PRESIDENTIAL ADDRESS. 235 



Central Africa to lands ready to pay for it and desiring to consume it for 

 useful purposes. For all time there would have arisen in the process an income 

 which would have gone to support in comfort those receiving it, and its surplus, 

 after this had been effected, would have served to add yet more miles of railway 

 and to bring yet more tons of useful produce. All this energy has been dis- 

 sipated in the manner indicated, and all that remains is the obligation of the 

 ' State ' for all time to pay interest on a debt which has been created. 



There is, as it seems to me, but one way to escape from the situation we 

 have created. No measure of confiscation, however disguised, will remove the 

 burden under which we lie. It may be decided to alter the incidence of the 

 burden from one set of shoulders to another. Any proposal of the kind must 

 have very careful and earnest consideration. If two men are journeying 

 together, one carrying a heavy pack and the other none, it may well be that 

 by dividing it they will i-each the end of their journey sooner than by one 

 carrying it all. But do not let us imagine that there is less to carry because it 

 is borne by two instead of one. 



It is sometimes said that all taxation is in the nature of confiscation. Is 

 this really a valid contention ? In the ordinary way, taxes are levied for services 

 rendered or to be rendered. It is indeed true that the tax is frequently not in 

 proportion to these services. There is good reason to hold the opinion that at 

 one time, if not now, the wage-eamer paid by means of indirect imposts, which 

 then were his only contribution to the revenue, an amount out of proportion to 

 his income. It cannot be doubted that, what with tax and super tax and, in 

 a certain measure, excess profits tax, the possessor of a large income pays much 

 in excess of his percentage share towards the revenue. In each of these cases 

 the excess payments smack of confiscation. 



If a really sound and equitable scheme of taxation could be devised each 

 taxable unit would contribute to the common fund raised for the purpose of the 

 Government an amount which would be arrived at after due allowance was 

 made for his services to the community and his ability to pay. A bachelor, 

 with no claim on him but to support himself without State aid, who had done 

 nothing to provide for a citizen to take his place in the fulness of time, might 

 be called upon to pay more than a man under obligjation to maintain a family 

 and supply by his children tlie means of carrying on the torch of progress. 



All kinds of refinements suggest themselves whieh show how diflScult it is 

 to give effect to the dictum that the amount of the tax should be regulated by 

 the 'ability to pay.' It might, for example, be suggested that, since the thrifty 

 man is better able to pay than the thriftless, some exemption should be granted 

 to the latter. A graduated income tax presents the hope of a isolution of the 

 problem. Professor Edgeworth in the Economic Journal of June 1919 deals 

 very elaborately with this question. He mentions the scheme proposed by 

 Professor Castle in 1901, and says : " Distinction may be claimed for it on the 

 following among other grounds : It is elementary, ' intelligible to the most 

 untaught capacity,' a great merit in a principle of currency, according to Mill, 

 and doubtless some merit in a principle of graduation." It may perhaps be 

 questioned whether the pages which follow this quotation are so easily ' in- 

 telligible to the most untaught capacity ' as INIill and the learned professor 

 suppose. We may also doubt whether a careful man would fully appreciate 

 the introduction into the equation of a modulus representing that particular 

 ground for exemption which would cause him to pay relatively more tax than 

 his less thrifty fellow. 



One of the chief objections of graduation seems to be the danger of gradually 

 increasing the steepness of the scale till the higher incomes would be taxed 

 out of existence and the revenue they produced disappear. This would no 

 dooibt bring its own remedy. The State needs a certain anmial revenue to 

 provide the service.? demanded by the community. If the result of taking much 

 the greater part of incomes over a certain amount ends by extinguishing these 

 the State will cease to derive the revenue on which it coimts. It must then 

 either reduce the tax on them till a point is reached at which they will continue 

 to exist, or it must increase the tax on all or some of the other incomes. Unless 

 It means to rush headlong into bankruptcy, it must find the point of equilibrium 

 at which its scheme of graduated taxation continues to produce the revenue 



