Now it might be surmised that this problem of ways and means would be an easy one to solve. “Just raise the tax rate and get more money” someone may suggest. That betrays the existence of a very common impression, namely, that city tax rates have the sky as their limit. But the fact is quite otherwise. In most cases, to be sure, there is no legal limitation upon the amount of taxes which the city officials can exact from the people; the limit is a purely practical one. Most of the city’s revenue comes from taxes upon real property—on lands and buildings (see pp. 445-446). By raising the tax rate on such property additional revenue can be secured up to a certain point. But when the tax rate keeps on increasing year after year it finally reaches a level where it becomes an obstacle to the erection of new buildings; it deters new industries from coming to the city; it causes rents to rise and acts as a brake upon the expansion of business. Under such conditions the value of property stops rising and may even decline, so that further increases in the tax rate do not yield a proportionate revenue. The people, moreover, grow restive under the soaring tax rate on their homes; they manifest their displeasure by turning the elective city officials out of office and installing others who pledge themselves to cut the expenses down. Such pledges, as a matter of fact, can rarely be kept. Considerable economies are undoubtedly practicable in the government of all American cities without exception; but the big outlays are bound to go on increasing so long as the people keep making demands for more and better services. [Sidenote: Newer sources of revenue.] If more revenue must be had, how can it be best obtained? Taxes on property have now reached a point in many cities where they can hardly go much higher. Taxes on incomes are already levied by the nation and by some of the states; the cities can hardly look forward to laying a heavy tax on top of these. Some cities, notably Los Angeles, Cincinnati, and St. Louis are imposing business taxes—so much per year on every lawyer, doctor, merchant, dealer, broker, and so on, the rate varying in each case. Chicago obtains a considerable income from a wheel tax imposed on all automobiles which use the city streets. Everywhere the quest for new sources of revenue is being carried on earnestly but not with any great measure of success. One serious difficulty lies in the fact that some of the more lucrative sources have already been tapped by the national and state governments. Congress and the state legislatures are keenly on the scent for new revenues; wherever the opportunity appears, they seize it. In this way the range from which the cities may draw their income is gradually being narrowed. It can fairly be said, therefore, that the problem of paying its way is the most difficult of all the problems which confront the American city at the present time. General References