TAX 



112 



TAX 



A lax upon the Rros rent of land would fall upon the 

 Undloid, and would be in fact a tax upon hi* annual in- 

 i-.iinr. and as such would lall with undue seventy u]>on 

 liiin. unlev. ollu-r classes of the community should be liable 



loportionatc deduction from their respective in. 

 for the benefit of the state. This brings us to consider the 

 iiency of a general tax upon nil men:: 



As th>- object of taxation should hi- to obtain from each 

 individual in a state a contribution to ilu- expenses of 

 government in proportion to his means ; and as, in what - 

 ionn the tax maybe levied. tin 1 contribution should 

 be paid in every case from income, and not from capital, 

 the simplest ami most equitable mode of taxation would 

 appear to be that which, after assessing the annual income 

 of cadi person m all sources, should take from 



him, directly, a. certain proportion of his income as Ills 

 share of the' general contribution. Such a tax, equitably 

 levied, would appear to agree in theory with all the four 

 maxims of Adam Smith; but practical fy, every tax upon 

 income must abound in inequalities, in uncertainty, and 

 in great personal hardships and inconvenience. 



In onler to make such a tax fall equally upon all, in the 

 first place, the assessment must be equal. But how is this 

 to be effected? By the voluntary statement of each per- 

 son, or by investigation and proof? If by the former 

 means, the equality of the tax would depend upon the 

 honesty of parties placed under a temptation to hi' dis- 

 honest : the least scrupulous part of the community would 

 be taxed lightly, and the conscientious would bear the 

 main burthen of the tax. If by the latter means, viz., by 

 investigation and proof, the dishonest still have an advan- 

 tage over the conscientious: because income arising from 

 some sources, being capable of direct assessment, cannot 

 be concealed ; while other descriptions of income arc often 

 known only to the possessor, upon whose declaration alone, 

 in such cases, reliance must be placed. 



But supposing that either by declaration or by proof, or 

 by both combined, the actual income of each individual 

 could be ascertained, the mere income of persons is a most 

 fallacious test of their means or ability to bear taxation. 

 One man has a fee-simple estate in land, or money in the 

 funds, producing an income of 1000/. a year, which will 

 descend to his children after his death ; another, by a 

 laborious and uncertain profession, also obtains an annual 

 income of 1000/., dependent not only upon his life, hut upon 

 his health and a thousand accidents. The annual incomes 

 of these two men are the same, but their circumstances 

 are most dissimilar. Before the latter could be placed in 

 the same position as the former, he must have an income 

 enough to enable him to insure his life for a sum of 

 which the interest would be HKH)/. a year, and still have 

 1000/. left to spend annually, alter the payment of the 

 premium. But even then, if lie should lose Ins health, his 

 present income would fail him, lie would not be able to 

 continue the insurance, nnd his position therefore would 

 still be more precarious than that of the proprietor of land 

 or funded property. Yet these two men, with means so 

 unequal, would be assessed alike, and charged with equal 

 contributions. But suppose that, instead of insuring his 

 life, the professional man should save half his income 

 every year, he would still be charged upon the whole, and 

 thus his cnjuldl as well as his income would be taxed. 



The case of annuitants also may he instanced as one, 

 amongst numerous others, of peculiar inequality. One 

 person invests his money in permanent securities, and 

 retains his capital, but denvc~ a small income, and there- 

 fore contributes a proportionally small rate of tax : another 

 purchases an annuity, and parts with his capital; but as 

 his income is much larger than that of the capitalist, he 

 pays a higher tax. At first sight this may appear a just 

 arrangement ; but in fact not only the income of the annui- 

 tant is taxed, but also his capital ; for that which is taxed 

 as his income is derived partly from the interest of his pur- 

 chase-money, and partly from an annual repayment of a 

 portion of Ins principal. 



These and many other evident cases of inequality can 



scarcely be questioned ; but it is alleged that other taxes 



preiis with as much inequality upon different classes of 



penon*. and that no attempts an- made to cqiiali/e their 



preuure, as the causes exist in the circumstances of the 



ie. Hud not in the nature of the laxe-. 1'ilfs 



ol. ui.. p. 0.) It is said that ti taxes 



fleet the professional man to the same extent as the man 



of property. Diere is however this essential differ 

 between taxes upon income and taxes upon expenditure : 

 the former are compulsory, Un- 

 paid or avoided at the option of each individual. If a man 

 lie saving money, an incon. s upun his accruing 



capital : a tax upon expenditure is levied upon that portion 

 of his income only which he thinks it prudent to spend. 



To smooth in some degree the inequalities of an income- 

 tax . 1st. the annual premiums on policies of insin. 

 should not be reckoned as income in the assessment. 

 being clearly capital, and the payments being no h 

 optional, as the insurance could not be dUcont. 

 without loss ; this provision was made by Mr. Pitt in i. 

 'Jndly, incomes arising from realized property should be 

 at a higher rate than the profits of trades and 

 professions : iinlly. annuitants should be rated on such 

 terms a.s to avoid the assessment of any portion of their 

 capital as part of their income : -It lily, all persons should 

 be liable to the tax. whatever may be the amount of their 

 incom 



In addition to the unequal pressure of an incom 

 which cannot be altogether corrected by any expedients. 

 there is much uncertainly in the assessment of certain 



s of persons. The' vicissitudes of trade, bad debts. 

 or deferred payments, render the incomes of commercial 

 and professional men very uncertain ; and nominal income 

 therefore, which afterwards cannot be rcali/cd. may be 

 charged with the tax. 



But the last and strongest of the objections to an 

 income-tax is the inquisitorial nature of the investigation 

 into the affairs of all men. which is 



statement of their incomes. This objection indeed is 

 treated lightly by some ; but by the mass of the contri- 

 butors 'it is considered, beyond all question, as the mo-t 

 inconvenient and unseasonable quality of an incom > 

 Even if the exposure of a man's affairs could do him no 

 possible injury, yet as an offence to his feelings, or even 

 caprice, it is a hardship which is not involved in the pay- 

 ment of other taxes. How many persons are anxious to 

 conceal the amount of their wealth:' It may be foolish ; 

 but they certainly must have strong motives for conceal- 

 ing that which most others are proud of displaying. Then 

 who cannot sympathise with the feelings of an honest man 

 who conceals the extent of his poverty, ami. by self-denial 

 and hard economy, is still enabled to bear up against ad- 

 :\ ? It is in vain to deny, what all men feel, that the 

 appearance of poverty does degrade a man in tin- ej 

 other-. : and the feelings of irood men ought to be respected. 

 But apart from matters of feeling, injury of a real cha 

 is also inflicted upon indiv iduals by an exposure of their 

 means and sources of income. Mercantile men. from the 

 dread cX' competition, take pains to conceal from others. 



iully if in the same business, the application of then- 

 capital, the rate of profit realized, their connections, ami 

 their credit, all of which must be disclosed, pcihaps to 



-.-lions injury, when there is an investigation of their 

 profits. 

 For these reasons, the mode of collecting the income 



tax certainly cannot he approved of as being ' most likely 

 to be convenient to the contributor.' It- gcm-ial unpopu- 

 larity when in operation is the best proof of its hardship 

 and inconvenience. I'pon the whole, a tax upon income is 

 so difficult to adjust equitably to the means ol' indivi.i 

 and the mode of collection is neccssaiih liable to such 

 strong objection, that, if icsurtcd to at all, it should I 

 served for extraordinary occasions of stale necessity or 

 danger, when ordinary sources of revenue cannot safely be 

 relied on. 



The English assessed taxes have as few objections in 

 principle as most modes of direct taxation. AVith an 

 equitable assessment and special exemptions in certain 

 cases, they are capable of being made to bear a tolciabU 

 just proportion to the incomes of the individuals paving 

 them. They share, however, in the general unpopularity 

 of all direct taxes, and it cannot be denied that they often 

 prc-s unequally upon particular : The numl 



windows in a house is a \ei\ imperfect c: it. -non of its 

 annual value, and in our opinion the house-tax which has 

 been removed was far prcfciable, in principle, to the win- 

 dow-duty. \vluch is still retained. The inequalities in the. 

 assessments were undeniable: but these miu'lit have been 

 :,-d by caieful valuation. 1'nder onlii:ar\ circum- 

 stances, a tax upon houses will fall upon the occupier, 



