The Express.
London, England, 1853-01-28 00:00:00

INCOME AND PROPERTY TAX.

TO TIP 3DITOI OP Till ZIPIIIBI.
SIE,—As the time approaches for the considera-
tion and decision of the House of Commons on the
important subject of Direct and Indirect Taxation,
it becomes desirable to snake known the various
opinions of able men upon it; and I. therefore, for-
ward to you an important paper, addressed to me,
on the question so often asked—" How can Sir
Hobert Peel's income tax be made more equitable ?"
Although differing in many points from the
writer, I nevertheless think his scheme will amply
repay perusal.
I remain, yours truly.
JOSEPH HUME.
Burnley Hall, Jan. 26, 1833.

OBSERVATIONS ON TILE QUESTION—BOW CAN
SIR ROBERT PEEL'S INCOME TAX BE MADE
MORE EQUITABLE ?
It is obvious that the full development of the free-
trade policy must lead to the progressive substitu-
tion of direct for indirect taxation. And hence the
importance of the question raised by Mr. Hume,
which may be stated in the words of Adam Smith :
"How can the subjects of a state contribute to the
support of the government as nearly as possible in
proportion to their respective abilities?"
The three modes which have been proposed to
effect this of are—by taxes on the production and
importation of commodities, by taxes on property,
and by taxes on income.
As to the first class of taxes, " those on the pro-
duction and importation of commodities," the great
objections are that they interfere with internal or
external trade—that they enhance the price of com-
modities far beyond the net amount actually received
from them, and that they lead to extensive smug-
gling and fraud.
As to "taxes on property," the objection is, that
in the case of the largest class of the community,
those who live by labour alone, their ability to pay
taxes is not measured by the amount of their pro-
perty, inasmuch as many, living from day to day on
large earnings, have no property at all. And this
objection cannot be removed by any of the plans for
considering wages as a species of life property, which
can be valued like an annuity, it being well known
that the wages of individuals and of trades undergo
changes according to laws entirely different from
those by which the value of an annuity is determined.
A " tax on income " rightly conceived is the real
solution of the proposed question, and is the solution
suggested by Adam Smith himself, for he says:—
" The abilities of the taxpayers are in proportion to
the revenue which they respectively enjoy under the
protection of the state."
Now, the revenue or income of a tax-payer, which
is the real measure of his ability to pay taxes, can be
reduced to four distinct elements:
Ist. The wages a man receives for his labour.
2nd. The profit he derives from the use of his
capital.
3rd. The rent he gets out of his land.
4th. The value of any property, whether real
ear moveable, which he obtains by gift or succession,
during the year.
Such is the scientific conception of income—such
also is the meaning attached to it by rny person who
prepares with any skill an annual ' profit and loss"
account, or an annual account of " income and ex-
penditure." It follows, therefore, that a perfect in-
come tax includes a tax on gifts and successions, as
well as a tax on wages, profits, and rents.
When it is asked, " How can Sir Robert Peel's
partial income tax (absurdly named an income and
property tax) be made more equitable ? " the answer
is plain. By extending it so as to include all classes
of Incomes ; viz. :
let. By extending it to all incomes from wave,
profits, and rent, below 1501., and exceeding 201. a
year.
2nd. By extending it to incomes front wages, pro-
fits, and rent in Ireland.
3rd. By extending it to the succession to freehold
property in land.
The succession to personal property is already
taxed at a higher rate than any other species of in-
come in the United Kingdom, by the probate and
lorry duties. But these duties, which are really
Maas on income, ought to be consolidated with the
Woos tax, and the rate of taxation equalised; and
then the extraordinary exemption of succession to
freehold property would have to be abolished, or
would be put in such a plain point of view as to ex-
pose the hollowness of the landlords' complaints of
peas: agricultural burdens.
The extension of Sir Robert Peel's income tax to
all kinds of income, would remove the complaints
which are now in some cases justly made against it
in its present state. Thus, a person who succeeds to
ea estate of 1,0001. a year in fee simple now pays
wily the same amount as an official with an annual
salary of 1,0001., namely, 301. a year—and this is
justly complained of. But, under a perfect income
tax, he would pay in the first year of his ownership
9 per cent. on 30,0001., the value of his estate, or
9001.; and in every subsequent year 3 per cent. on
the rent, or 301., equal to a perpetual payment of
901. a year, if he lived for ever, as the interest of
9001. would be 301. In the case of the longest life
die perm seseeeding to the freehold estate would
pay a great deal more than double the amount paid
by the person reoeiiril,oool. a year as wages.
None of the pro modifications of the existing
tax, such as Mr. eron's plan of taxing incomes
under Schedule (D) at three-fourths of the amount
Wed upon all other kinds of property, would be so
Ismarable to Incomes arising from wages as the
paid income tax.
The objection that persons on salaries are now
unfairly taxed, as compared with fundholders and
ether capitalists, has no foundation, as it arises from
overlooking that such capitalists are liable to probate
and legacy duties, which impose a greater burden on
incomes arising from succession than a perfect
income-tax would impose.
Nearly all the other difficulties which have been
suggested as objections to Sir Robert Peers income-
tax could be shown to be entirely inapplicable to a
perfect income-tax.
The true policy of taxation to be adopted by Bri-
tish statesmen should therefore be :
First—To substitute for the present probate and
legacy duties, an extension of the income-tax, so as
to include successions to personal property.
Secondly—An extension of the income-tax, to in-
clude successions to real property.
Thirdly—An extension of the income-tax to Ire-
land, and to all incomes above 201.
If, then, a perfect income-tax were thus con-
structed, the rate of taxation should be gradually
raised about 1 per cent. each year, commencing at
the present amount of 3 per cent., and, as a surplus
arose, indirect taxes should be gradually taken oIL
In repealing the indirect taxes, it wadi be maw
nary in the first to repeal stamps as sem
veyances and on the transfer of property, which itre
the real burdens on land, and also the assessed taxes,
as these taxes are put forward as the plea for
exempting successions to real property from taxation.
Then the duties on tea, sugar, tobacco, and wine,
should be reduced, so as to avoid all objection to ex-
tending the income tax to incomes below 1601.
After these, the changes should be in the following
order : To repeal
L Taxes on knowledge.
2. Duties on fire insurances.
3. Taxes on locomotion—railways, coaches, &c.
4. Taxes on law proceedings.
6. Receipt and other stamps.
6. Excise duties.
7. Customs duties.
The reduction of some of the customs duties damn
precede the removal of the tax on spirits, to paeans
the price of that article being lowered before the
prices of tea, coffee, cocoa, wine, and other articles
which enter into competition with it. The reasons
Ike the order of repear g the indirect taxes are so
_ 1 obvious that it is unnecessary to state them.
tin

Nate's OF TIE KIFFIEMBEIL—The P 01,41114 Herald
of December M onnliiro the following interesting informa-
tion relative to one tithe expeditions sent in search of Sir
John Franklin, Ar the sahty of which considerable anxiety
was beginning le be Mt, as no intelligence had been re-
ceived of it kr soessidevable time :—" The friends of Cap-
tain Cadihron, of her Britannia Majesty's ship Enterprise,
will he ilellAted to bear that he has been seen by moms
Amnion altive. This eater, it will be reoollected,went
is essreit of Ar John Franklin and his party, and wu sup-
posed to have been tattoo he had not been beard of for
sisligi two "
MOUT ORDUL—A notice just Mimed from the
Oseeral Post-o Mos announces that minor money order
cams will be opmed at Ballendine, county Mayo, served
from Team, and at Pettigo, county Donegal, served from
Enniskillen, cm the Ist February.