III. Fiscal Contributions

Molina's classifications demonstrate that the character of direct and indirect taxes was well understood. Property and per capita taxes he calls "taxes in the strictest sense of the word" hecause they, if any, must he horne by the taxpayer, whereas charges on commodities are usually shifted to the consumer. Molina also understood the dif ference between personal, impersonal and mixed taxes. Most interesting is Molina's statement of the philosophic 229 MARIANA:-POLITICAL ECONOMY basis of taxation. That this has not received more attention in the past is really surprising. To this day practically all students of Fiscal Science believe that the benefit theory was, until very recently, the only known explanation of the taxing power. In part, this misconception must be due to the wholesale neglect of scholasticism. This type of learn ing was regarded with contempt, and hardly anyone thought it worth his while to examine scholastic ideas. The concept of the State as a social organism and the obligation, on the part of the individual citizen, of shouldering his share of the public burden were known to the scholastics from the time of St. Thomas Aquinas, who, following Aristotle, in substance developed the same principles as the authors un· der consideration as early as the thirteenth century.

Though none of the Spanish thinkers had formulated the principles and canons of taxation, almost all of them are contained in their three "conditions." The primary canons of uniformity and universality were treated in practically the same way as they are today. A large portion of Molina's treatise is devoted to the uniformity of taxation. The theory of the "ability to pay" was likewise set forth much more correctly by the Jesuits than by Adam Smith who lived some hundred and fifty years later. Not the protection which the individual enjoys from the State is the reason for the proportionate payment of taxes, but the principle of social or distrihutive justice according to which the burdens must be apportioned with regard to the ability to pay. To the Jesuits it seemed only just that those who had more should contribute accordingly towards the common good. For this reason the general sales tax is pronounced con trary to the principle of uniformity. The Alcavala can jus tify itself only in part by some of its other advantages. Mo lina sees also the inequality of the per capita tax, the amount 230 FISCAL CONTRIBUTIONS of which is the same for all; but since it is only a slight charge, he does not consider it worth his while to impugn its justice. He finds; after a fashion, some confirmation of this view in the tithes of the Church, which were the same for all and yet were paid without remonstrance.

Can we find any indication of progressive taxation? Not in the strict sense of the word, but there seems to he at least some trace of it. Practically all of our authors advo .. cate a higher tax on luxuries; and Mariana in particular wishes to reduce the charge on the necessities of life mate .. rially and to make up for this loss hy a high tax on luxurious articles, thus burdening the rich and relieving the poor. This advice he gave not only for fiscal but also for social reasons, wishing as he did to equalize the fortunes of the rich and the poor. The reason why de Lugo does not advise the restriction of the sales tax to luxuries is the consideration that all should pay taxes. If only luxurious articles were taxed, one class of people would he freed entirely from all tax obliga .. tion. This would militate against the canon of universality. Amongst the four maxims of Adam Smith, we do not find this maxim or canon. The Spanish Jesuits, however, were , acquainted with it. They saw that the exemption of the nobility and of the clergy were apparently contrary to this principle. Nevertheless they held that hoth of these classes contributed their share to the common good in another way.

It was, furthermore, agreed among them that the king might not grant exemption to any number of citizens, because otherwise the remainder of the community would he over .. burdened or the sources of public revenue would soon yield no revenue at all. Exemption has the same hasis as taxation: that is, a re gard for the common welfare. It is necessary for the com 231 MARIANA:-POLITICAL ECONOMY mon good that people should contribute their share toward the common needs; and likewise the common weal demands that extraordinary service to the State be rewarded ade quately. Even though our own age looks askance at tax exemption, it has, nevertheless, not entirely disappeared. In many countries churches, schools and charitable institutions are still free from the burden of taxation. Suarez goes so far in urging the application of the univer sality of taxation as not to exempt even the ordinary poor, but only the beggarly class. De Lugo maintains, however, that the obligation to support the State arises only after a person has paid his debts and taken proper care of his family.

Mariana also knows that double taxation may outrage social justice. He realizes that the poor Spanish peasant cannot bear a heavy tax because he is already heavily bur dened by the tithes of the Church. It is interesting that in answering the question as to whether foreigners might justly he taxed, Molina and de Lugo do not speak of the prohlem 11 of double taxation hut merely discuss the question whether and for what reasons a non-subject may be taxed. Molina can justify it only by general custom and considers it a necessary evil. Most of the secondary canons of taxation are also used by the Spanish Jesuits. Taxes upon the necessities of life Molina justifies upon the ground of fiscal adequacy. He considers the general sales tax more economical than a direct assessment, believing that it obviates the employment of a large number of officers. Convenience of payment is an other consideration in favor of the Alcavala. Mariana ad vocates tax relief for the poor farmer, so that his economic position may not be weakened.

Quite apart from fiscal and social considerations, taxation 232 FISCAL CONTRIBUTIONS may also pursue an economic purpose. This is the under lying principle in the modern protective tariff policy. Ma riana advocated high tariffs on imported goods partly in order to protect native simplicity, and partly to encourage home production. According to him it would he better to draw various artisans and skilled laborers to the country than to export precious metal abroad for goods which might easily he produced in the country. This would also mean an increase in population and would meet the problem of emigration. Our survey shows that the history of Public Finance as it has been taught in the past needs considerable modification. If it is true that until recently the benefit theory was accepted both as a basis and a norm for taxation, this is in part due to the utter neglect of scholasticism. It is not the German Cameralists who discovered the principle of "ability to pay,"

as German scholars are in the habit of asserting. Had these scholars interrogated mediaeval scholasticism, they would have found that this principle was clearly understood by the Churchmen of the later Middle Ages. The three "condi tions" to which every just tax must conform were likewise considered by these writers as a matter of course. St. Thomas had accepted the Aristotelian view of the State and the prin ciple of distributive justice in apportioning the honors and burdens in a commonwealth. The principle of "ability to pay" is but a practical application of distributive justice. It was further amplified by the three "conditions" with which every just tax must comply. The author of this monograph does not claim for the Spanish Jesuits the credit of having first set: forth the scholastic doctrine of taxation but he does maintain that they have more fully elaborated what was already in substance taught by St. Thomas and other earlier writers. It is Molina . 233 MARIANA:-POIlTICAL ECONOMY who ahove all deserves the credit of having most clearly and thoroughly developed the philosophic hasis of taxation. He has also advanced the hest arguments for the "general sales tax," to which confessedly even today a good deal of weight is attached.

234 Conclusion Now that we have scrutinized so much of sixteenth and seventeenth century discussion, it remains to sum up Mariana's contributions to political science and more particularly to political economy. His explanation of the origin of the State is in the main the scholastic view that man needs a political society in order to supply the com mon wants. Men will of necessity organize themselves into a hody politic as soon as they realize how unavoidable the division of lahor is and how unable they are to supply the needs common to all by their individual strength. It was God's will that men should satisfy these wants hy entering into a political society; hut He left man free to determine at what moment the State was to be formed. Thus natural law and human liberty became the two forces that co operated toward the formation of the civil society. Al though Mariana follows in the main Aristotle and St.