ON THE ASSESSMENT Ol' UIIIKCT TAXATION. 31 



of business and professional incomes, with a varying percentage deduction 

 according to the average proportion of capital in each class, has been pro- 

 posed ; but it may be doubted if the second objection has any just foundation. 

 That the assessment of an income from conjoint sources does not necessarily 

 involve an official return of these sources, may be seen by looking to the 

 return of the income of capital or stock itself, as exemplified in all large 

 trading companies. This income, regarded in the concrete, consists of the 

 conjoint incomes from houses, ships, machinery, stock, trade fixtures, all of 

 which incomes having diiferent outgoings, are singly and differently assessed 

 by the owner, but all of which are united, without statement of particulars, 

 in one common official return. What is practicable, however, with the 

 incomes (derived, say, from horse labour plus machinery) is also practicable 

 with those derived from human labour plus capital generally. Doubtless, in 

 order to value the labour-income separately from the cajntal-income, the two 

 must be separately known to the valuer, but not, therefore, separately 

 returned to the Government unless Government undertakes the work of 

 accountant. Tlie distinction between the two (the one technically known 

 as profits, the other as interest) is a primary distinction in book-keeping 

 usually given in every profit and loss account. Capital being [known (and 

 this knowledge is as necessary to the preparation of an accurate return under 

 the present system as to that under the proposed one), its interest subtracted 

 from the mixed income will give the technical profits, gross labour-income, 

 or gross wages of the capitalist. The deduction of labour-outgoings from 

 the labour-income will give the labour's interest-value, which, j^lus the 

 interest of the capital, will be the interest-value or returnable income of the 

 business or profession. 



Example 1. — A (a barrister, physician, or salaried officer) has ^1000 a year, 

 an unmixed gross labour- income. Assuming, c.(/., 40 per cent, to be 

 the average labour-outgoings for risk, maintenance, and " depreciation," 

 the deduction will be ,£400 and the interest-value ,£600. A's returnable 

 and taxable income will be ^600. 



Examjile 2. — B (a solicitor or general medical practitioner) has ^2000 capital 

 in his practice, and a gross income as now returnable of £1000 a vear, 

 the joint result of his personal labour and his cajjital. Interest bein"- 

 reckoned at 5 per cent., £100 will be the interest-value of his capital, 

 and £900 the gross income, wages, or so-called jorofits of his labour. 

 The deduction of 40 per cent, from this for labour-outgoings leaves £540 

 as the labour's interest-value, which, jj?«s £100 as the interest of capital, 

 gives £640 as the interest-value of his practice. B's returnable and 

 taxable income will be thus £640. 



Example 3. — C (a merchant, manufactnrer, or shopkeeper), having a capital of 

 £10,000 in his business, has a gross income of £1000 a year, the joint 

 result of his cajntal and personal labour. Here, under the former 

 suppositions, the interest of his capital will be £500, and the '-ross 

 income of his labour wiU be £500. Deducting 40 per cent, for labour- 

 outgoings, as before, we obtain £300 as the labour's interest- value, 

 which, ^j/i(s the interest of the capital, equals £800, the interest-value 

 of the business. C's returnable and taxable income will be £800. 



Zero-p)oint of Direct Taxation. — In the remuneration of labour, as we 

 descend in the scale, there must be a point at which income and outgoings 

 balance, and at which, therefore, interest-value or real profit is zero. This 

 important point in labour, analogous in land to the commencing point of 



