ON THE ASSESSMENT OF DIRECT TAXATION. 29 



incidents are not as a matter of practice uniformly included, and the valutitiou, 

 founded upon unfixed conditions, can fix nothing ; its possibilities of variation 

 are coextensive with those of free contract itself, and hence, being absolutely 

 unrestricted, as a measure it must be inherently unfit. 



4. Exemplified in incomes of Income-tax. — Such valuations, some tempering 

 effect of deductions notwithstanding, have been those ol' local taxation ; and 

 hence the local chaos which Mr. Sclater-Booth's bill was the last attempt to 

 reduce to order. 8uch also, without any tempering influence, are the 

 valuations of income under the present income-tax. In this latter the 

 returnable and taxable incomes of interest, land-rent, house-rent, royalties, 

 wages, including professional fees and salaries, are the considerations that 

 are paid for the uses of principal monies, land, houses, mines, and labour 

 respectively. Interest, however, is the consideration paid for the use of the 

 principal, neither user nor owner being subject to any outgoings. Land-rent 

 is the consideration paid for the use of land, the user bearing almost all 

 outgoings. House-rent is the consideration paid for the use of houses, the 

 owner and user sharing the outgoings in various proportions. The owner 

 also largely bears outgoings in the contract of mines and royalties ; he wholly 

 bears them, as a rule, in that of labour and wages. Moreover these out- 

 goings vary according to the nature of the thing ; they may vary from zero 

 up to 40 or 50 per cent., or even more, of the gross production. It is these 

 differences that give rise to the various characteristics of incomes, as gross, 

 net, certain, precarious, terminable, permanent, nominal, real. All, indeed, 

 are in the catalogue of considerations paid ; all are so-called incomes 

 received, but only 



" As hounds and greyhounds, mongrels, spaniels, curs, 

 Shoughs, water-rugs, and demi-wolves are cleped 

 All by the name ot dogs." 



The true account " distinguishes " we are told, and gives to each " particular 

 addition : " the measure of incomes, too, that lays claim to scientific truth 

 must do the same, and to the " bill that writes them all alike " and taxes 

 them aU ahke, must add natural differences and just discrimination. 



5. Usable value specialized and determined as Interest-value. By consis- 

 tent deduction of outgoings. Interest-value as the common measure required. 



And if the cause of these inequalities of valuation be rightly stated, the dis- 

 covery of such measure ought not to be difficult. As the inequalities arise 

 from the different conditions in respect to outgoings under which the various 

 incomes are calculated, the remedy must be the assimilation of these condi- 

 tions ; and the case of principal and interest, which in one aspect may be 

 regarded as a common expression of sources and uses generally, may be 

 employed as a precedent. Interest, as before said, is the income received 

 from a thing free of outgoings. It leaves the thing or its capital value 

 unimpaired. The extension of this idea to revenues or incomes in general 



is simply the universal deduction from them of their productive outgoings 



equivalent to the general restoration of the capital-values of their respective 

 sources. Under such a regime, returnable and taxable income would not be 

 land-rent, house-rent, mine-royalties, labour-wages ; but land-rent minus 

 land-outgoings, house-rent minus house-outgoings, mine-roj'alties minus 

 mine-outgoings, labour-wages mimis labour-outgoings ; and similarly with 

 terminable annuities and the profits of business, the outgoings, however, 

 being in all cases only the necessari/ ones of the production. The result thus 

 obtained would be what by analogy Ave may call the interest-value of the 

 various sources ; and such interest-value of land, of labour, of houses, of 



