TAXES. 



presumed, even the poorest could afford : the 

 rich and the poor paid the same amount; and, 

 therefore, the greatest inequality prevailed. Real 

 property was early taken as a standard in dis- 

 tributing the taxes, as cultivated land, in civilised 

 countries, appeared to be the safest and most 

 substantial property. As this afforded to its pro- 

 prietors or cultivators a certain income, the an- 

 nual produce of the lands of those' who were 

 declared subject to taxation was estimated, and, 

 after this ratio, the tax was distributed on real pro 

 perty. Thus arose the land tax, in which, how- 

 ever, the gross and net produce of the lands were 

 seldom accurately distinguished ; and where it was 

 done, little dependence was to be put upon the 

 estimate itself, and still less on the maintenance of 

 this principle through the changes of income. As 

 the land tax was insufficient to furnish the neces- 

 sary revenue, other means were sought for, and the 

 closest attention was paid, particularly as the cir- 

 culation of money increased in civil society, to all 

 those quarters where money appeared. Wherever 

 money changed hands, as in sales, exchanges, in- 

 heritances, taxes were laid. Whoever desired to 

 obtain any favour from the public officers, was 

 obliged to purchase it with money. When property 

 was acquired, something must be relinquished. 

 Hence the long series of taxes on acquisition and 

 industry. As the income of the members of the 

 community did not yield so much as the state re- 

 quired, the attention of governments was directed 

 to expenditures ; and people were made to pay, 

 wherever their expenses could be estimated. Thus 

 taxes on consumption of every description were 

 established. When taxes began to be treated 

 scientifically, which was not till a long time after 

 the different kinds had been invented and intro- 

 duced, attempts were made to bring the whole 

 mass of the existing taxes under a general system. 

 All taxes may be arranged under the following 

 classes : taxes on the possession, on the acquisition, 

 or on the enjoyment of property. In order to judge 

 whether they are rightly distributed, it must first 

 be considered, whether they can be paid regularly 

 and continually from the net income or not. There 

 may be a possession which brings no gain at all, as 

 a library, a collection of pictures, &c. If an annual 

 tax is laid upon such property, it would sooner or 

 later consume the property, if it were to be paid 

 from it, and consequently, would contradict the 

 principles above laid down, that property should be 

 taxed only so far as it affords a regular income. In 

 a like way, acquisitions can be taxed, according to 

 the principles of political economy, only when they 

 are a permanent source of gain. If, therefore, any 

 one acquires an estate or a capital by purchase, ex- 

 change, &c., and taxes are laid upon such an acquisi- 

 tion, the tax is taken from the capital, that is, from 

 the means destined to produce profit. As far as 

 this happens, or is in danger of happening, the sys- 

 tem of taxation is defective. If, in fine, a tax is 

 laid on enjoyment, or the value of things enjoyed, 

 this can be justified only so far as he who purchases 

 or enjoys such things can afford the expense, from 

 an income which furnishes more than enough for 

 liis subsistence, and the source of which is not ne- 

 cessarily diminished by the tax. If we seek there- 

 fore, for the principle of the distribution of taxes, 

 which ought to serve, at the same time, as a rule 

 for judging-of the propriety of the distribution, this 

 ran be no other than the net income of the persons, 

 or the net produce of the property. Net income or 



net profit is that part of income or profit which re- 

 mains after the portion necessary for the mainte- 

 nance of the person, or the continuance of the pro- 

 perty which produced the income or the profit, has 

 been subtracted. An income and profit are pro- 

 duced either, 1. from land; 2. from capital; 3. 

 from labour. All taxes will be just and useful only 

 so far as they are a part of the net produce from 

 these sources, and are imposed and distributed after 

 this principle. But as it is difficult, and, in many 

 cases, impossible, in practice, to ascertain the net 

 revenue of every one, the politician must take dif- 

 ferent ways to find the just proportion. The first 

 way is direct to determine, from the statement of 

 the parties concerned, or from official estimation, 

 the net income of the persons, or the net produce 

 of the land, and to assess the taxes according to il.r 

 result. This kind of taxes is called direct. lint as 

 this mode leaves a large portion of net income;' 

 doubtful, their amount is sought for in an indirect 

 way. It is supposed, that he who receives more 

 than the amount at which he has rated hie in- 

 come, will consume and enjoy more than tliis 

 sum will warrant, and, in particular, that he will 

 enjoy certain articles, which the man of smaller 

 income consumes not at all, or not in equal quan- 

 tity. If now, the expense for articles for consump- 

 tion is taxed, an additional sum can be generally- 

 drawn from all those who pay already a direct tax 

 on income, not sufficient, however, to cover the 

 expenses of the state. This sum they can pay from 

 their net income, if their affairs are properly ar- 

 ranged. In this way, something more is obtained 

 from the net income of those who have concealed a 

 part, than they would have contributed if they had 

 been taxed merely according to their own statement. 

 These taxes are termed indirect, as they are calcu- 

 lated, like the others, on the net income, but only 

 in an indirect way. The art of reaching this net 

 income by taxes on consumption, or other indirect 

 taxes, still remains very imperfect. Its perfection 

 is, however, necessary, if the system of taxation is 

 to be established according to just principles. Ano- 

 ther signification is usually attached to the division 

 of taxes into direct and indirect. The mode in 

 which they are raised is made the principle of deno- 

 mination. By direct taxes are understood such as 

 are laid immediately on the consumers ; by indirect 

 taxes, such as are assessed on others in advance, who 

 are left to remunerate themselves from the rest of 

 the community. But this principle does not afford 

 a logically correct division : for the same tax can be 

 raised at one time directly, at another indirectly. 

 Thus all taxes of consumption may be raised as well 

 from those who consume the articles, as from the 

 tradesmen who deal in them. In like manner, many 

 articles of luxury are taxed directly. Nevertheless, 

 the taxes remain indirect, because the net income 

 only is taxed according to the extravagance of indi- 

 viduals. Taxes imposed on goods at the time of 

 their importation, are denominated customs, duties, 

 or imposts. Adam Smith mentions one objection 

 to this mode of raising revenue, as the importing 

 merchant must enhance the price of his goods, not 

 only by the amount of the duty advanced by him, 

 but also for interest, profit, and guarantee ol 

 that amount, so that the consumer must, in fact, 

 pay more than the tax. This objection is avoided 

 by an excise tax, which is levied on the goods in the 

 hands of the person who uses them, or at the time 

 of their coming into his hands. An annual excise is 

 sometimes levied upon articles of a durable natuie, 



