32 REPORT — 1876. 



rent, is the scientific division in labour between exemption and taxation 

 that a common measure of value determines. Wherever the point may be, 

 below it there is no interest-value, and hence ought to be no taxation ; and 

 it is above this point that in strictness the percentage deduction for outgoings 

 ought in every case to begin. 



Example 1. — A, a labourer, earns 30s. per week, an unmixed gross labour- 

 income. Assuming this sam to be only sufficient to meet the necessary 

 labour-outgoings, then the interest-value of the income wiU be nil. A's 

 income will be whoUy untaxable. 



Example 2. — B, a clerk or artisan, earns =£150 per year. Assuming, as 

 before, 30s. per week or .£78 per year, as the necessary labour-outgoings, 

 then the subtraction of this sum will mark the zero-point of the labour's 

 taxable income, and =£72 wiU be the margin to which alone the per- 

 centage deduction for outgoings ought . to be applied. Assuming this 

 deduction at 40 per cent, as before, we have £22 as such deduction, and 

 £44 as the labour's interest-value. B's returnable and taxable income 

 wiU be £44. 



A similar preliminary process of correction applies to aU higher labour- 

 incomes, the zero-point being determined by the amount fixed on as the 

 labour's necessary outgoings. 



9. Proposed new Valuation System intermediate to the Self-assessment and 

 Official Systems. — The practical working of a measure of value, like other 

 measures, has necessarily a relation to the persons by whom it is a,pplied. A 

 just measure, through careless or wrong application, may act unjustly ; but 

 unjust application is no argument for an unjust measure ; an unjust measure 

 even when rightly applied must act unjustly. In the income-tax, as now 

 arranged, with its five or six inconsistent measures of value, the valuation 

 for some of the chief schedules ranges between the loose liberties of self- 

 assessment and the inquisitorial stringency of ofiicial : the one system con- 

 scious of a radical injustice in the law, which it is itself called on to api^ly, 

 the other in total ignorance of the facts which the law covers, and both 

 working in antagonism to each other. In the valuation for probate duty we 

 have a third system, applied not by the interested individual nor by the 

 official, but by a third and independent party, authoritatively licensed, indeed, 

 by the Government, but selected by the individual, and hence whilst ne^itral 

 himself, having responsibilities to each. Under an equitable measure of 

 value, self-assessment might in the first instance exist as at present ; but in 

 cases of doubt Government might require the guarantee of such an independent 

 authority (licensed valuer, accountant, lawyer, acting as a semiofficial com- 

 missioner in income-tax) for a second evidence to the truth of the return, 

 reserving its own power of official examination as a last resort. At the 

 present time many firms do actually call in professional accountants to make 

 up their returns ; and with a growing sense of justice in the tax, such an 

 independent guarantee to the truth of the return might not improbably 

 become general, and might even acquire the force of a custom, 



COMPAKISON BETWEEN CaPITAL-VaLTJE AND InTEKEST-ValXJE. 



10. Capital-value and Interest-value equivcdent on a series of years, but not 

 for each year. — The two measures, capital-value and interest-value, are, as 

 before observed, on a series of years equivalent. Interest-value is capital- 

 value for a year. Capital-value is the present worth of interest-value for all 



