The Economics of Taxation
by Harry Gunnison Brown
Fred Rogers Fairchild
[Reprinted from The American Economic Review,
Vol. 16, No. 2 (June, 1926), pp. 343-344]
The general course in principles, with which the American college
student begins his study of economics, imposes a heavier demand upon
his reasoning powers than do the so-called advanced courses which
follow it and which incline generally to narrative and description.
This is, in Professor Brown's opinion, an inversion of the proper
order, which he would correct by such change in the advanced courses
as would offer a progressively increasing test of the students'
reasoning faculties. In such manner does lie introduce the present
book as an appropriate text for a course in taxation.
With the essential spirit of this position I find myself in sympathy.
I welcome Professor Brown's clear and courageous insistence upon the
distinction between scientific principles of taxation and historical
records of tax development or descriptions of existing tax systems or
practical rules for the guidance of the financial administrator. I
agree with him that it is quite practicable to present these
scientific generalizations to college students.
Yet I am troubled with the misgiving that he has permitted this
wholesome idea to carry him astray -- to an opposite extreme no less
dangerous than that from which he seeks to escape. This book deals
exclusively with abstract theory, telling us virtually nothing of the
relation of these theories to the facts of present-day practical tax
problems. The author has frankly intended just this; he has indeed
anticipated in part this criticism and set up his defence in the
preface. Yet while we may grant his plea that complete inductive
verification of the principles of taxation is out of the question, it
is nevertheless true that a very considerable degree of partial
verification at least is today within our reach. And beyond this, I am
firmly convinced that the true purpose of a textbook in such a field
as taxation can never be fully served except as constant reference to
the facts is relied upon to illustrate and vitalize the abstract
principles of the subject. I cannot follow those who would set a gulf
between theory and practical problems in economics. I would correct
the situation of which Professor Brown justly complains, not merely by
making the advanced courses somewhat more "theoretical," but
by making the beginning course much more "practical."
Principles and facts must, I believe, be combined all along the line,
if our teaching of economics is to attain to the success which the
inherent interest and vitality of the subject warrant.
Accepting the author's conception of a textbook in tax theory, his
work has on the whole been well done. The advanced student of taxation
will find the discussion of certain topics rather meager and will
recognize much that cannot claim originality. But this is no adverse
criticism, in view of the author's avowed intention to address, not
the special students, but the beginners in the study of taxation.
Indeed at many points there is distinct contribution. In particular,
the thoughtful reader will be well repaid for his perusal of the
chapters on the incidence of taxes on monopoly-made commodities and
the economic effects of land taxes, upon which latter topic the author
is clearly at his best. What appears to me as a defect is the reliance
upon arbitrary numerical examples for demonstration of general
principles. A greater use of general geometric and algebraic
demonstration and graphic illustration would have been an aid even to
the beginning student. In general, the language is simple and clear,
the reasoning coherent, and the conclusion sound. The author shows
familiarity with the literature of his subject and writes with evident
assurance, which does not fail him when on occasion he takes issue
with other economists.