Section III. Fiscal Problems

171 MARIANA:-POLITICAL ECONOMY examine the various criticisms and suggestions regarding the fiscal policy of the King of Spain to which Mariana has given full expression. Finally, we shall see his new methods of public financing. There have always existed great differences between vari ous definitions of a tax. Even today no uniformity exists. 1 It is therefore most interesting to note that the Spanish Jesuits of the sixteenih and seventeenth centuries all adhered to substantially the same definition, which contained all the elements of the most modern interpretations. Professor Seligman offers the following definition: "A tax is a com pulsory contribution from the person to the government to defray the expenses incurred in the common interests of all, without reference to special benefits conferred." 2 Mariana, for his part, does not give a direct definition of a tax, but simply tells us why taxes are paid and how they are to be used. He claims they are for the maintenance of internal and external peace, which implies that their object is not personal benefit but the common good.

3 Molina de clares at the beginning of his treatise on taxation: "Now we shall have to speak . . . of the taxes, in the light that they are due to the lay authorities with regard to their jurisdictional dominion and for the common good of the State. 4 De Lugo closely resembles Molina: "(By a tax) is meant that which the subjects or members of the State con1 This is very well brought out by C. F. Bastable in the following l)aragraph: "First of all we have to settle the meaning of the word 'tax.' This term, so clear and simple to the ordinary citizen, has been very variously defined, sometimes at astonishing length, and often with the, it may be unconscious. design of aiding-a particular theory as to the character of the facts denoted by it. Public Finance, p. 262-63. II Essays in Taxation, p. 432. 3 Enimvero regius census trifariam divisus est. aut enim ex praediis gentilitiis pecunia aut fructuum parte locatis reditus percipiuntur. Ex iis regia familia, universae aulae apparatus debet sustentari. Deinde vectigalia ordinaria quacunque ratione atque ex quibuscunque rebus suppeditentur, ad rempublicam in pace regendam destinata sint. Jnde annuae mercedes publicis ministris pendantur, urbes muniantur, aedificentur arces, viae publicae sternantur, reficiantur pontes, alantur milites praesidiarii. De Rege, Lib. III, cap. 7, pp. 261·62.

'Nunc autem disserendum consequenter nobis est de tributis, quae laids potestatibus ratione dominii jurisdictionis quaeque in commune reipublicae bonum debentur. De lustiti{l ,t Jure, Tom. III, Disp. 661.

THEORY OF TAXATION trihute compulsorily for the common utility and for puh lic needs."l Suarez says: "(A tax) is a public payment dis tributed over all the people for royal expenditures, or (rather) for the common needs of the State, and paid under a definite law." 2 Taken collectively, these definitions enumerate all the elements necessary to constitute a tax, although :Molina em phasizes the source of taxing power, De Lugo the compul sory character of the tax, Suarez its universality and Mariana the purpose for which it is to be paid. The last point is also explicitly mentioned by the other three, for all of them say that taxes are paid for the common good. Another element common to these definitions is the compulsory character of these public payments. That a tax is to be paid without reference to special benefits conferred is indicated by the emphasis laid by all four on the purpose for which it is to be paid: the common good. If a tax has for its pur pose the defraying of public expenses, immediate personal benefit seems, indeed, not to be a consideration.

This becomes even clearer when we see what is meant by "common good." In analyzing this, Molina enuruerates the following items: "Salaries for public officers, repair of bridges, public buildings and town walls, common utilities or needs and the fighting of enemies." 3 According to !1ari ana, taxes are levied for the maintenance of the king, the payment of salaries, the fortification of towns, fortresses and castles, the huilding of roads and the construction of 1 Tributum, gabella, vectigal ... iIlud intelligitur quod subditi seu membra reipublicae ad communem utilitatem et publicas necessitates ex obligatione contribuunt. De Justitia et litre, Disp. 36, sect. 1, n. 1. 2 •••significat (tributum) pensionem publicam, quae ad regios sumptus seu communes reipublicae operas per singulos de populo distribuitur, et stata lege persolvitur. De Legibus, Lib. V, cap. 13, n. 1. sUnde si, quae i1Ii (principi) a populis tributa, non sufficiunt ad stipendia competentia ministrorum publicorum, ad reparationem pontium, domorum publicarum, moenium et ad similes, aut majores utilitates ac necessitates publicas, aut ad resistendum hostibus tunc princep~ imponere ~otest nova tribut.a. aut antiqua augere, quantum et quamdiu ;imiles causae Id postulavermt .... De Justtt1G et Jure, Tom. III, Disp. 667.

173 MARIANA:-POLITICAL ECONOMY bridges, the compensation of garrisons and the defrayment of war expenses. If, then, taxes are to be paid for the com mon good and this comprises such things as have been mentioned above, the question of personal benefit can scarcely have entered into the case. Today, we are accustomed to make careful distinctions between taxes, special assessments, fees, return from gov ern~ent business and other public revenues. These distinc tions were familiar to de Lugo 1 and even more familiar to Molina. 2 Although both vigorously defend the tax exemp tion of the clergy, they do not in so doing exempt the clergymen from all compulsory contributions. When im provements of land and property immediately benefit the churchman, he must shoulder his share of the expense. This may happen in the case of irrigation, protection against inundation, drainage or the building of roads leading through his property. The very fact that they believed the clergy man should pay in these cases shows clearly enough that both de Lugo and Molina considered such contributions not real taxes, but rather, as we would say today, special as sessments. Here, indeed, there is question of personal benefits; but, since the clergyman is free from taxes and yet not from these contributions, it follows that, according to Molina and de Lugo, a real tax is always paid without regard to personal benefit.

Molina, moreover, carefully discriminates between taxes and the other revenues of the king. This he manifests by 1 nunc dicendum est de ilIo alio genere contributionis ad ea, quae concernunt immediate etiam et directe bona ecclesiasticarum, et non solum consequenter, ut quando contribuendum est ad avertendum fluvium cujus impetus perdit agros non solum laicorum, sed clericorum, qui in litore sunt, in quo casu dubitari potest, an eaedem conditiones requirantur, nempe consensus et facultas summi Pontificis, et quod laicorum facultates non sufficiant. • . • Ergo in hoc casu distin2"uendum puto: possunt enim tunc ecclesiastici, quorum interesse agitur, et qui praedia habent vicina, quibus subvenire intenditur, conven:;e, et pacto se obligare ad contribuendum ad expensas pro parte sua: vel potest haec contributio illis imponi per modum tributi a superiore. De Justitia et Jure, Disp. 36, Sect. 8, nn. 128-129.

I Quoniam bonum, quod intenditur, et ad quod contribuitur, directe ac proxime respicit bona E'cclesiae aut Ecclesiasticorum. De Justitia et Jure, Tern. III, Disp. 672, n. 4. 174 THEORY OF TAXATION the Spanish nomenclature for the various payments to the sovereign. In the case of taxes he uses the word pechos. Derechos is more general and comprises as well the revenue from the regalia, or royal privileges. Rentas del Rey, the most general of all, includes over and above the content of derechos the rents from the royal domain. We can, therefore, confidently assert that Molina in particular had a very clear concept of a tax as distinguished sharply from other types of royal revenue. Bearing all this in mind, it would seem that the com posite definitions of Suarez, Molina, de Lugo and Mariana are sufficiently comprehensive and exclusive and contain all the elements essential to a tax. Although none of these authors expressly excludes from his definition the regard for personal benefit, this element is implicitly contained in their explanations of the purpose for which taxes are paid.

So far as we know Professor Seligman is the first fiscal scientist who adds to his definition the clause that a tax is paid without regard to personal benefit. C. F. Bastable e.g., defines a tax as "a compulsory contribution of the wealth of a person or hody of persons for the service of the public or the public powers." 1 Therefore it is not surpris ing that the Spanish Jesuits did not explicitly make mention of an element which only very recently has been brought out by experts in the field of Puhlic Finance. In his schol arly monograph, Die Steuer in der Rechtsphilosophie der Scholastiker, R. Amberg comes to the conclusion that "the very definition of the scholastics shows that they had a correct idea of the main characteristics of a tax." 2 He be lieves, however, that it is not exclusive enough, and that 1 op. cit., p. 263. :I Schon die blosse scholastische Definition der Steuer zeigt, dass man einen richtigen Blick fur die Hauptmerkmale der Steuer hatte .... Nur die korrekte Unterscheidung von "Steuern" und "Gebiihren" findet sich noeh nicht klar und deutlich genug als solche ausgesprochen. Dies Steuer in der RechtsPhilosophie der Scholastiker, p. 121.

175 MARIANA:-POLITICAL ECONOMY it makes no sharp distinction hetween taxes strictly so called and fees. Our analysis shows, we helieve, that this distinc tion was clearly enough indicated hy the fact that, accord ing to the authors examined, a tax is paid for the common goo~ and not for personal benefit. Classifications Modern Fiscal Science makes a great many classifications of taxes. The most common of these we can easily discover in the writings of the Spanish Jesuits. Mariana, who says very little ahout the theory of taxation, classifies public pay ments not from a systematic but from a practical viewpoint. According to him, there are three sources of public revenue: The royal domain, the ordinary tax and extraordinary con trihutions. The first class is intended for the maintenance of the royal household, the second for the administration of the State in time of peace, and the third for extraordinary expenditures in case of war.

1 Suarez divides all taxes into personal (tributa personalia) , impersonal (tributa relia) and mixed taxes (tributa mix ta) . By an impersonal tax he means the rent on the royal domain. This, however, is not a real tax but a payment with reference to an individual benefit. By personal taxa tion Suarez means what we would call a per capita or poll tax, and by a mixed tax a paYment on persons or on mov1 See page 172, footnote 3. II Ut autem commodius fiat, oportet prius distinctionem tributi adnotare in reale, personale, et mistum. • • • Solent igitur ita (scI. tributa realia) vocari pensiones quaedam, quae penduntur Regibus, et Principibus ex terris, et agris, quae a prmcipio ad eorum !lusten tationem illis applicata fuerunt, ipsi vero in emphyteusim, vel feudum alii!! ea dona runt sub certa pensione annua, quae in jure civili solet Canon appellari. .•. Personalia tributa dicuntur, quae ratione tantum personae solvuntur, et vocantur census .... ~1ixta dicuntur, quae pro rebus praesertim mobilibus, et personis solvuntur, hujusmodi sunt Gabella, quae solvitur de rebus, aut venditis, Hispane Alcavalla. Item, Vectigal quo nomine in jure significat tributum debitum ex mercibus invectis in provineiam, vel ex illa evectis. . . . Et ita distinguitur vectigal a tributo tamquam species a genere, licet interdum videantur condistingui tamquam duae species. De Legibus, Lib. V, cap. 13, n. 2.

176 THEORY OF TAXATION able goods, under which head he also includes indirect taxes. The classification thus proposed by Suarez seems exclusive and comprehensive hut is, nevertheless, very arbitrary and inexact. Molina distinguishes much better between the various taxes. He sees clearly the difference between taxes by as sessment and taxes on transportation and exchange of com modities. The one he designates by the Latin word Tribu tum, and the other by Vectigal and Quasi-vectigal. He be gins with a discussion of the use of these words in the Roman Empire; then he enumerates the various taxes in Spain and Portugal by analogy with those of Rome; and next he finds that there existed in Rome a tax on land and on immovables in general, which was raised by assessment. This assessment was called census, the same name being applied also to the tax itself. A tax similar to this existed in Castille during Molina's time. He also speaks of a per capita tax, and of a number of other payments to the king.

All these contributions he calls taxes in the strictest sense of the word. Moreover, he observed a per capita tax in Castille and Leon which was assessed according to the number of per sons in a family. It was a sign of subjection to the King of Spain and was entitled Moneda forera. The Martinega (St. Martin's tax), another form of tribute, was levied every year upon each independent individual and was collected regularly at Martinmas, the eleventh of November. Every third year a tax of 300 cuentos was paid to the king, the sum being equally apportioned over each year. Its name, .5ervitium indictum, is derived from the fact that it was solemnly proclaimed at the termination of each three year period. Another contribution of 154 .cuentos, Servi tium extraordinarium, was likewise distributed over the 177 MARIANA:-POUTICAL ECONOMY same term. These payments constituted the ordinary taxes on property and persons.

Molina's division of these contributions into personal, impersonal and mixed taxes is noteworthy. The Roman property tax he calls "mixed," explaining his use of the word by means of an example: A sells a piece of land to B without having paid the property tax. The question arises whether B has to pay it. The answer is in the nega tive if the tax was imposed upon the land whilst and because it was A's property. If it were an impersonal tax, B would have to pay it because he took over the tract of land with all burdens placed upon it. This example, one sees, ex plains very well the difference between our general property tax and real estate tax. 1 During times when there was especially urgent need ex traordinary taxes were levied called Collectae, Praestantiae or Talliae, or Derremas in Spanish, Finitas in Portuguese. Upon occasion the king might call for a special contribu tion to carryon war against the Turks or the French, but the amount was left to the generosity of the donor. This Molina does not consider a real tax but rather a free or liberal contribution (Liberalis praestatio.) All assessed taxes Molina classifies under the head of Tributa and calls them taxes in the strictest sense of the word.

2 Quite different in nature from these contributions were the taxes on the transportation and the sale of goods. They are recorded under the head of Vectigalia and Quasi-vecti galia and were in the main charges on imports and exports (Portoria, Spanish Aduana), on transportation (Pedagia, Guidagia), and on sales and all other kinds of business trans1 De Justitia et Jure, Tom. III, Disp. 661, n. 3. 1I Uterque etiam census (viz., property and capitation tax) propriisime et praecise appellatur tributum ut tributum a vectigali distingultur. Vectigal presse et proprie, quod solvitur ex rebus ac mercibus, quae vehuntur de loco in locum, ratione loci publici per quem transeunt aut quo afferuntur. Ibid. 178 THEORY OF TAXATION actions (Alcavala). This latter tax played the most im portant role in Spain and was chara~teristic of Spanish finance. De Lugo, like Mariana, speaks almost exclusively of this tax. It was the chief source of public revenue; and as it was extremely high and burdensome, it was {~omplained of frequently and grievously. In addition, it was more easily exposed to fraudulent treatment than any other tax and called, therefore, for special consideration from the nloralists.

According to Molina, the Alcavala originally amounted to one thirtieth of the value of the goods involved in the transaction but was later raised to one twentieth. After the State bankruptcy under Philip II, it was again raised and amounted to one tenth. Formerly it had been exacted with leniency; now it was collected most rigorously and fraudulent returns were punished severely. Practically the whole of de Lugo's treatise and the greater part of Molina's are devoted to this general sales tax. Only a few commodities enjoyed freedom from the AI cavala. 1 Of the necessaries of life, bread was exempt, hut grain was taxed. When the haker hought grain, he could pay by furnishing in turn a certain number of loaves tax free; but if he offered bread for sale to a farmer in exchange for grain the tax had to he paid. Another concession was made in favor of the poor peasant. Should he sell a grown and broken-in horse or ass with saddle and harness, he was free from the Alcavala. But if he sold a young animal, or one grown up that had not heen hroken in or was not harnessed at the moment of the sale, he was compelled to pay the tax.

Recoining of old money was likewise free; books, even when imported from ahroad hore no tax; falcons and other l. De blStitia. et Jure, Tome. III, Disp. 663 nn. 1-18. 179 MARIANA:-POLITlCAL ECONOMY hunting hirds were not assessed. Dowries were considered presents made to the bridegroom and thus passed taxfree. An inheritance was exempt from the Alcavala when it was divided amongst the heirs without the intervention of money, mutual exchange or sale. When a heritage was made over to a pious cause it was considered ipso facto, property of the Church and as such free from taxation. Some professions enjoyed the privilege of exemption from the Alcavala under certain conditions. The work of a far .. rier, performed in the camp or on guard, was not subject to it. Armorers could sell weapons ready for use and in struments of torture without the payment of a sales tax, but other instruments such as kitchen knives were taxed. Phar ..

macists were required to pay the Alcavala upon simple medi cines, not upon their more complicated preparations. As has heen explained in the preceding chapter, the dif ference between a tax, strictly so called, and contributions in the nature of special assessments was known to both de Lugo and Molina. The second also differentiates between the tariffs on the transport, import and export of goods, and the general sales tax. The former, he tells us, were originally paid by the merchants for the protection of commerce from seafaring and land faring pirates. 1 Here, too, there was question of personal benefit and therefore these charges are not taxes in the strictest sense of the word. Although, in the course of time, they became so high that they took on more and more of the character of real taxes, they were originally held to be what we might call fees for personal benefits. Mariana and the other Jesuit writers were also aware 1 Quando vera exigitur propter bonum, quod peculiariter respicit quosdam, illi praecipue sunt gravandi. Ut mercatores et alii, qui peculiariter indigent defensione a piratis, grassatoribus et latronibus, praecipue sunt gravandi tributo ad sumptus ad id necessarios.

De Justitia et Jure, Tom. III, Disp. 668, n. 3. 180 THEORY OF TAXATION of the difference between taxes borne by the taxpayer and those shifted to other persons. Both the tariffs and the general sales tax were of the second type: that is, they were indirect taxes. Thus we find them consonant with direct and indirect taxes, taxes on property and persons on the one hand, and on commodities on the other, fees and special assessments. Molina calls taxes on property and persons taxes in the strictest sense of the word, because they evi dently were borne by the taxpayer, whereas tariffs and sales taxes were, as he believed, always shifted to the consumer. Philosophical Basis of Taxation Mariana and all the Spanish Jesuits agree that taxation is based upon the natural law. According to their doctrine, the State is a necessary and essential human institution. This State cannot, however, accomplish its end without the necessary means. Since, therefore, the State is but a con sequence of the natural law, the means necessary to the State are also dictated by that law. This is, in hrief, the scholastic basis for taxation. It was expounded by St.

Tholnas Aquinas and was retained and developed by later scholastics. Modern writers on Public Finance are in the habit of saying that the benefit theory prevailed until re cently, and that the social theory is an accomplishment of the latest decades. H. L. Lutz ventures the following be lief: "The contrihutary elements in the tax concept is its contrast ... with the earlier view that was held concern ing the tax, according to which it, too, (like special as sessments and fees) was regarded as a payment for services or benefits rendered. This view was quite generally held during the seventeenth and eighteenth centuries.~' 1 A. Wag1 Public Finance, p. 240. 181 MARIANA:-POUTICAL ECONOMY ner wrote as late as 1890: "Until very recently another 'foundation' was held to a great extent, (i.e., another than his own social-political theory), the tax obligation being based upon the protection the State grants to (persons and) property. Thus, there was formed a 'benefit' and 'assur ance' theory to give a basis to the right of imposing taxes and the obligation of paying them. The tax was also, per haps, considered as in the nature of 'exchange' (compulsory exchange) or a 'price': an 'exchange' between the public services benefiting the individual and the return service of the tax, the tax being the price to be paid for these services." 1 R. Amberg puts the same idea in this way: "Until very recently (Fiscal) Science knew no other basis (of taxation) than the benefit and assurance theory. This theory we owe to the English philosopher Hobbes, who first formulated it in 1609; and it has been followed as late as 1871 by L.

von Stein in the second edition of his text book. Only the most recent progress in contemporary Fiscal Science has succeeded in revealing the incorrectness of this theory and in freeing itself from these old and false concepts." Then Amberg, giving due credit to the. scholastics, continues: "Now we see that some mediaeval philosophers, at a time when Fiscal Science did not as yet constitute a special branch of study. apart from general Philosophy, entered upon a road leading toward the explanation of the philo sophical foundation of taxation; and this, when followed 1 In der theoretischen Erorterung iiber Besteuerungsrecht des Staates u.s.w. und Steuer pflicht der Einzelnen ("Biirger," "Untert(l.nen") ist die hier vertretene Auffassung jetzt wohl die herrschende, auch in der Finanzwissenschaft. . . . Bis untangst wurde indessen vielfach eine andere Begriindung vertreten, indem die Steuerpflicht auf die Vorteile im Staatsverband, namentlich auf den Schutz des Staates fiir (Person und) Eigentum zurtick l'(efiihrt, so eine "Genusstheorie" und eine "Assekuranztheorie" zur Begriindung von Besteuert1l1gsrecht und Steuerpflicht gebildet, dabei auch wohl die Steuer als eine Art "Tausch" ("Zwangstausch") oder 31s eine Art "Preis" aufgefasst wurde: ein "Tausch"

zwischen den dem Einze1nen zu Gute kommenden offentlichen Leistungen und der in der Steuer gegebenen Gegenleistung, und die Steuer der Preis, welcher fiir den Genuss dieser Leistungen gezahlt wird. Finanzwissenschaft, Zweiter Teil, p. 217. 182 THEORY OF TAXATION consistently, would lead to the modern view and, to a great extent, has already led to it." 1 Mariana does not offer a strictly philosophical justifica tion of taxes, but simply tells us that the people, having elected the king, assigned to him certain revenues for the maintenance of his household and of the royal splendor. These revenues are not only due to the king, hut he has property rights over them. 2 Whenever in the past there arose a need for greater revenues, he would call on the people and they would grant additional funds by the way of taxation. As has been said repeatedly, Mariana contends that the king cannot raise a just tax without the people's consent. But once they have granted a tax they have bound themselves by their free decision to pay it. It is evident that under this supposition taxation needs no further philo sophic justification. Promises must be kept.

Suarez and Molina have a different and, one feels, more correct explanation of the obligation to pay taxes. Accord ing to them the State is nothing but a fulfilled demand of the natural law: i.e., a necessary consequence of man's social and political nature. Man needs the help of his fellowmen in order to satisfy numerous wants which he cannot satisfy alone. Domestic and external peace, for in stance, cannot be maintained without a strong political . ·1~~'lllol'l/iliti.: 1 Bis in die neueste Zeit hinein kannte die Wissenschaft keine andere Begriindung als die Vergeltungs-und Assekuranztheorie, eine Theorie, die wir dem englischen Philosophen Hobbes, der sie zuerst im Jahre 1669 ausgesprochen hat, verdanken, und die noch im Jahre 1871 von L. v. Stein in der zweiten Auflage seines Lehrbuches vertreten worden ist. Erst den jiingsten Fortschritten der zeitgenossischen Finanzwissenschaft ist es ge1ungen, die Unrichtigkeit dieser Theorie zu durchschauen und sich von den angestammten falschen Vorstellungen frei zu machen.-Und nun haben wir einige mittelalterlich geschulte Philosophen vor uns, die in einer Zeit, wo die Finanzwissenschaft noch gar nicht als eigene Fachkenntnis von der allgemeinen PhiJosophie losge1i:ist war, zur rechtsphilosophischen Begriindung der Steuer einen Weg einschlagen der folgerichtig zu der heute geltenden Anschauung fiihren musste und auch vielfach schon gefiihrt hat. Die Steuer in deT Rechtsphilosophie aer Scholastiker, p. 122.

2 Quam auctoritatem ut cum dignitate tuerentur, certos reditus designavit (respublica) unde vitam principalem sustentarent: formam quoque praescripsit ejus pecuniae redigendae. Quae omnia eorum redituum quos res publica attribuit, dominium dant, eorum praeterea possessionum, quae aut idem privatus obtinebat, aut Rex factus accepit a populo, non eorum quae sibi cives publice aut privatim retinuerunt. De Monetae Mutatione, cap. I, p. 192. 183 MARIANA:-POLITICAL ECONOMY power. Moreover, there are many wants common to all which no individual can supply by himself but which must be attended to by an authority whose object is to care for the common good. In other words, the insufficiency of human nature makes the establishment of a political society necessary. Thus far both Suarez and Molina are in exact agreement with Mariana. F or their philosophic justifica tion of taxation they simply refer to the natural law.

To recapitulate: The State is necessary to man because he cannot attain his end without it and will inevitably estab lish a political society wherever many families live together. In other words, the State is based upon the natural law. But the State cannot accomplish its object, the common good, unless it has the necessary means. Since, therefore, the State is a postulate of the natural law the same is to be said of the means necessary for the right functioning of the State. Hence, the payment of taxes is an obligation binding under the natural law. As Molina tells us: "(Taxes) are due as things to be paid, according as the nature of the mat ter and the obligation of the subjects to the State and to the sovereign require, by virtue of the very institution of the State, that is, for the good of the State, for its conservation, administration and defense." 1 The reason, then, why citi zens must pay taxes is purely a necessary consequence of the nature of the State. Taxation enables the State to achieve its end.

The whole of their discussion of political power and tax ation is bound up with actual conditions in Spain and Portugal. Because Spain is a monarchy, the person of the sovereign and the State are used ahnost synonymously. This 1 •••sed deberi (tributa) ut res solvi praeceptas juxta id, quod postulat natura rei ac debitum subditorum suae reipublicae, ac principi, vi institutionis ips ius reipublicae, in reipublicae bonum ac conservationem atque pro administratione ac defensione reipublicae, esse proindeque res eo ipso ex justitia debitas. De Justitia et Jure, Tom. III, Disp. 674, n. 3. __ , 184 THEORY OF TAXATION is not surprising in view of what we have seen in the first part of the treatise; that, according to Suarez, the State has transferred to the king the whole sovereign power. Con sequently it is only natural that the maintenance of the king and government expenditures are indiscrinlinately as sociated as calling for taxation. Occasionally also taxes are called a stipend (Stipendium), which seelns to imply that they were to be a personal remuneration for the king's services to his subjects. It must be admitted that the term Stipendium is sometimes used in such a way that it could be taken to mean that taxes are in the nature of a personal remuneration but it can he proved to almost anyone's satis faction that this was not the meaning intended by these writers.

Thomas Sanchez used expressions which seem to indicate clearly that he considered the tax merely a salary paid to the king in accordance with an agreement entered upon when he was appointed the head of the State. He says that taxes were instituted "as a reward and a price for the work which the Prince does for the conservation and ad minjstration of the State, of the same order as remuneration given to a mercenary." 1 But from other places :in the same context it becomes clear that Sanchez regarded the common good of the State as the real reason why taxes are paid. For "it is to be noted that all these pensions (the general term used for taxes) agree in this that they are public meas ures for the common good. . . ." 2 When the "just cause" for taxes is under discussion, the author says "that the second condition is that there should be a just cause for 1 Probatur, quia tributa non sunt poenae, sed sunt instituta tanquam pr,lemium et merces Principis pro lahore, quem substinet in conservanda, et g'ubernanda republica, sicut datur n~erces mercenario. Consilia seu Opuscttla moralia, Lib. II, cap. 4, dub. 1.

2 Est tamen advertendum, quod omnes pensiones (pension is the general term fo:- every public payment) istae in hoc conveniunt, quod sunt actiones publicae pro bono communi, et solet una accipi pro altera, v.~. census publicus et tributum solent accipi pro eodem, scilicet pro pretia, quod datur Principi, vel r('ipublicae de proprio solo. . •. Ibid. 185 MARIANA:-POUTICAL ECONOMY imposing a tax, and that this is, according to all, the common good and not the private interest of the Prince, unless this redounds to the common good of the realm, as would be the case if the indigence of the prince or lord were so great that the ordinary revenues would not suffice for his main tenance, or if he were taken prisoner by the enemy and had to he ransomed. . . . And the reason is because the king is set up for the good of the people, and not the people in the interest of the king." 1 Consequently, the reason why the king must be main tained hy the people is the fact that this is necessary for the common good of the State. It is true that the terms "Praemium," "Price" and "Pension" are misleading, hut the context shows that they cannot he taken as signifying a real remuneration for work done. They simply mean that it is only just that he who lahors for the common good should he maintained hy the State, and that it is to the common interest that the king he well taken care of.

Sanchez is more inclined than any other Spanish Jesuit to accept the contractual theory of taxation. But if even he admits that the reason why the king must he maintained is the interest of the common good, it is evident that not even he holds the contractual theory. Molina also uses the word Stipendium or rather Quasi-stipendium hut at the same time explains how this is to be understood. The maintenance of the king is but one item in the disburse ments to be covered by taxation. He writes: "It is, as it were, a proper stipend to the prince from his subjects and is to he numhered among the needs of the State. With 1 Secunda conditio est causa justa imponendi tributum, quae secundum omnes est bonum commune, et non privata utilitas ipsius Principis, nisi ea redundet, in bonum commune regni, ut si tanta esset Principis, aut domini inopia, ut communes reditus ad ipsiul sustentationem non sat essent, vel esset captus ab hostibus et indigeret pretio ad sui redemptionem, etc. et ratio est, quia Rex propter populi utilitatem, et non populus propter Regis commodum datu. est. Ibid., dub. 2.

. 18~ THEORY OF TAXATION regard to this stipend and the reverence and obedience which the subjects owe and exhibit to their sovereign, he in turn is bound, as it were, by a contract to rule and defend them, to administer justice and to care for their common good." And a little later he says that these charges (for main tenance) "are to be numbered among the needs of the State." 1 In order to show still more clearly that the measure of taxes is not to be determined by the private wants of the sovereign but by the common needs of the State, Molina writes as follows: '''The people are not for the prince, but the prince is for the people, since he has been set upon his throne for the good and the benefit of the people. For this reason, taxes are not to be measured by the will and benefit of the prince but by the public good and the needs of the community, as whose administrator, defender, watch man and ruler he was constituted. He must, therefore, he satisfied with a proper maintenance and the means for his own expenditures as the prosperity and the dignity of the State warrant. He must also content himself with what is sufficient for the common needs; nor are his subjects obliged to contribute more." 2 From this text it seems clear that the outstanding reason for all taxation is held to be the common good and not the private interests of the king. He has, indeed, a right to royal circumstance, not so much for his own sake, however, 1 •••Quippe est quasi promium stipendiurn asubditis principi debitum, computaturque interreipublicae necessaria. (Sic S. Thomas, Medina et doctores communiter) Ratione vero hujus stipendii, reverentiae atque oboedientiae, quae subditi suo principi debent, ac praestant, ipse vicissim tamquam ex contractu, tenetur eos gubernare ac defendere, administrare iIlis justitiam et curare bonum commune ipsorum. . . . Quoniam illi sumptus computantur inter res necessarias reipublicae. De Justitia et Jure. Tom. III, Disp. 667, n. 4.

2 Neque enim populus est propter principem, sed e contrario princeps est propter populum, qui est praepositus, in bonum ac commoditatem illius: eaque de causa tributa non ad voluntatem, et utilitatem principis sunt admetienda, sed ad utilitatem ac necessitatem publicam ejus communitatis, cui tamquam administer, defensor, custos, ac rector est constitutus: contentusque esse debet princeps iis quae ad competentem sustentation em et sumptus ipsius, pro qualitate status et reipublicae, et ad publicas necessitates sufficiunt, neque plus respublica subditorum tenetur ei tribuere. De Justitia et Jure, Tom. III, Disp. 667, n. 1. 187 MARIANA:-POLITICAL ECONOMY as for the welfare and the dignity of his kingdom. We can therefore say with certainty that Molina did not agree with the henefit theory, according to which a person pays taxes in so far as he receives personal henefits from the State. All the henefits which Molina enumerates are common to the State as a whole; and he says that taxes are simply re quired as a necessary means for bringing about the general welfare of the community. It follows, finally, that a person is bound to pay taxes because he is a member of a com munity to the satisfaction of whose common wants he must contrihute his share.

Some Jesuit authors use the terms Stipendium and Praemium to indicate that there exists between the king and his subjects a relationship of strict justice, the king heing hound in justice to devote proper care to the interests of the community and the citizens being obliged in the same way to give their support to the king. This relation ship is considered hy Molina, Suarez and the other writers as in the nature of a" quasi-contract, not indeed in the sense of Hobbes, Locke or Rousseau hut in the sense that an onerous donation of the supreme power of the State has been conferred on the king by the people, the king being bound to use this power for the good of the State and being granted the right to demand the necessary means, the people obliging themselves to obey their sovereign and to supply the means needed to promote the common interests. It is therefore wholly evident that the Spanish Jesuits con ceived of taxes as based not upon personal benefit, but upon the natural ohligation incumhent upon the members of a hody politic to contrihute their share toward defraying ex penses incurred for the common good. As Molina puts it: "The members of the State are each one obliged to give 188 THEORY OF TAXATION aid on hehalf of the common: good and the public needs according to his ability. "1 Principles and Canons I One cannot expect to find in the writings of the sixteenth and seventeenth centuries a minute treatment of the prob lem of taxation in all its aspects. Public Finance has only recently heen developed as an independent hranch of Polit ical Science. Today we speak of criteria, principles and canons of taxation, although we have not succeeded in establishing uniformity of terminoolgy, much less of opinion.

The first author who speaks of "maxims with regard to taxes in general" is Adam Smith. Every tax should, he holds, comply with four general maxims: It must be equal, certain, convenient and economic. 2 These four "maxims" or, as they were often called, principles, have since heen constantly reiterated and reverenced as the wisest things ever said about the doctrine of taxation. But it has been and still is overlooked that in substance the scholastics knew these very "maxims" and several more, long hefore Adam Smith wrote his Wealth of Nations. 3 It is true that neither Thomas Aquinas nor the Spanish Jesuits spoke of "max ims" or "principles" of taxation, but their three "conditions" (Condiciones) contain substantially all the elements of a sound tax. Moreover, Mariana, Molina and de Lugo touch upon many of our "modern" principles and canons of tax1 Partes enim rei publicae juxta vires cujusque subvenire tenentur communi bono necessitatibusque publicis. De Justitia et hwe, Tom. III, Disp. 668, n. 3.

2 The Wealth of Nations, Book V, chap. 2, part 2. 8 Die Steuer in de,. Rechtsphilosophie der Scholastiker, p. 104. 189 MARIANA:-POLITICAL ECONOMY ation. Mariana, the most democratic and progressive among them, suggests several measures which have actually heen put into effect in the tax policies of several commonwealths. According to these various scholastic authors, the abiding principle of taxation is justice: justice in its cause, justice in its imposition and justice in its distribution. These are the three "conditions" with which every tax must comply. Let us see what the first condition, justice in cause, im plies. Who can justly impose a tax? In seeking the an swer to this question, we must distinguish between Mariana and the other Spanish Jesuits. Mariana holds that the king cannot impose a new tax without the consent of the people, and he tells us that this was the common opinion of jurists and theologians in the sixteenth century, according to the authority of the French writer Comineus.

1 The reason ad vanced is that the king has no right of proprietorship over the goods which his subjects own as private citizens, and that therefore he cannot take them away in full or even in part contrary to the wish of the legitimate owners. Since taxing the people means taking a part of their property, it follows that they must he consulted. This idea underlies the treatise on money, which declares that the king cannot adulterate the coinage because in so doing he takes some thing from the people against their will. In a well organized commonwealth the people must reserve to themselves cer tain supreme rights, of which taxation is one. Mariana, we have seen, is more extreme than are his hretheren in re ligion, who attribute to the king supreme power in so far 1 Sit ergo fixum nunquam Principi licere subditos novis oneribus premere, nisi accedat consensus quorum interest, certepopuli capitum et rei publicae .•.•Sed potiua quando a republica cam potestatem accepit reditibus designatis quibus vitam principalem sustineret, impositis muneribus sat isface ret si ea vectigalia augeri cupit, adeat necesse erit eos qui initio eos reditus numero definito designarunt .... Quod cum is auctor (Comineus) ex ordine sacrato non fuerit, ac potius litterarum prorsus expers, quod tanta asseveratione affirmatum reliquit, uti que ex auctoritate posuit ea aetate theologorum in ea re sententiis non discrepantium. De Monetae Mutatione, cap. 2, p. 194.

190 THEORY OF TAXATION as the interests of the State are concerned, provided the law of the country or general custom have not decreed otherwise. Taxes are destined to defray the expenses incurred in the common good, and so it follows that they can he imposed hy those, and only those, who have charge of the common good. Primarily, this means the sovereign. If anyone has the duty to look after the welfare of the State it is he. But the question arises as to whether he is the only one who possesses the right to impose taxation. Lessius and many others say yes; but de IJugo refutes their reasoning. Lessius holds that no subordinate officer of the king can impose a tax, because this is the inalienable and exclusive right of the sovereign, who is supreme. Hav ing received his authority from the community, he alone has the right to demand of the community the means to discharge his office properly. De Lugo replies that in many republics the subordinate officers likewise take their au thority from the people; and it follows that they also may impose taxes hoth for their maintenance and for the ex penses of their administration. Lessius, however, would not accept this conclusion. On the other hand, he admitted that if the common good should require so drastic a measure, the governor of a province could undoubtedly exercise the right of expropriation. But if he can rightfully proceed to the extent of expropriating a citizen, it would seem that he can also do that which is less extreme-that is, take a part o£ a citizen's property through the imposition o£ a tax. De Lugo, therefore, concludes that it is in itself possible that a subordinate officer justly tax the group whose care has heen entrusted to hIm. But, as a rule, de Lugo continues, sovereigns reserve this right to themselves, although they may delegate their right to their ministers or even to a local 191 MARIANA:-POLITICAL ECONOMY community. A tax, therefore, complies with the first con dition when it is imposed either by the prince himself or by someone else who has the authority from him.

1 Molina and de Lugo subsequently discuss the question of a nobleman's acquiring the right to a tax by prescription. If when the legitimate time for prescription has elapsed there exists no doubt as to the justice of the tax, it may lawfully be collected. This, naturally, does not give the nobleman the right to impose a new tax unless the king specifically grants him permission to do so. In view of the pitiless" exploitation of the people by the aristocracy, so common in those days, we may add in passing, that due credit should be given the scholastics for their attempts to protect the poor from all unjust extortions. It has already been said that Molina and de Lugo differ from Mariana in that they allow the king to impose taxes without the consent of those concerned. They took the view that unless the people have reserved certain rights to themselves, the king has unlimited power and is superior to the people. They do not mean, however, that his power has no limits at all. He must rule his subjects according to justice and equity. In a general way he is responsible to the community in so far as he could be deposed should he commit enormous injustices or go beyond the limits set by the constitution. Ordinarily he is not subject to the supervision of the people and can, therefore, impose taxes unless the constitution of the country specifies otherwise.

The fact that the King of Spain cannot tax his subjects 1 Sicut ergo ob necessitatem communem potest gubernator obligare hunc civem ad dandam rem suam, cur non poterit ob eamdem necessitatem communem obligare cives ad co.ntri buendum modicum, ut necessitati subveniatur? Plus enim videtur esse auferre ah uno pJiquid magnum, quam a multis, paucum a singulis. quod videtur esse exigere tributum. Sictlt ergo iI1ud primum non superat potestatem ordinariam gubernatoris subordinati, cur hoc sf'cundum iIIam superabit? Haec ratio mihi suadet. loquendo ex natura rei ... de facto tamcn id non posse fieri ab his gubernatoribus. sine speciali commissione principis, quia de facto principes supremi hanc pofestatem sibi reservarunt, nec censentur iIIam concedere i? ordinaria concessione potestatis gubernativae, nisi id exprimant. De Justitia et Jure, D1Sp. 36, sect. 1. 192 THEORY OF TAXATION without the consent of the estates does not imply that this limitation arises from the very nature of the matter. It is according to Suarez 1 only a local custom. :Molina tells us that it was introduced through the kindness of the king himself, at a time when Spain was prosperous and the tax rate very low. Foreseeing that such a state of affairs might easily induce an avaricious sovereign to increase the tax hurden to the detriment of the country, the king desired to make every new tax depend upon the consent of the Cortes and thus to prevent ahuses of the taxing power.

What are the chief doctrines involved? With the excep tion of Mariana, the Spanish Jesuits hold that, directly, only the sovereign who has no superior over him on earth can impose taxes, and that subordinate officers or local com munities can do so only in so far as the ruler delegates this right to them. Where the laws of the country require the consent of a diet, the king is bound to suhmit to its decision. But unless the people have reserved this concession to them selves, the king is free to tax without consulting any person or group of persons. IT The philosophic hasis of taxation is the fact that the State, which is a necessary institution, needs the help of the members of the community to promote the common good. Taxes must be paid because the State has a right to demand of its members the means to defray expenses incurred on behalf of the general weHare. From this all scholastics infer that there must be a strict relationship between taxation and the public need. Without exception, they hold that a tax ought to he the means of last resort in 1 De Legibus, Lib. V, cap. 17.

193 MARIANA:-POLITICAL ECONOMY raIsIng funds for common needs, that all other methods must have failed, and that the levy must cease as soon as the need no longer exists. From this it might seem as if the scholastics considered the tax an evil, and one would probably not he very wrong in saying they did. People never have paid taxes gladly, and they resent every new contribution as being an en croachment upon their property. Mariana's declaration that the people cannot hut reserve to themselves the right of taxation seems to be based on the general unwillingness of the people to contribute toward meeting the common needs. Another reason for his opinion is that according to his theory of the origin of the royal power the people assigned to their elected king revenues, most likely lands, the income from which was to support him and yield the means for the administration of the State. It was understood at the time that no further revenues would he required for the royal administration. If then the king nevertheless soon called upon the people for help, it is only natural that he met with opposition to a new grant.

Under s1;lch circumstances the king would first have to try to find a way out of the difficulty without burdening the people, even though a sacrifice on his part might be involved in cutting down unnecessary expenditures. When he calls upon the representatives of the people, he must listen patiently to their pleading in behalf of those whom they represent. They, in turn, should lend a willing ear to their emharrassed king; and, if his situation absolutely demands new contributions, they must grant them. From all this it appears that Mariana was of the opinion that a tax ought to he the last thing tried to solve the difficulties of the royal treasury.1 1 Populus quidem, uti monet bistoricus idem (Comineus), debet se facilem exhibere, 194 THEORY OF TAXATION Molina and the other Spanish Jesuits, though attributing to the king the right to tax the people, nevertheless main tain that he should exercise this right only when all other means have failed, and only for so long a time as the need exists. Molina requires of a tax "that it be imposed for a just reason, that no more he demanded than the cause re quires, and that with the disappearance of the cause the tax must likewise cease." He then advances his reasons: "For the subjects who are the members of the State are obliged to come to its aid by exhibiting and exposing not only their property but their lives as well, when the com mon good and the public need require it. Thus they may he compelled, whenever the common and ·the public good demand it and no other means is available, to contribute as much as and as long as the public good and the common welfare command it. . .. When, therefore, the contributions of the people do not suffice to pay fair salaries to public officers; to repair bridges, public buildings, town walls or such like things; to meet the charges for even greater public utilities and needs; or to fight the enemy: then (the sove· reign) may impose new taxes . . . or increase old ones as much as and as far as such causes still call for help. When these causes have ceased, the taxes also must cease or be decreased in accordance with the public causes or needs that have ceased." 1 neque Principis votis repugnare, sed potius, ut res se dabunt, aeraru lllopiae pro viriH parte succurrere. Sed et Principis etiam aures patientes esse debent, populum audire ac diligenter considerare copiae ne suppetant et vires ad ferendum novum onus, an rationes aline inveniantur ad occurrendum angustiae; etiamsi opus sit Principe ad modestiam revocato castigatisque sumptibus supervacaneis, quod video passim factitatum in paulo antiquioribus regni conventibus. De Monetae Mutatione, cap. 2, pp. 193-94.

1 Vt imponatur ex justa causa, neque plus exigatur quam causa postulat, et ut cessante causa ... cesset etiam tributum .... Etenim subditi reipublicae cujus partes sunt, subvenire tenent1.lr, non solum sua, sed et seipsos exhibendo, ac exponendo, quando bonum ac necessitas publica id ita efHagitat: eaque de causa, exigente id communi publicoque bono, cui non possit aliter commode subveniri, cogi possunt contribuere, quantum postulat et quamdiu id postulat, publica necessitas et bonum .... Unde si, quae ilIi a populis tributa sunt, non sufficiunt ad stipendia competentia ministrorum publico rum, ad reparationem pontium, domorum publicarum, moenium, et ad similes, aut majores utilitates ac necessitates publicas, aut ad resistendum hostibus, tunc princeps imponere potest nova tributa, aut 195 MARIANA:-POUTICAL ECONOMY Molina therefore helieves that a tax is justified only when there exists a common need, and that, as a rule, it is unjust, when its cause no longer exists. This does not mean, how ever, that all taxes should he only temporary, for when one need has heen supplied, there may have arisen a new and still greater need-in which case the old tax could run on and suffice to meet the new difficulty. He uses an example to illustrate. Tariffs on the transportation of goods origi nally had for their object the protection of commerce from brigandage. Although this purpose may seem out of date now, yet there may arise a new danger of the same kind in the future. In this manner the king can justly :maintain the tariffs to insure against a recurrence of the same emer gency. He may use the surplus for other common needs, or else deposit it in the treasury for the national benefit.

Charges such as these ought not, however, to be excessive or otherwise hurdensome. Molina is the more inclined to justify these tariffs, since they are not so much a great hurd en to the merchant as a hother to the consumer, who has to pay a somewhat higher price for goods so taxed. Should commerce never he threatened again, the king might still he justified in collecting a moderate amount, for fiscal reasons. In this case, however, these charges would no longer he fees hut real taxes. Here we find an application of the canon of adequacy. A tax may also hecome perpetual through legitimate cus tom. The king may rightly demand its payment after the time of prescription has expired, even though the original reason for the levying of the tax has heen forgotten. Since from his point of view the supposition is always in favor antiqua augere, quantum et quandiu similes causae id postulaverint: iis vero cessantibus, cessare, ac minui debent tributa, juxta causas, atque exigentias publicas, quae cessaverint.

De Justitia et Jure, Tom. III, Disp. 667, n. 1. 196 THEORY OF TAXATION of the justice of an old tax, the contrary must definitely he proved hefore the tax can he declared unjust. . Without exception all the Spanish Jesuits maintain that the king is in conscience strictly hound to impose only just taxes. If he is excessive in his demands, the confessor must remind him that he is not the proprietor of the public funds, hut the steward, and as such responsi.ble hefore God for all excessive charges placed upon his subjects. In this matter, Mariana again is, as we shall see later, more explicit and direct than the other Jesuits. Concerning the royal dehts, the difficulty arises as to whether the people are hound to meet obligations of this sort incurred by their ruler. In general (Mariana excepted) the Jesuit answer is yes, provided, of course, there is no other way of meeting the situation. The sovereign being a puhlic person and the representative of the nation, the community must not allow him to be disgraced. But he, for his part, is bound to save as much as he can and is, nloreover, obliged to make restitution to his people of what ever has been disbursed to cover his debts, at such time as he is in a position to do so.

The doctrine that a tax must he imposed only for a just cause is evidently based upon the assumption that it is odi.ous and should, therefore, be kept at a minimum. Only as long as there is no other way to defray the public expendi tures should the taxing power go actively into effect. Fur thermore, a tax should be no higher than is absolutely nec essary and should automatically cease at the same moment the necessity ceased to exist. Another reason for a just rea son being insisted upon so strongly was perhaps the old prejudice that paying taxes is unworthy of a free citizen. This conviction was very strong in the days of the Roman Republic and the early Empire because of numberless 197 MARIANA:-POLITICAL ECONOMY abuses of the taxing power. The injustice and cruelty of Spanish tax farmers and collectors were certainly not apt to make taxes popular; and the exemption of the ruling classes threw the entire burden upon the Iniddle class, thus creat ing an extremely trying situation. Bearing this in mind, it is easy to understand why the Spanish moralists, who cham pioned the poorer people, were relatively inclined to he suspicious of any new tax.

III A tax, though justly imposed by the proper authority for a just cause, is not yet necessarily just in every respect. It m~st also be distributed according to the principles of jus tice. This has always been the most vexing problem faced by students of Fiscal Science. Should all pay the same amount?-Or, if a distinction should be made, what is the norm of distribution? Is it the amount of property or the amount of income? Is it the expenditure made by each citizen? Or, finally, is it the personal benefit the individual derives from the State? A clear and in every way satis factory answer to these questions has not been found even yet. We need not concern ourselves here with the benefit theory, since we have already seen that the Spanish Jesuits did not maintain it. But what do they consider a just norm of taxation? Generally speaking, we may answer that all of them helieved in distributive justice as the proper norm, i.e., they held that the burdens of the community should be horne by each citizen according to his ability to pay.

How is this "ability to pay" to be understood? Is the Jesuit interpretation the same as that proposed hy Adam Smith about one hundred and fifty years later? "The suh jects of every State," he wrote, "ought to contribute toward 198 THEORY OF TAXATION the support of the government, as nearly as possible, in proportion to their respective abilities: that is, in propor tion to the revenue which they respectively enjoy under the protection of the State. . . ." 1 Smith speaks, indeed, of the "respective abilities" as the norm, and he even intro duces the idea of revenue or income as a basis for determin ing a person's ability to pay. But since he considers pro tection granted by the State to the individual the reason why this individual should contribute in proportion to his respective abilities, he openly professes himself a defender of the benefit theory, and in this respect, is wholly at vari ance with the thinkers of the period under consideration.

Molina and de Lugo agree with Adam Smith (or vice versa) that payment should be made in proportion to re spective abilities, but their reasons are not identical with his, because, as we have seen, they did not share his alle giance to the benefit theory. What interpretation, then, did they place upon the ability to pay? They are not ex plicit as to this point; hut, since they repeatedly mention property as a basis for taxation and never speak of income or revenue in this connection, we must conclude that they held the old view according to which property is the proper measure of a man's ability to pay. In general, they demand that all pay in proportion to their possessions, so that those who have more pay correspondingly more, and those who have less pay less. De Lugo declares: "The third condition is that a geo metric proportion be observed in the imposition of a tax. . . . When the need is common (to all), all should he bur dened in common and, as far as possible, equally. This equality, I hold, must he conceived of as a geometric propor1 The Wealth of Nations, Book V, chap. 2, part. 2.

199 MARIANA:-POLITICAL ECONOMY tion, so that those who have greater resources pay more and those who have less pay less. Otherwise the common bur dens would be distributed not in formal, hut material equal ity, which would he the greatest inequality, as may be seen in the case of an infant and an adult man carrying equally heavy weights." 1 Molina maintains the same position. Ac cording to him, all should contribute according to their ability, so that the rich and the poor be not constrained to pay the same amount. The reason he gives is this: "The members of the State are bound to contribute towards the common good and the common needs according to the strength of each." 2 At this point de Lugo remarks that if the need were local, those to be benefited should be called upon first; and only if they could not pay all, would the rest of the country be obliged to aid them, because in such an event, the rule that the various members of the State must help each other is in force. The charges in question here are more in the nature of special assessments or local taxes for local needs, and therefore the principle of immediate benefit applies to them. Where general needs exist, all must contribute com mensurately with their means.

Two difficulties are advanced against this principle of just distribution: the general sales tax (Alcavala ), which seems to be at variance with equality, and tax exemption, apparently opposed to universality of taxation. How is this problem met by the Spanish Jesuits? 1 Tertia conditio, quae exigitur, est proportio geometrica in tributi impositione servanda: (ut scilicet, si ad necessitatem non omnibus communem, sed ali quorum imponitur, ii primo loco graventur ad quos necessitas illa spectat; iisque non potentibus, ab aliis exigatur, quatenus membra ejusdem corporis debf'nt sibi invicem subvenire.) Si vero necessitas est communis, omnes communiter et quoad fieri possit, aequaliter graventur. Aequalitas, inquam, aequalitate et proportione geometrica, ut ii, qui majores vires habent, plus solvant, et qui minores minus; alioquin non dstribuuntur onera communia aequaliter aequalitate formali, sed aequalitate materiali, quae est summa inaequalitas, ut si parvulo, et viro adulto aequale pond us singulis portandum imponatur. De Justitia et Jure, Disp. 36, sect. 2, n. 23.

2 Partes enim reipublicae juxta vires cujusque subvenire tenentur communi bono, necessitatibusque publicis. De Justitia et Jure, Tom. III, Disp. 668, n. 1. 200 THEORY OF TAXATION IV Molina, Suarez and de Lugo frankly admit that the gen eral sales tax appears to be contrary to the pri.nciple of equality because the poor are burdened more heavily by it than the rich. Although the wealthy will ordinarily buy more than the poor, yet proportionately to their means the poor are the heavier spenders. Furthermore, an indigent man may have a much larger family to support than his more fortunate neighbor, and so be much more heavily bur dened by a sales tax, whereas the moneyed landlord, deriv ing a great many articles from his farms, need buy very little. In spite of all these apparent injustices, scarcely anyone of the Spanish Jesuits condemns the general sales tax point blank, though Suarez would have it restricted to luxuries, and Lainez holds that it is unjust in so far as the necessaries of life are concerned. It must be noted, however, that Lainez speaks of this tax primarily as he found it in Venice, and is inclined to believe that it is more just in Spain.

1 Molina says that he would not venture to condemn the sales tax as unjust. He demonstrates that, as a matter of fact, people in general do not find the Alcavala unbearable, and he presents a number of considerations designed to mitigate to some extent the impression that it is not equi table. The tax is found everywhere, hut people do not com1 It is to be noted that Lainez is one of the first Jesuit writers to treat the subject of taxation. He was the second General of the Jesuit Order and played an important role as a theologian during the Council of Trent. Thus he lived in the very beginning of the period under consideration. Up to that time the great theologians hac! almost unanimously denounced the sales tax and the various other indirect charges, as R. Amberg has pointed out and as becomes clear also from the authorities quoted by our authors. It would seem that Lainez marks the turning point in the attitude of theologians towards indirect taxes.

:!\Iolina who is sometimes charged with being a little too favorably disposed towards the Spanish Court, finds a great many reasons to justify the general sales tax. Suarez would rather have it restricted to luxuries. De Lugo, who lived a generation later than Suarez, advances much the same arguments as Molina. It seems that by this time theologians generally admitted the defensibility of the Alcavala. 201 MARIANA:-POLITICAL ECONOMY plain hitterly ahout it; no concerted effort has ever been made to have it changed; and in point of fact, should it be changed into a tax on property, the opposition of the people would prove serious and its reintroduction would be de manded.! What reasons reconcile the people to this undoubtedly bur densome tax? P'aid as it is in small portions, at each pur chase of goods, the masses do not feel the sacrifice as keenly as they would if they had to pay a lump sum. This is in the nature of the third maxim of Adam Smith, viz., that "every tax ought to be levied at the time or in the manner which is most convenient for the contributor to pay it. . . .

Taxes upon such consumable goods as are articles of luxury, all are finally paid by the consumer, and generally in a manner that is very convenient for him. He pays them little by little, as he has occasion to buy the goods." 2 Though Smith, unlike Molina, does not defend the sales tax on the necessities of life, he invokes the same principle to justify the tax on luxuries as Molina does to justify the gen eral sales tax. This same reason,-convenience of pay ment,-we find advanced by Adolf Wagner;3 and it still holds good in our own days for purposes of expediency in some cases, and, to a certain extent, as a norm of taxation. 4, Molina believes that a direct tax by assessment would bring in its wake numerous brushes between the people and the royal assessors, and that enforcement of it would require a host of such officers. This, in turn, would be followed by 1 De Justitia et Jure, Tom. III, Disp. 668, n. 2.

9 The Wealth of Nations, Book V, chap. 2, part 2. a Finanzwissenschaft, Zweiter Teil, pp. 463-64. 'Charles J. Bullock also can justify indirect taxes on the ground of convenience of payment. He writes: "On the other hand, it is some advantage on the side of indirect taxes, that what they exact from the contributor is taken at a time and in a manner likely to be convenient to him. It is paid at a time when he has at any rate a payment to make; it causes, therefore, no additional trouble, nor (unless the tax be on necessaries) any incon venience but what is inseparable from the payment of the amount. Selected Readings in Public Finance, p. 419. 202 THEORY OF TAXATION additional taxes in order to supply the salaries of the numer ous taxing staff. Here, Molina points to another psychologi cal factor and applies the canon of economy. His last reason is based upon his experience as a moralist. An. assessment of each citizen would occasion great violence, injustice and hatred, and cause much uneasiness of conscience.

De Lugo holds that the general sales tax is ultimately horne hy the rich and not hy the poor. Although the less wealthy will have to pay a somewhat higher price because of the Alcavala, yet they will be reimbursed by higher wages and so these charges will burden not the laborer but the employer. The small farmers will not be heavily burdened by the sales tax because they will not only not have to buy many articles supplied by their farms, but will even sell a great part of their produce. 1 Suarez, de Lugo and Molina arrive finally at the conclu sion that the general sales tax can be justified from the standpoint of proportionate distribution, and that it observes justice in as far as it can be observed. 2 Should an apparent injustice occasionally result, this unavoidable evil is more than compensated for by other important considerations: convenience of payment, economy of collection, higher 1 Melius alii probant primo, quia servatur aequalitas, quantum servari potest, quia licet pauperes cogantur emere, plura tamen emunt divites, et nobiles una die propter majorem familiam, quam habent, et propter lautiorem victum, quo utuntur .... Secundo, quia si tributum imponendum esset taxando cujusque vires et facultates, et a singulis exigendo quod solvere possunt, difficilius id fieret, et magis gravarentur subditi propter dependentiam ab exactoribus, et ministris. . . . Tertio, quia si tributa exigerentur solum a mercatoribus ex iis, quae negotiationis causa afferunt vendenda, idem inconveniens reipsa sequeretur, cum mercatores soluta gabelIa carius postea merces venderent, quae ad gabellam cariores ipsis existunt; quare jam pat:peres ab illis ementes sentirent idem onus quod vitare intenditur. Quarto, quia, quod aliqui pauperes plura emant, per accidens est: nam plures etiam divites multo plura emunt; cum pauperes agricolae ex suis fructibus plerumque ea necessaria habeant .... Adde quinto, licet divites non solvant ali quando immediate tributum in ilIis rebus, sent ire tamen mediate idem onus: quia cum artifices, operarii, et alii, majori pretio comparent sibi victum propter tributa, quae in illis rebus solvunt; carius suas operas divitibus locant, ut lucrum et victum solitum sibi comparent. De Justitia II Jure, Disp. 36, sect. 2, n. 25. .

2 Denique ratio a priori est, quia cum aequalitas ilIa geometrica adeo difficile obtineri possit, nec consistat in indivisibili; illa via tenenda est, quae pauciora et minora incommoda habet, licet ali qua habeat, cum omnia prorsus vitari non possint, et usus docuit, minus turbari populum, quando haec tributa imponuntur, quam si a singulis pro mensura, et ratione propriae facultatis exigerentur. Ibid. 203 MARIANA:-POLITICAL ECONOMY wages and the prevention of many moral evils. Suarez tolerates that the sales tax be placed on the necessaries of life, only because otherwise the public revenues might not suffice for the needs of the State. This is an application of the canon of adequacy. May not the sales tax have been devised in order to reach, to a certain extent, the exempted classes of society? One might very well believe so. But both de Lugo and Molina vehemently protest against any attempt to deprive the clergy of its privilege by indirect taxation or by any other covert means. As a matter of fact, the clergy succeeded in remain ing free from absolutely all taxes, even the general sales tax and the various tariffs. Only when they engaged in business did they forfeit this privilege. The nobility, on the other hand, were obliged to subscribe to the indirect taxes.

Molina does not tell us why the clergy was free whilst the nobility was taxed, but merely mentions the fact without entering into any discussion of it. It may be of some interest here to remark that Spain is the only country in which the general sales tax has played any considerable role. It seems to come more naturally to the Latin races, but it is now fast disappearing. The fact that all of the Spanish Jesuits were enthusiastic monarchists, Mariana not excepted, may in part explain why they found so little fault with this undemocratic tax. In democratic countries it has always been rejected as a norm of taxation.1. v Another difficulty of fiscal justice presents itself in the exemption of the clergy and the nobility. What solution do the Spanish Jesuits offer? They deny that the exemption 1 Edwin R. A. Seligman, Studies in Public Finance, pp. 124-138. 204 THEORY OF TAXATION is unjust and maintain that it is, on the contrary, reasonable and necessary.

All of them are convinced that the Church and its mInIS ters should be free from the tax burden and all of them discuss the question at length. Some, de Lugo for instance, think that exemption was ordained by divine law. Molina, on the other hand, believes that it is suggested by divine but established hy human law. According to his view, the Church grants the State so many benefits of a higher order that it is only fair that its ministers he exempted from ma terial contributions. Mariana shows that Church property belongs to the poor, and that it was intended from the very, beginning to serve charitable purposes. In the event of a serious calamity the Church has always contributed gener ously, as for example in times of war against the infidels or other national enemies. Mariana thinks of Church property as being like a public depositary to he drawn upon in times of great national need. Thus the exemption of the Church is more apparent than real. 1 Mariana does, however, think that it would do no harm if high ecclesiastics were requested with the approbation of the Pope, to use a considerable portion of their revenues for embellishing the cities and erecting magnificent buildings and charitable institutions.

2 1 Deinde sacrati ordinis immunitates et jura intacta ut sint, curare Princeps debet .... Quo plura religioni ipse (Princeps) dederit, majora coeIo accipiet opes, honorem, potestatem .... Ego parvum quiddam ins tar eorum quae animo concipio, praesenti a mala putabam; ac veil em potius non tantum quae a majoribus data sunt, Episcopis non auferri, sed etiam firmissimas arces corum in fidem tradi. . . . Postremo sit persuasum, templorum divitias, sive vaSa sint aura et argento gravia, sive annui reditus, agrorum decumae, praedia, rei publicae esse in primis salutares .... Deinde sacerdotum copiis magna inopum multitudo alitur: qua potissimum causa a maj oribus sunt datae. . . . Qui ergo templorum capias et reditus otiosos esse disputant, et deb::re contendunt in meliores usus converti, nae ii opinione sua falsi magnum reipubJicae malum, si fides habeatur, parant. et credam potius non subtrahendis iis divitiis quaeri salutem, sed potius eura, ut ad pristinos usus alendosque pauperes convertantur .... Ad haec templorum ornamenta, reditus annui, aurum argentum que factum signatumque. quasi in quodam sacra aerario servantur ad supremos reipublicae casus: cum hostis bello lacessit victoria ferox formidabilisque, aut de religione sanctissima certamen est, non arbitror incommodum fere, si iis copiis respublicaad tuendarn publicam salutem utatur. De Rege, Lib. I, cap. 10, pp. 89-92.

~ Praesertim si qui honores militares suscipient. eccJesiarum praefecturam, aut omnino alios magistratus, iis necessitas imponatur, venia Pontificum si opus crit, redituum partern et proventuum in ornamenta publica insl1mewli: pontes instuurandi, inopibus et aegrotis hospitia extruendi, haud leve operaepretium existet. De Rege, Lib. III, cap. 10, p. 286. 205 MARIANA:-POUTICAL ECONOMY He is also ashamed to admit that not all ministers of the Church spend their means in the way intended hy the donors. The exemption of the nobility is just as vigorously de fended by our authors. They consider it only just that extraordinary service in the national wars should entitle heroes to some consonant reward. Grateful recognition of distinguished conduct is meet and fitting, is consequent upon the proper administration and dignity of the State. What hetter acknowledgment could be made than to exempt such henefactors and their descendants from taxation? The same privilege may likewise be granted to doctors, scholars and soldiers, in view of their importance to the general welfare and of the effect of their example upon young men qualified to devote themselves to these professions. On the whole, the Spanish Jesuits do not exert themselves trying to prove the legitimacy of the exemption of the nobility, hut take it for granted rather and refer to it repeatedly as offering con firmation of the justice of the ecclesiastical exemption.

Molina explains the justice of exemption hy saying that it is right and fitting to grant immunity when it is demanded by the good of the State. But it would he an injustice for a prince to exempt citizens from paying taxes without a legitimate reason, because it would not be consonant with distributive justice, would burden the rest of the community and would endanger the general good as a result of inade quate public revenues. 1 May the king sell tax exemption? Very seldom and only for very grave reasons. In cases of urgent necessity, when the people are unwilling or unable to bear a new tax, the king may grant tax freedom to a wealthy citizen in return 1 Fas expediensque id esse, quando ita postulat rei publicae bonum. . . . Absque legitima causa, nefas est principi eximere quosdam a tributorum soluti one. De Justitia et JUT6. Tom. III, Disp. 673, n. 1. 206 THEORY OF TAXATION for a large sum of money. This would be only a payment in advance of taxes, and would serve the general good of the community. It should, however, be granted only when all other means have failed. Otherwise the number of taxpayers would soon be materially reduced, the burden of the remainder of the community proportionately increased, and the sources of public revenue seriously diminished.

If taxes must be paid by all subjects of the king, how is the taxation of foreigners justifiable, since they are not subjects? Today we speak of a political and an economic adherence to a country, and say that either of these may be considered a proper basis for taxation. In the sixteenth and seventeenth centuries, political adherence was looked upon as the primary and proper foundation for paying taxes. Nevertheless, non-citizens were in most cases subject to the tax laws of the country in which they traded. ~Iolina is of the opinion that this situation is not ideal but only a neces sary evil. Still, as it exists everywhere, the charges will more or less compensate each other and thus restore justice. In treating the same problem, de Lugo advances four reasons why it may be lawful to tax non-subjects: If for eigners are not taxed, many natives will try to evade their obligations by pretending to be strangers or by buying through strangers. Foreigners enjoy the advantages of the improvements for which the tax returns have been used, and should, therefore, bear a reasonable part of the expense.

The Law of the Nations (Jus Gentium), it is true, gives for eigners freedom to trade with all nations that are not hos tile; yet this concession seems to imply, by custom at least, the obligation of sharing the public burdens of the place where they trade. The fact that all nations tax foreigners will compensate for all eventual inequity.l 1 Alii tamen communiter et verius dicunt, non esse damnandum usum illum exigendi ab 207 MARIANA:-POLITICAL ECONOMY The poor, according to de Lugo, should he taxfree. By the poor he means not only the class of beggars but also everyone of those who must spend all they· have for the support of their families. Suarez, a little stricter, would exempt only the extremely poor. The Spanish Jesuits, Mariana above all, maintain that taxes ought not to he higher than the resources of the coun try can bear without economic loss. This again is an appli cation of the canon of economy, for taxes are meant to help the general welfare of the nation and not to diminish its economic power. Mariana calls attention to the fact that in the northern part of Spain, which is to a very great extent mountainous and suffers frequently from droughts, poor farmers can often scarcely raise enough produce for their own use. It would, therefore, be unfair to expect of them high taxes; and, indeed, they should be supported by the State. Moreover, the tithes of the Church are already a heavy burden upon these hard working people, especially when they are tenants of wealthy land owners. 1 C. Besold, whom W. Roscher calls the greatest German political writer of the first half of the seventeenth century,2 gave due credit to the author of De Rege for calling atten tion to these facts. After quoting a long passage, he proves from it that taxes must be moderate and in accordance with exteris .•.. Probant primo, quia si exteri non solverent, multi ex incolis fingendo se exteros, vel per exteros emendo, non solverent. Secundo, quia exteri etiam plerumque fruuntur hono illo communi fontis, pontis, viae, propter quod tributum illi loco imponitur.

Tertio, quia'licet de jure gentium sit libera negotiandi facultas exteris, qui hostes non sunt; haec tamen communi usu non videtur concessa, nisi cum onere subeundi gravamina, quae ad regis sustentation em. et ad necessitatem loci illius communiter impo_ita sunt. Quarto, Quia incolae etiam hujus loci, quando ad alias· provincias, et locos conflttunt, solvnnt tributa illorum locorum: quare non fit inaequalitas, si incolae aliornm locorum cogantur, et ipsi solvere tributa hujus loci ex pacta tacito inter homines diversorum locorum jure gentium inito. De Justitia et Jure, Disp. 36, sect. 2, n. 28. 1 Atque illud sit persuasum, non convenire Hispaniam magnis vectigalibus gravari, Primum quoniam magnam ejus partem squalida siccitate loca, rupes horridae et saxa tenent. praesertim qua parte ad Septentrionem vergitur .... Saepe propter aeris siccitatem pluviarum inopia in aestate, annonae pen uri a laboramus, ut proventus labori et sumptibus non respondeat. grave sit novis tributis et magnis temporis calamitatem augere. Deinde ab aratoribus in Hispania et pastoribus, aliisque omnibus agricolis decumae fructuum omnium integra fide templis persolvuntur .... De ReQe, Lib. III, cap. 7, p. 266.

II Cf. W. Roscher, Geschichte det" Nationaliikonomik in Deutschland, p. 195. 208 THEORY OF TAXATION the economic power of a country. He calls Mari~na a wise and pious political philosopher even though his views on some matters may not be wholly sound. 1 Mariana mournfully remarks that the king listens to flat terers who care little for the welfare of the country but wish only to win the royal favor. They tell the sovereign that Spain, being a rich country, can bear just as heavy a tax as France and Italy. The pitiable conditions brought about in France by over-taxation should warn the king. Unfortunately the very opposite of this warning is appar ently proferred him: everyone who invents a new scheme to draw further revenues from the people is sure of a wel come at the Court, because the royal treasury is always on the verge of bankruptcy.2 The canons and principles thus stated by Spanish Jesuits, almost self-evident in our days, were by no means so gen erally understood a few decades ago. The astonishing thing is that most of them were known to the scholastics beginning with St. Thomas Aquinas,-that is, to men who lived some six or seven hundred years ago,-whereas the "Father of Political Economy" evidently did not know one of the most fundamental of them. The scholastics had clearly stated that ability to pay must be the norm for a just tax, and yet Adam Smith considers the amount of protection granted by the State to the citizen a proper norm.

3 His view prevailed until the end of the last century. The utter neglect of the 1 De Aerario Publico, cap. VII, n. 2. 2 Errant ergo qui Principibus nostris exemplo Italiae atque Galliae persuadent, majora ut tributa Hispanis imponant, beatissimae, ut praedicant, provinciae, omnibus bonis et felicitate affiuenti, vaniloqui videlicet, assentatores, fallaces, quorum magnus est numerus, certa pestis, quia blanda. . . . Ac ne illi quidem satis considerant, in quae mala fuerit praecipitatum in Gallia, praesertim ex quo tempore immensum regia vectigalia creverunt, nulloque consensu civium aucta a Regibus, pro potestate proque arbitratu sunt. De Rege, Lih. III, cap. 7, p. 267. 3 Wenn wir schliesslich noch die Behandlung des Besteuerungsgrundsatzes der Gleich miissigkeit bei den Scholastikern und bei A. Smith vergleichen, so muss es uns wirklich erstaunen, wie as moglich war, dass jene vollstiindig der Vergessenheit verfiel, wiihrend diese mit geradezu sklavischem Pythagoriiismus bewahrt wurde. R. Amberg, Die Steuer in dey Rechtsphilosophie dey S cholastiker, p. 125.

209 MARIANA:-POLITICAL ECONOMY study of scholasticism must account for the strange fact that economists had to rediscover what was taught uninterrupt edly by churchmen since the later Middle Ages. R. Amberg offers an explanation of why scholasticism was never consulted by students of Public Finance until the most recent past. He says that it had become customary among scholars to despise and repudiate scholastic philosophy with out making even the slightest effort to understand it.! Whether this was due to prejudice or to the fact that it re quires a good deal of patience to follow the reasoning of metaphysicians so different from modern thinkers, or whether the size of scholastic foliants deterred almost every one from attempting to make a serious study of them, the fact remains that the treasures hidden in scholasticism have only until very recently been sought" for. It is noteworthy that modern tax policy has more and more returned to the view held by the Spanish Jesuits, that justice must be the abiding principle in fiscal policy.

Moral Obligation to Pay Taxes Every just tax must comply with the three conditions dis cussed in the preceding pages. These being met, what obligation in turn does the tax imply? The Spanish Jesuits almost unanimously maintain that it obliges in conscience under the pain of mortal sin. In the case of fraudulent return, restitution must be made. The principal argument for this moral obligation is drawn from Holy Scripture. Christ's enemies had sent a delegation to ask of Him the delicate and much discussed question: 1 Uberhaupt ist est merkwiirdig, dass man die Schriften der Scholastiker bis jetzt nicht fur wert gehalten hat, ihnen irgend welche Beachtung zu schenken. Noch sonderbarer ist es, mit welcher Leichtfertigkeit man sich daran gewohnt hat, iiber alles, was irgendwie mit der Scholastik zusammenhangt, abzuurteilen und abzusprechen, ohne auch nur die elemen· tarste Kenntnis davon zu haben, ohne auch nur einen Versuch gemacht zu haben, sich in dieser uns fremden Ideenwelt lrgendwie zurechtzufinden. Ibid.

210 I .~ THEORY OF TAXATION " Is it lawful to give tribute to Caesar. ?" And Jesus answered them: "Render (therefore) to Caesar the things that are Caesar's, and to God the things that are God's." 1 St. Paul, in his Epistle to the Romans, was even more explicit. After having explained that all lawful au thority is from God, he concluded: "Render therefore to all men their dues: Tribute, to whom tribute is due, to whom custom, custom, fear to whom fear, honor to whom honor." 2 Other arguments are found in the documents of the Church and in the teaching of the Fathers. Some of the. later scholastics believe that the tax regulations have only the obligation of penal laws: that they only oblige either to compliance or to the payment of the penalty, that a tax must be paid only upon a direct order of the courts. This opinion is uncompromisingly rejected by the great Jesuit authors Molina, Suarez and de Lugo. The last explains that: "the tax is not designed to be paid as a penalty, but as a stipend due by reason of natural law to the prince for his support and for the public good." 3 Suarez declares the tax obligation to be binding "because it is a matter of jus tice and a most important point in regard to the common welfare; nay, it is morally necessary for the conservation and government of the State." 4 Molina's argument is, perhaps, the strongest and clearest.

The text has been cited previously in demonstration of his philosophic basis of taxation: "(Taxes) are due as things to he paid, according as the nature of the matter and the 1 Matthew, 22, 21. 2 Rom., 13, 7. 3 Ratio est clara, quia tributum non debetur ut poena, sed ut stipendium jure naturae debitum principi, ad suum statum et bonum publicum sustinendum. De Justitia et Jure, Disp. 36, sect. 4, n. 38. 4 Unde est tertia ratio, quia materia talium legum maxime postulat hujusmodi obliga· tionem, quia est materia justitiae, et in re gravissima, ac pertinente ad commune bonum: imo necessaria moraliter ad rei publicae conservationem et gubernationem. De Legibus, Lib. V, cap. 13, n. 12. 211 MARIANA:-POLITICAL ECONOMY obligation of the subjects to the State and to the sovereign require by virtue of the very institution of the State, that is, for the good of the State, for its conservation, administration and defense." 1 If, then, there be a grievous obligation in conscience to pay taxes, how is defraudation to be judged? When the tax is incontrovertibly just, defraudation is a mortal sin and forgiveness can be obtained only after restitution has been made. All of our authors agree on this point, since they reject, as we have noted, the penal character of the tax laws.

But if a tax transgres~es against anyone of the three "con ditions," it is unjust and does not bind in conscience. The injustice must, of course, be thoroughly evident and certain. This rule applies in the following and similar cases: a tax imposed by a nobleman without the consent of his sove reign; a-needless tax, or one substantially higher than nec essary; and a tax which violates the principle of distributive justice. Upon this point again there is perfect unanimity among the Spanish Jesuits. Very often it proves difficult to demonstrate that there is an evident injustice; and moreover the taxpayer is easily inclined to consider a tax unjust in order to avoid paying it. What is the individual citizen's obligation when he en tertains a serious doubt as to the justice of the tax? Here we find Suarez, Molina and de Lugo divided betwixt several opinions. Even when the doubt is purely negative, i.e., when the individual believes that the tax is unjust but is unable to advance a definite reason for his belief, the opinion of many scholastics is in favor of the subject. De Lugo is in clined to endorse this opinion, provided the individual tries to clear up his doubt in every possible manner. "When it 1 See page 184, footnote.

212 THEORY OF TAXATION is impossible to know or even to judge with probability as to the justice of the tax, I do not believe that the subject can be obliged to pay. The reason is that in case of doubt the burden of the proof lies with him who asks. And since it is the sovereign or the exactor who asks, with him lies the burden of proving that the tax is just." 1 When the doubt is positive, i.e., when the citizen has a solid reason for believing that the tax is unjust, de Lugo agrees with Sanchez and Lessius that he need not pay. He fortifies his opinion behind the fact that it is held by many authors and that even the defenders of the opposite view excuse the subject from any obligation when the payment of the tax would mean a serious harm to him. 2 Suarez' point of view is, on the whole, much more exact ing than de Lugo's. He maintains that in the case of a negative doubt the citizen is always obliged to pay, and that ordinarily he must also pay in the case of a positive doubt unless he can see no reason why the sovereign Inay impose the tax. s Molina differs from both Suarez and de Lugo. He be lieves that an old tax must be paid, even though one is not certain that it is just. This view is based upon the common supposition of the scholastics that an old tax is to be con sidered just until its injustice is definitely proved. Here the sovereign occupies the better of the two positions, "for in case of doubt the position of the possessing part is the 1 Quando igitur sciri non pote,t nee judicari etiam probabiliter, tributum esse justum.

non videtur obligandus subditus ad illud solvendum. Ratio est, quia in dubio semper onus probandi incumbit ei qui petit cum ergo princeps, vel e-,'actor tributi sit qui petit, ei incumbit onus probandi tributum esse justum. De Justitia et Jure, Disp. 36, sect. 6, n. 89. 2 Haec sunt de dubio negativo; nunc dicendum est de dubio positivo quando sunt rationes probabiles pro justitia. et pro injustitia tribl1ti, an possit subditlls illud non solvere. In quo casu negant aliqui posse non salvi .... Alii tamen verills nezant talem obligationem, sed dicunt, posse subditum amplecti opinionem probabilern cantrariam de injustitia tributi, et operari juxta illam non sol vendi. De Justitia et Jure. Disp. 36, sect. 6, n. 91. 3 Alia vera modo potest subditus ita opinari injustarn esse tributi impositionem. ut nihilorninus judicet contrarium esse etiam prohabile, et tunc censeo, non posse excl1sari ab obligatione lei"is propter illam probabilem opinionem. De Legibus, Lib. V, cap. 18, n. 20.

213 MARIANA:-POLITICAL ECONOMY better one." 1 Molina adds, however, that there must never previously have heen a doubt concerning the justice of such taxes, regardless of whether the king has actually heard the complaints of his people or not. For usually the many flatterers around the throne will fail to speak the truth concerning the feelings of the subjects, and the timidity of the people restrains them from voicing open and loud com plaints. Regarding new taxes Molina is of the opposite opinion: ""When it is not known for certain that they (the taxes) are just, there is no obligation in conscience. Thus the doctors generally affirm." In confirmation of this opinion he quotes the following passage from an ecclesiastical document: "'taxes are generally contrary to both civil and canon law." 2 Molina goes on to say that the sovereign has no right to impose taxes such as these, and that in doing so he sins against justice and is bound to make restitution. De Lugo maintains that the king may justly impose a tax only prob ably just, but that the people coincidentally could justly re fuse or avoid it. He applies the doctrine of prohabilism to the case.

These, in general, are the principles by which the moral obligation of paying taxes is to he determined. But all of our authors, Suarez not excepted, are forced to admit that in practice a decision is difficult in the extreme. As all of them are loyal royalists, they hardly dare to denounce any of the existing taxes, the great number and heavy burden of which would seem to indicate that they actually trans gressed the limits of justice. Molina, in particular, enters into a long discussion of this 1 In dubio melior est condicio possidentis. De Justitia et Jure, Tom. III, Disp. 674, n. 6. 2 Si non constat de eorum justitia, non deberi in conscientia. Ita affirmant doctorell communiter . . . . tributa regulariter esse contra jura, tum canonica, tum civilia. De Justitia It Jur6, Tom. III, Disp. 674, n. 7. 214 THEORY OF TAXATION suhject. He points out that Victoria called the tariffs simply "rohheries." Wnat, then, would he call them now, increased so enormously as they are? Molina admits, of course, that there may he new needs which partly justify new charges.

This he follows with a disquisition upon the sales tax, which, in the course of time, had increased from one-thirtieth to one-twentieth, and ultimately to one-tenth, of the business transacted. Lainez alone condemns the sales tax on neces saries of life as patently unjust, and sets down what ought to be the maximum of the sales tax for other commodities. It should not, he says, greatly exceed four per cent of the value of the goods sold. 1 This would seem to imply that the Spanish sales tax was excessive; but it must be borne in mind that at that time the Alcavala had not as yet heen in creased to one-tenth. Sotus and Victoria helieved that the sales tax should he paid only upon formal request, hut Molina held that the king required payment without request, as was indicated clearly hy the enormous penalties imposed upon defraudation. These penalties were unjust if payment had to be made only upon request.