INCIDENCE OF TAXATION. 585 



hoard buys assistance for the defence of the remainder. That 

 is, he gives a part of the result of his industry to preserve the 

 balance, and this is the essence oftaxation, properly so-called. 

 Taxation may be for providing" police and military, for the 

 protection of life and property, for education given in the 

 hope that it will increase respect for the law, and thus reduce 

 the cost of poUce, or that it will increase the productiveness of 

 labour ; or it may be for payment for the performance of the 

 many functions of an administrative government, whereby 

 the convenience, safety, and general well-being of the tax- 

 payers are promoted. This taxation must come from the 

 accumulations of past industry and thrift. A tax, then, may 

 be defined as a part of the previously unconsumed, but con- 

 sumable, products of industry and thrift relinquished by the 

 owner to secure him in the enjoyment of the balance. It is 

 contended that whatever diversities of form taxation may 

 assume it will be found that in nltimate incidence every 

 continuous tax, every tax levied by instalments over a long 

 period of time, falls under this definition. 



There is a general law as regards old taxes which renders 

 unnecessary any consideration of the first of Adam Smith's 

 famous maxims, that, namely, in which he requires that taxes 

 be so imposed as to fall upon the several members of the 

 community in proportion to their means. It is held that the 

 total taxation continuously paid by any community foi'ms a 

 charge on production, and is deducted from the total product 

 of the co-operation of labour and capital before the division 

 of that product. 



It is im])urtant, firstly, to establish the truth of this law, 

 and to illustrate its practical operation ; and, secondly, to 

 show what an in)portant bearing its recognition in practice 

 would have upon the welfare of the working or wage-earning 

 classes of the community. 



Much consideration has been given by various writers on 

 taxation to the arrangements necessary to provide for the 

 observance of the fallacious axiom of Adam Smith, and for 

 the adjustment of the balance between direct and indirect 

 taxation. But that balance will adjust itself if legislative 

 changes are abstained from. The incidence of a newly- 

 imposed tax is quite difi'erent from that of an old tax nominally 

 the same. Professor Nicholson says truly : " It has been 

 found by experience that an old tax causes less inconvenience 

 than a new tax of smaller amount, a fact Avliich is so striking 

 in some cases as to have given rise to the saying that an old 



