THE INCIDENCE OP TAXES 



119 



employed. This it will do in very different ways according to the 

 manner in which the tax is levied. 



If the tax be an ad valorem duty on rent, it will modify the 

 supply curve only between D and X. There will remain just as 

 much land as before capable of paying rates of interest less than 

 O M, but the quantity of land capable of paying the higher rates 

 will be diminished ; in other words, the rate of interest which the 

 poorest land worth cultivating pays will not be affected, for this 

 land pays no rent and remains untaxed hence no land will be 

 thrown out of cultivation, but the supply curve will be altered from 

 D X to D X', diminishing the volume representing rent, but leaving 

 the other quantities untouched ; hence any tax assessed on rent 

 v 



M 



tJ' 



Fi~ 4. 



is paid wholly by the landlord. The amount of the tax is the 

 volume standing on D X X'. It is curious to remark that this 

 tax in no way falls on the consumer. The tax on rent simply 

 diminishes the excess of value which some land has over others ; 

 no land is thrown out of cultivation, and no less capital employed 

 in production than before ; no one suffers but the landlord. If, 

 instead of being assessed on the rent, the tax is assessed on the 

 produce of the cultivation, the incidence of the tax will be greatly 

 modified. The cultivation of land will no longer be so profit- 

 able ; i.e. the returns from capital employed on the land will 

 be less ; in other words, the whole supply curve of the land will 

 be modified, falling everywhere if the produce taxed be that 

 which is produced on all qualities of land. Some land will fall 



