766 REPORT— 1888. 



proper principle is that each contributory should (live to the State in the proportion 

 in which he receives from the State ; and this proportion is not, as would at the 

 first aspect appear just, to be calculated either upon the still Jluid means, or 

 incomes, of the contributories, or upon their means solidified, and stored up as 

 capital. "What the citizen receives from the State is the fruition, or enjoyment, of 

 his means or resources under the State's guarantee ; but the perception of income, 

 ■whether in the shape of wages, of profit, or of rent, is not its fruition, or enjoy- 

 ment. To illustrate the meaning, let us reduce the problem to its simplest terms, 

 and suppose two members only of a political society, and that the labour of both 

 is equally valuable, which means that their contributions to the aggregate of the 

 means of enjoyment are equal. Let one, A, consume as fast as he produces, while 

 the other, B, forbears from consuming a moiety. A has under the State guarantee 

 double the fruition that B has. The burden of proof now lies upon whosoever 

 should asse-rt that their contributions to the State burdens should be alike. It 

 would perhaps be maintained that, notwithstanding the actual inequalities of 

 fruition, the potential, or facultative, fruition of both was equal, that it was open 

 to B to consume, and by consumption to enjoi/ equally with A. But, through the 

 abstinence of B, another party, C, comes upon the scene. B by his abstinence has 

 afibrded the means of enjoyment to C ; and 0, too, is a member of the political 

 society, and should therefore be a contributory to its burdens. But if the whole 

 contribution to the State had already been rendered by A and B, would escape 

 the burden altogether. This is the reductio ad ahsurdum of the taxation of 

 income. The taxation of destructive expenditure — that is, of consumption — entails 

 no absurdity ; but A, whose production and consumption equal each other ; B, 

 whose production exceeds his consumption ; and C, whom we may treat abstractedly 

 as a pure consumer, all contribute in the proportion of their fruition or enjoyment 

 under the State guarantee. 



But, if the contributions to the State ought not to be measured by the incomes 

 of the respective contributories, still less should they be graduated according to 

 their accumulated capitals. Capital is deposited, or solidified, income. Its end is 

 the generation of enlarged fluent income ; and income, whether origmal, that is, 

 generated by labour alone, or derivative, that is, generated by labour in con- 

 junction with capital, is not the end, but the means to the end, the end being ever 

 the fruition, or enjoyment, in the eventual expenditure of the income. By intro- 

 ducing capital we import another term, but a term which, in the order of causation, 

 precedes income, as income precedes consumption, or fruition. The order is 

 (a) capital, (6) income, (c) expenditure, (d) consumption or fruition. By imposing 

 a tax upon income you strike in the wrong place ; but by taxing capital you strike 

 still further from the mark. Only by assessing taxation upon consumption — that 

 is, upon the destructive expenditure by the members of the political society — do you 

 collect the contributions from the parties who ought to contribute, and in their due 

 proportions. That the characters which have been assigned severally to A, B, and C 

 may be filled in successive acts of the drama of society by the same persons, or by 

 persons succeeding to the same rights, makes no difierence to the argument. The 

 frugal B may be followed by a spendthrift heir, who dissipates B's accumulations. 

 The spendthrift would then, under a properly adjusted scheme of taxation, become 

 the contributory to the State charges in the proportion of his fruition, or of his 

 destructive expenditure. 



The State machine is not concerned to promote or foster either accumulation 

 or expenditure. Accumulation means, virtually, enjoyment postponed, or deferred ; 

 while consumption is enjoyment in act ; and the function of the State is to 

 guarantee the enjoyment and to maintain its neutrality between the present, or 

 actual, and the postponed, or deferred. But it is only by assessing its burdens in 

 the proportion of the destructive expenditure of the members of the political society 

 that it maintains its neutrality. By taxing income it imposes equal burdens upon 

 A the spendthrift and B the accumulator, unduly strengthening the motives 

 actuating A, and equally unduly weakening those actuating B — that is to say, 

 encouraging present at the cost of deferred enjoyment ; whereas, by taxing A andB 

 according to their consumption or destructive expenditure, A contributes in the pro- 



