Principles of Political Economy and Taxation. 179 



not diminish the rate of profits, because if they did, the capital 

 would be transferred to other employments. 



As before, let r be the number of units produced by a total 

 capital c, (fixed and circulating), p the price of each unit. Then 

 pr = lw + y c: profits are ye. If the tax be a fraction t, y will 

 remain the same after its imposition. Let the price become p' ; 

 therefore 



p'r = lw + yc + tyc. 



Hence — = 1 + 7 — - — , 



p IW + yC 



the productions of those employments of capital in which profits 

 were taxed, would rise in price, compared with those in which 

 the tax was not applied. If money be not taxed, the money 

 prices of such commodities will rise. 



It has been seen, (Art. 12.) that if a person employ a fixed 

 capital c-lw, which is replaced in k years, and a circulating 

 capital lw in paying wages, we must have 



pr=lw+b+yc, where b= ^ y< f~ lw ) k , 



.1. 1"~ (1+7) 



in this case profits are yc. 



If we now suppose profits to be taxed, and money not to be 

 taxed, money prices will rise. Mr. Ricardo supposes that in this 

 case the money value of the profits will remain the same as be- 

 fore, (p. 272. 1st ed.). 



Therefore p'r = l w + b + ye + tyc ; 



p llC -rb-\-yc' 



Let the fixed capital be m times the circulating, or c-lw = mlw; 



hence c = (m + i) l w . Also let b = ^, where it is clear that d is 



greater as h is greater (see Art. 12.), then 



z2 



