ON THE ASSESSMENT OF DIRECT TAXATION. 33 



years. But though the two measures are thus equivalent ou an average of 

 years, they are not equivalent for each specific year. Interest-value measures 

 the gains of capital for one year, and capital-value measures its gains for 

 that year, with the expectant or probable gain of future years added. As, 

 however, national gain for any year has, as a rule, the closest relation to the 

 national expenses for tliat year, the interest-value is a more specific measure 

 for annual taxation than the capital-value ; and this is probably the reason 

 that has imconsciously led to the adoption of an annual-value measure, both 

 in local and imperial taxation, in preference to one of capital or perpetual 

 value. 



Capital-value in comparative relation to things and to tenures generalli/. — 

 Measures practically equivalent may, however, through differences of appli- 

 cation, give contrary results ; and of this the two measures in question afford 

 illustrations. Taxation, according to capital-value, may look either to the 

 sources, things, or objects owned, or to the rights and tenures of their 

 owners — to the land, labour, or stock possessed, or to the- freehold, leasehold, 

 life-tenancy, or jointure, as the case may be, of the possessors. Prima facie 

 it would appear that as the value of the tenures of a thing, however manifold, 

 can be neither more nor less than the value of the thing itself, the results of 

 the scientific capitalization of the tAvo should be identical. As a matter 

 of fact, however, this has not been admitted to be the case ; and it is on the 

 question of tenures that the deepest controversies of the income-tax have 

 arisen. 



Capital-value in relation to terminahle tenures. — As the capital-value of a 

 limited tenure in an estate, for example, is less than that of a permanent 

 one, its taxation, it is argued, ought to be less, and therefore it ought to pay 

 at a lower rate. Putting aside for a moment the question of the truth of 

 this inferejico, it is evident that its enforcement would make an estate's 

 taxation vary with the character of its tenure, thus giving power to the 

 subject to alter taxation by altering tenure, and that to almost any extent. 

 To avoid this it has been proposed to derive the whole tax from the estate 

 as at present, but to levy on the limited tenure according to its capital-value, 

 and to make the reversion liable for the balance. 



Terminalility of tenure does not influence the Annual Tax. — "Without dis- 

 cussing the administrative difficulties of this view, it may be questioned 

 whether such a view be a logical deduction from the principle of taxing 

 tenures according to their capital-value. Assuming that a limited tenure in 

 an estate ought to pay less than a permanent one, with reference to its 

 capitalized value, it would not therefore follow that it ought to pay at a lower 

 annual rate. Be the tenure long or short, the estate for any given year is 

 the same, the value for that one year's tenure is the same, the government 

 protection afforded to it for that year is the same, and hence it would appear 

 that the payment for each year ought to be the same also. But if each year's 

 payments be the same in both cases, the total payments are not therefore 

 equal ; the limited tenure pays only for a limited time, whilst the perpetual 

 tenure pays for all time ; and if these payments bo aggregated it will be found 

 that their amounts are in exact proportion to the capital-values of the 

 respective tenures. Should it be said that the reversioner, having interests 

 in the good government of the present, ought therefore to contribute according 

 to the value of these interests, the reply is that the present possessor has been 

 the reversioner of the past, and has had similar interests in the good govern- 

 ment of the past. If, therefore, i)resent possession has a claim on the future, 

 it owes a debt to the past ; and it may be mathematically shown, what 



1876. D 



