It accords more with our sense of justice to levy taxes according to ability to pay. This policy we follow in asking for Y. M. C. A. and Red Cross subscriptions, and even in urging the people to purchase government bonds. But there is also an economic justification for compelling the well-to-do to pay taxes out of proportion to what may appear to be the benefits derived. Clearly, the millionaire ought to contribute more than a laboring man to protect the country against foreign invasion. Both have, or ought to have, equal personal interests in preserving the sovereignty of the nation. In addition, the former has extensive property rights which he expects the government to protect. Enforced contribution according to ability, if carried into the realm of prices, would, however, lead to ridiculous results. To employ an economic term, it would destroy what we called in an earlier chapter the consumers' surplus.

Acceptance of the ability principle paves the way for two other considerations. Shall a tax be proportionate or progressive; that is, shall persons pay in exact proportion to their means, or shall the rate of pay increase with an increase in wealth ? To make our problem concrete let us suppose that we have under consideration the assessment of taxes against three individuals having property valued respectively at $1,000,000, $2000, and $500. A one per cent proportionate rate would produce $10,000, $20 and $5 in taxation, thus diminishing the wealth of these three to $990,000, $1980, and $495. The question is: Has each individual paid according to his ability? Is the sacrifice the same in the three cases ? One may mean merely the foregoing of a costly banquet; another, the loss of a comfort; while the third may mean sacrifice. To place the three on a more nearly equal basis progressive taxation is employed. Here, we may suppose, the individual with the lowest income pays one per cent, the next, two per cent, while the wealthiest of the three pays ten per cent. Then the amounts raised from the three would be $5, $40, and $100,000. The use of the progressive system has been confined very generally in this country to income and inheritance taxes, largely because it is there, according to an old saying, that "the goose can be plucked with the least squawk."