PRINCIPLES OF TAXATION. 175 



does not apply to indirect taxes, and the person upon whom the 

 incidence of such taxation primarily falls may be regarded as ad- 

 vancing rather than paying the tax, which is ultimately paid by 

 a consumer, not as a tax, but as a part of the market price of a 

 commodity. 



In other words, the general effect if not the avowed object of 

 an indirect tax is to place its burden in a roundabout way on the 

 person who ultimately bears it. Taxes on imports, or customs 

 dues ; most internal revenue taxes ; " octroi " taxes, or taxes 

 levied by municipalities on commodities mainly articles of food 

 brought within their limits from without ; stamps and fees for 

 registering or verifying documents, are typical examples of in- 

 direct taxation. 



The objections to this form of taxation are so great as to 

 warrant their characterization as evils. In the first place, they 

 prevent the taxpayer from knowing what he pays, by mixing up 

 the price of an article with the tax, as has been already noticed. 

 Secondly, they enhance the cost of a commodity to the consumer 

 to a degree (often largely) in excess of the original burden of the 

 tax. Thus, if an importer of sugar, salt, wool, coal, or metals 

 pays taxes on these commodities when they enter the territory of 

 another country (as, for example, that of the United States), he 

 adds them to the first or invoice cost of the importation. On this 

 aggregate he calculates and adds interest and profits when he 

 sells to a wholesale dealer ; and this process is repeated by every 

 smaller dealer or retailer through whose hands the commodities 

 pass on their way to final consumption; and as the number of 

 such intermediaries is greatest in the case of articles sold by 

 small retailers, the final burden of the tax is greatest on the very 

 poor, whose necessities compel them to buy in very small quan- 

 tities.* There is thus a very real and close connection between 

 indirect taxation and pauperism. 



In dealing with the relative influence of direct and indirect 

 taxation, Mr. Gladstone, when Chancellor of the Exchequer, took 

 the position in a parliamentary discussion in 1859 that " the dis- 

 tinction between them involves the question between rich and 



* Some years since, at the instance of the writer, the late Charles L. Brace instituted 

 an examination to determine the difference in price to individual consumers of coal bought 

 in comparatively large and small quantities. He reported that as a rule, when coal could 

 be delivered at private residences in the city of New York (at the time when the investigation 

 was made) for four dollars and a half per ton, its cost to the people whose poverty com- 

 pelled its purchase by the " bucketful " was at least twelve dollars per ton. And yet when 

 subsequently a philanthropic capitalist proposed to remedy this grievance of the poor by 

 selling coal bought in small quantities at greatly reduced rates, his attempt did not meet 

 with the full approval of the people whom he desired to serve, by reason of an inference 

 by them that the project must in some way be a scheme for the promotion of private gain 

 rather than public good. 



