ON A COMMON MEASURE OF VALUE IN DIRECT TAXATION. 



223 



a capitalist with an income of £200 a year for each pair of horses thus 

 let ; he would he allowed a deduction for the food, stabling, and hired 

 attendance. But the horses in the course of half a dozen years are worn 

 out, and have to be replaced, and he is allowed a deduction for this 

 expense also, if not in the shape of a fund annually put by for deprecia- 

 tion, at any rate in the shape of cost for resupply of diminished stock. 

 The Income Tax assessment, however, does charge in this manner the 

 labour of the capitalist himself, and thus not only is the man of industry 

 assessed on powers in his possession on which the man of idleness is not 

 assessed at all, but he is assessed on the gross receipts of these powers, 

 whilst their necessary expenditure, with the exception of the small in- 

 surance allowance, is absolutely ignored. 



VIII. As an individual's labour is thus a possession of limited and 

 uncertain duration, and subject to an annual expenditure for maintenance, 

 the true mode of valuing its income would be to regard it as a terminable 

 annuity, subject to an annual cost. In this aspect the amount of this 

 annuity would be that of the labour income at present returned, its term 

 the average labour period, and the annual cost that of the labour's main- 

 tenance. This annual cost, which would in general be expressible as 

 some proportion or percentage of the income, added to the annual fund 

 necessary to replace the capital of the annuity, would be the deduction 

 required for finding the labour's interest value, or taxable income. With 

 the requisite statistics, the calculation of this deduction is a question of 

 arithmetic. By a witness in the Hume Committee, it was stated as ^ of 

 the present assessable labour income, just as the deduction in mills and 

 manufactories is given as ^, and that of certain classes of houses as ^ of 

 their respective rents, and this, if not the exaot truth, must be a close ap- 

 proximation to it. A summary of these deductions is presented in the 

 following schedule, and the general adoption of the single principle they 

 illustrate would secure the immense advantage of a uniform plan of 

 assessment throughout both local and imperial direct taxation. 



Schedule of an Assessment of Incomes according to their Interest-value, the 

 Principal-value of each Source being maintained by deduction of all 

 Essential Outgoings. 



SOURCES OF INCOME. 



PROPERTY. 



1. Land, according to presence or absence of buildings 



2. Houses and buildings, according to class 



3. Mines and quarries, according to class 



4. Mills and manufactories, including blast and 



smelting furnaces and kilns 



5. Moneys invested in Exchequer Bills and Bonds, 



Perpetual Annuities, or Loans 



6. Moneys invested in Terminable Annuities 



7. Railways, Canals, Docks, Tolls, Waterworks, and 



Gasworks 



8. Ships, vehicles, machinery, trade fixtures, horses, 



stock, and other forms of capital, whether 

 fixed or circulating 



Deduction per cent. 



or proportion 



From 5 to 10 or i to ^ 



Prom 16f to 25 or £ to £ 



■ to \ 



From 10 to 20 or ^ 



331 or i 



Nil 



Sufficient to restore capital 



To be determined in each case 

 _ according to the ordinary rules of 

 valuation for stock taking and 

 balance sheets. 



