing indirect taxes, but also of the most important direct taxes, so that ultimately the fiscal system would, in his opinion, be composed primarily of an income tax and of a few great indirect taxes on expenditure. "The income tax," said he, "is a tax on the new citizenship (Bürgerthum) which is still in the making." Sparre disposed of the chief objection, namely that the administration of the income tax would cause a prying into people's affairs, by asserting that self-assessment without inquisitorial methods could be made to suffice, but that even if some compulsion were needed, too narrow a view must not be taken, for in reality "the state is mankind's great educative institution." "3

In a second edition published six years later, Sparre con

1 Benda, Peel's Finanz System. Leipzig, 1842.

2 Die allgemeine Einkommensteuer als einzige gerechte directe Abgabe, aus Theorie und Erfahrung nachgewiesen. Von Karl v. Sparre. Giessen, 1848, p. vii. Sparre also published a separate work on the Prussian system entitled Die Preussiche Classensteuer und Mahl- und Schlachtsteuer.

"Der Staat ist eine Erziehungs-anstalt für das Menschengeschlecht." See p. 89 of the 2d ed.

ceded that his original scheme was premature, and that for a long time to come only a partial income tax was possible. He therefore changed the title of his book1 and discussed primarily the eventuality of such a tax. He was, however, still firm in his conviction that that would be only a halfmeasure, and he deplored the government's "lack of courage in not throwing overboard all the old direct taxes." "Only shyly," he tells us, "is our government grasping at the partial income tax, leaving it unsuitably enough as a subsidiary and supplementary impost to be added to old taxes which have long since been condemned by science and sentenced by experience. Let us hope that the future will show the inadequacy of all such makeshifts."2

Other writers did not fail to take the cue and even to exaggerate the scheme. Freiherr von Gross, a member of the National Assembly, suggested in 1848 an income tax with progressive rates running up to thirty-three and one-half per cent; and Ziegler, the mayor of Brandenburg, proposed in 1850 to replace all the existing direct taxes by a progressive income tax, having succeeded, as he tells us, temporarily at least, in introducing the system in his native town. Perhaps the extreme glorification of this single tax idea is found in a production of von Graffenried, who deduced his scheme from the old theory of taxation as an insurance premium.5 These enthusiastic projects, however, soon engendered a host of objections. Baumstark, a weighty disputant, declared that "the income tax is a growth cultivated, although by no means discovered, by the German Revolution, as well as a product

1 Die allgemeine und die partielle Einkommensteuer, verglichen mit der bisherigen Steuertheorie und Praxis. Zweite Auflage, Frankfurt a/M, 1854.

2" Nur schüchtern greift man zu der partiellen und läszt sie als ein subsidiäres und supplementares Wesen neben alten Steuern unpassend genug hergeben, die längst von der Wissenschaft gerichtet und von der Erfahrung verurtheilt sind. Hoffen wir aber, dass die Zukunft die Unzulänglichkeit aller solcher Nothbehelfe aufdringen werde." - Op. cit., p. 99.

8 Freiherr von Gross, Allgemeine Progressive Grund- und Einkommensteuer. Gleiches Maas und Gewicht für Deutschland. 1848.

Held, op. cit., p. 260.

5 Von Graffenried, Über die Einkommensteuer. Zürich, 1855.

of bitter sentiments and unclear ideas."1 He preferred taxes on special kinds of income to a general income tax. A less important writer, Quarizius, entered the lists against Sparre and stated that "it would be a relatively simple matter, scientifically to refute the sanguine admirers of the income tax."2 His own refutation, however, was far from scientific, for he based his criticism chiefly on a general opposition to the increase of any direct tax, for the reason that it would prevent the rich from employing the poor, and would thus directly increase pauperism.

§ 3. From the Revolution of 1848 to the Franco-Prussian War

On the whole, however, it may be said that the democratic movement at the end of the forties was distinctly favorable to some kind of an income tax, designed to alleviate the existing burdens of the poor. In Baden, for instance, there had been since 1820 a class tax. But this tax, which was intended to supplement the land, building, and business taxes, applied only to incomes from wages, salaries, and pensions. A remarkable feature of the tax was the application of a progressive scale, the rate rising from one and two-thirds per cent in the lowest class (1 kr. per gulden up to fl. 1000) to sixteen and two-thirds per cent on the highest class (10 kr. per gulden, above fl. 80,000). The revolutionary movement of 1848 accordingly brought with it a demand for some tax to reach the revenue of the wealthier classes in general. While the project of an income tax failed, the agitation resulted in the imposition, in 1848, of a so-called capital tax or what we in America should call a tax on all intangible personalty.3

1 "Ein von der Deutschen Revolution gepflegtes wenn auch keineswegs entdecktes Gewächs, ein Product bitterer Empfindungen und unklarer Vorstellungen." -Baumstark, Zur Einkommensteuer. Greifswald, 1850, p. 27. 2 Quarizius, Die Einkommensteuer. Weimar, 1853.

3 Cf. in general, for the fiscal history of Baden, Lewald, "Die Direkten Steuern in Baden," Finanz Archiv, vol. iii (1881), pp. 764 et seq.; and Philippovich, Der Badische Haushalt von 1868-1889. Freiburg, 1889. A shorter

An interesting innovation of the same year was the introduction of a so-called Council of Assessment (Schätzungsrath), a small body elected by, and directly representing, the taxpayers and designed to assist the official commissioners in assessing the new capital tax as well as the old class and business tax. The movement found its most extreme expression in Bavaria, where the law of 1848 actually introduced not only a capital tax but also an income tax. These two taxes were combined in 1850 into a general income tax, with a normal rate of two per cent and with abatements for lower incomes. The law, however, was defective in that the tax was superadded to the existing taxes on product. Above all, the administrative machinery was woefully inadequate. It worked so badly and gave rise to so many complaints that, with the subsidence of the revolutionary enthusiasm, the tax was virtually abolished in 1856. The name indeed remained, but it now applied only to incomes which were supposed not to be reached in some way by the remaining taxes. Practically it became a tax on wages and salaries only.1 In Hesse also an income tax was introduced in 1848, applicable to all incomes not subject to the land and business taxes. This likewise proved to be a failure.2 Finally, in the city republic of Bremen, an income tax was introduced in 1848, resting on a system of self-assessment which had long been practiced there in connection with the old property tax and which for that reason worked fairly well.3

The Prussian government also was influenced by the same account will be found in A. Wagner, Finanzwissenschaft, Vierter Theil, Zweiter Halbband. 1901, pp. 245 et seq. For the laws themselves, see Philippovich, Gesetze über die Direkten Steuern in Baden. Freiburg, 1888, 2 vols.

1 Cf. S. Gerstner, Das Bayrische Einkommen- und Kapitalrentensteuergesetz. Erlangen, 1858. See also L. Hoffmann, Geschichte der direkten Steuern in Baiern vom 13-19 Jahrhundert. Leipzig, 1883; and Vocke, "Beitrage zur Geschichte der Einkommensteuer in Baiern," Tübinger Zeitschrift, vols. 20 and 21. Cf. also Schanz, "Das Bayrische Ertragssteuersystem und seine Entwickelung," Finanz Archiv, vol. xvii (1900), pp. 551-772.

2 Cf. the article by Schanz, "Die direkten Steuern Hessens und deren neueste Reform," Finanz Archiv, vol. 2 (1885), pp. 235-381.

For a good account of this see Wagner, op cit., pp. 622-629.

tendency, and in 1847 introduced a bill to abolish the grist tax and to make all persons with an income of over 400 thalers liable to an income tax at the rate of three per cent for funded incomes, and two per cent for unfunded incomes. Those with incomes below 400 thalers were still to be subjected to the class tax. Minister Camphausen defended the measure in an eloquent speech in which he pronounced himself as indeed opposed to a single income tax, as being entirely impracticable and for that matter unjustifiable. But he upheld his scheme of an income tax primarily on grounds of social reform. The bill, he tells us, "aims to secure a recognition of the fact that the 'haves' are in duty bound to do much for the 'have-nots'; it aims at a greater recognition on the part of the latter that the former are ready to make sacrifices for them. It is the function of our modern legislation to recognize the hardships of life, and to alleviate them." 1 Camphausen, however, appealed to deaf ears. There proved to be no such readiness on the part of the wealthy to make sacrifices for the poor, and the very mention of self-assessment was sufficient to kill the bill. Nothing was accomplished except that in 1848 the state now abandoned one-third of the grist tax to the towns, in order to lighten the burden resting on the working classes.

In 1849 the government returned to the fray with a slightly altered scheme. The tax was now to begin only at 1000 thalers. The distinction between funded and unfunded incomes was dropped, and the question of self-assessment was relegated to the pleasure of the taxpayer. Nearly every one agreed in the discussion that something must be done to make the wealthier classes pay their proper share, but no effective majority could be secured for any particular method of accomplishing this result. Perhaps the best speech was made by an old tax official, Kühne, who, in referring to the necessity of abandoning the old taxes, conceded that this would involve

a painful operation on the body politic." But, he added: "When one finally concludes to undergo an operation and

1 Quoted in Held, op. cit., p. 286.