222 eeport — 1878. 



these outgoings, or costs, does not merely rest on the reason of the thing, 

 but in many cases is proved by actual precedent. The Income Tax Act 

 itself allows them in some cases, though it ignores them in others, both 

 recognition and non-recognition being equally haphazard and arbitrary. 

 It was recently stated by the Chancellor of the Exchequer, that deduction 

 for depreciation in ships and railways, though not expressly recognised 

 in law, were practically recognised in the assessment offices. Deprecia- 

 tion in machinery is now added by special enactment, whilst the Law 

 Courts have recently discovered that allowance for depreciation in mines 

 has always been the real though the hitherto hidden meaning of the Act 

 itself. Special clauses of the Act expressly allow cost of repairs and 

 renewals. The immemorial usage of calculating the profits of capital in 

 business, viz., that of valuation of stock at the beginning and end of the 

 business year, and the inclusion of the difference in the profit and loss 

 account, involves a distinct deduction of source's outgoings, and the 

 Act in so far as it recognises this usage, recognises and allows this de- 

 duction. Moreover in other instances to which the Act is partially or 

 wholly blind, precedents of practicability are not wanting. Deductions 

 from gross annual value, in order to obtain rateable value, have ever been 

 recognised in local taxation, though in the absence of a common measure 

 of value, in a variable and uncertain manner. The Metropolis Valuation 

 Act of 1869, " an Act to provide for uniformity in the assessment of rate- 

 able property in the Metropolis," and the various Valuation Bills proceed- 

 ing from it, are founded upon these deductions, to which they attempt to 

 give a uniform and common basis, and their appended schedules, if not 

 wholly accurate, are valuable precedents for direct taxation generally. In 

 these, lands Avithout buildings are allowed a deduction of ^V; w . itu 

 buildings not houses of ^; houses are allowed a deduction varying 

 according to their class from £ to £, mills and manufactories a deduction 

 of £, &c. : all these deductions representing the expenses to which the 

 several properties are liable, as necessary to " maintain the hereditament 

 in a state to command its rent." 



VII. In the case of labour, however, no deductions are allowed either 

 in practice or in legislation, and yet the income from the labour of men 

 is as subject to essential outgoings, costs of maintenance, depreciation, 

 exhaustibility, as the income from houses or from horses. A man's 

 labour, it is popularly said, is his capital, but if so, it is both a con- 

 sumable and perishable capital. Like the labour of a horse, to take the 

 previous example, it undergoes a daily exhaustion of power that has to 

 be supplied by food. As the horse has to be clothed and stabled, so the 

 productive labourer has to be clothed and housed. As the horse by 

 age undergoes a depreciation of its value, so by age the productive 

 labourer undergoes a similar depreciation, and as the work and value 

 of the horse finally disappears, so does the labour and value of the 

 labourer disappear also. As questions of economic valuation, the cases 

 of the working horse and working man, be his work mental or manual, 

 are precisely analogous, and the outgoings of the labour's value that are 

 capable of calculation and allowance in one case, are capable of calculation 

 and allowance in the other. The calculation in the case of horses, is the 

 necessary condition of maintaining a business in horses. A job-master, 

 for example, may receive from the hire of a pair of horses worth £200, 

 which he supplies with food, stabling, and attendance, full £200 a year. 

 The Income Tax assessment even, would scarcely venture to charge such 



