The Express.
London, England, 1851-12-30 00:00:00

THE INCOME-TAX AND THE INSTITUTE

OF ACTUARIES.

Yesterday evening Mr. Charles itllicoe, ono of the
eice-presidents, read a paper before the members of this
society, at their rooms, No. 12, Chatham-place, Illackfriars,
e On the iuequitable operation of the property and income-
tar enactments as regards life and other interests; and on
the princinles by which direct taxation should be regu-
lated." The institution is one of a private nature, but by
the courtesy of its officers we are enabled to lay the sub-
stance of Mr. Jellicoses interesting observations before our
readers.
Mr. JELLICOE (who occupied the chair) ssid—The
mode in which the property and lactose-tax of this country
is levied, has created so much dissatisfaction, and is so um-
versaliy acknowledged to be inequitable, that I am induced
to call the attention of the members of his institute to the
'abject, with a view to arrive at some elucidation of the
principles upon which direct taxation should be based, being
satisfied that there is no tribunal before which the conside-
ration of such matter could be more properly brought, or
where its peculiar features could be more thoroughly
or efficiently investigated. The primary source of
the disgust to which the tax has given rise,
is to be found in the introduction of "income,"" as one of
the elements by which the tax is to be measured, it being
obvious, that, in some cams, income is the representative
of real property, and that in others it is by no means of
that character. If we assume that three per cent per
annum is the rate of interest yielded by securities of the
best descriptioa, then a tax upon, income arising out of such
securities of rd. in the pound, or 21. 18e. 4d. per cent.
is equivalent to a tax upon property of Is. Pd. per cent. •
and this is the rate of taxation upon real property, which
we may consider the possessors of it to be now paying. But
the tax, as wo know, is regulated by income, and therefore
varies as regards property with the nature of the income
arising out of it. Thus, if instead of being a perpetuity,
the annual stipend is to continue for ten years-ouly, then
an income tax at the rate above masticated operates as a
tax upon property of very nearly seven shillings instead of
Is. 9& per cent.; and thus it happens, that under the m-
end spices scarcely any two persons are assessed alike as
regards their property erred power to contribute • it being
actually possible for the rate to vary from els. ed. to 31, •
So that, as circumstances differ one individual may be
called spun to pay more than thirty times the sum
required from another, although their real and abso-
lute property be of precisely the same value. (Hear,
bear.) It is this inequality, and the taxing of profes-
sional incomes as if tney arose out of real property,
which constitute the great grievance.' of the property and
income tax as now levied in this country—every considera-
tion leading to the conclusion that the contribution re-
quired trout each individual ought to be directly as the
means which he has of making it, or as the value of his
share in the general wealth of the country, and not as the
amount of his receipts in the year, which, as a general
rule, affords no evidence whatever of the extent of his ea-
pability to supply the exigencies of tee state. it is, indeed,
not easy to discover oa what grounds the present system
his been adopted It is not more difficult to determine
what a man is worth than to ascertain what income he has
got; nor is it to be supposed that the tax is any the more
easily raked for being unequally distributed. It is true
that on the more correct plan a process wid in many epee
have to be gone through after the income is &terms/At
but the pewees if, as will be sent,' very simple oas, and is
o 0 more than the inverse of that constantly required under
the arrenaements existing at the present day—namely, the
determin item of income from property; whereas, under
the system I would advocate, the object would be in every
case to meertain, either by means of the income or other-
wise, the exact value each person 'trod possessed of at the
precise epoch at which the assessment was made. This fn-
formation being obtained, and a uniform per centage charged
to each, the members of the whole community would, after
payment of the tax, stand in the same financial relation to
each other as they did before, and no one would have just
cause of dieeatiefaction on that head. (Cheers.) The equity
of this prieciple being then conceded, It remains to show in
token manner we are to determine the value of the manifold
and multiform descriptions of property which together con-
stitute the retire wealth of the country at any riven time.
Now, as reJards a very considerable portion of me, no other
process would be nettled than that which is to be found at
all times in daily operation, namely, the ordinary our of
valuation by persons competent to form a fair and proper
estimate ; or, in the first instance, the owner's valuation
might be required, and, provided there was no reason to
*nude? it a partial one, eventually adopted. This simple
arrangement would suffice fur re-adjusting tlee tax upon
freehold or leasehold properties in houses or land, or material
peormions of any deecription whatever. In like manner it
might be applied to what in schedule C of the existing act
are railed .• Profits arising from annuities and dividends."
These would, in almost every case, be found al-
ready valued inasmuch as they have, with few ex-
ceptions, a market price attached to them ; whether they
ere payments in perpetuity or for a time only, and as re-
gards all thew varieties of property no better test of their
value fur the purpose could be found than the suss they
would fetch if put up for public sale at the time of the tax
being levied. (Hear, hear.) It is perhaps necessary, how-
ever, shortly to consider on what principles this market
value is Arrived at, or how the required estimate is to be
mete in the abeesee of say indication of that nature. To
effect this I would propose as • soused methed le strip the
gross income or revenue in Its hilt pimp et all these par-
UM of it which would be lashed up" as ether then the
mere interest of capital; and musidering the remainder a
of that character, deters's* the capital from it at three per
cent, or 33313 years parehme. This rate of conversion
would piece the monied is as It is called, upon a par
with the owners of land, in the latter le be taken at
the market due merely, of toe it is net material what
rate of roarer.too is used, provided it be the Sem Is every
ease, for it is the relative values, and mg t e abasiste, which
we are in search of for the la IRWIN& (Hess,
hear.) To illustrate this waft of swesedwre we will instance
One or two eases, and tabs ihet a heobsid lauded estate
yielding a gross rental of 1,0001. ppsefsltawm. Here we have
to ascertain thirsting, taus, end van emmtal outgoings, and
to aikidos Aswan he rap mealigemies likely Wiriness
" diSainiai the eskriag testa. Lt is sapper* that is
these accounts the Festal is reduced ha 7OOL
the value of the mists is then to be lakes at Will dames
that rental, or Asus.; and the tax wadi assurdingig be
Bs. 4d. frost year to year, se WS el the value of the
estate and the mil ef aeeessmeut reardaed the seem. If
instead of a freehold, the ease were that of a ismeheid less-
:Rent held for a Neu say, end having 21 yeses eti to Tun,
the process would be semewlist different. We mg sem
alder that for every 19K invested in such a property the
purchaser should have iseareat—say 31.—an annual palsies,
sufficient, when 'wowed at the same rate, to nprodems his
capital at the expirsiew et the term—in this ease about
31. 104—compeneatiou kr son-tenancy, for repairs, sad he
other sources of depreciatioa, which will nemandly eery
with circumstances, bat which we will suppose In the pre-
sent case amouut to 21.105. more. It thus appears that every
N. of rental is not worth more than 1001., and twasequestly
a rental of 1,000/. would be valued under such eirmunstausies
at 11,111/. The tax on this, at Is. 9d. per cent., would of
Course be 9/. lts. ed., or 21. les. 4d. per cent. out the intone'
of 11,1111. According to the present ardent it would pro-
bably be much the mans se in the ems of the
freehold ; that is to ea , more than doable what
it ought to be. These will sakes to show
the mode of proceeding se regards simple asaulties and
dividendsofeverykind, wheekom aremporely. For
the ralustion of the latter one Wm ealy would he astitesarY,
exhibiting the annual sum required whet invested at 3 per
Tee
to produce 1001. at the end of ear number of years.
The addinon of this in the particular mos to the interest
would at once show what annuity for that term was worth
1001., and hence the value of any other annuity of the same

isonsa ulna botallystalooll sh The idolise of set
amiske depmellemtepen bare
node life, my
lindasseas m
ses eonetatos alled. wadi sbe sioadsd Ink my
diffiulty. looked, the government itself has waded sae
mesas of arriving at tat aloe of these in the pries which it
has est upon its own ananitin„ and which would of course
indicate the value of any annuity or life interest whatever.
(Beer, bear.) I would, however, rather seek to carry out
the principle generally to which I have alluded, and which
regards the payments of every terminable annuity as made
up of interest upon its value and the annual sum required
to reproduce such value at the expiration of the term.
This would be effected very readily by the adoptioa of a
table of life premiums calculated to be payable at the cod
of the year and not in advance. The addition of
these to the interest in my particular ease would
show at once the ratio between the life annuity
and ile value, as in the ars of assuities certain, already
meaelaaed Thos, supposing*. age of the annuitant
to be IA sod the meal peouleat simpered to produce 1001.
tar Oak, as ism 1a As kin, to be 31., we have at
wee 100 le aline 3, or 110 to I, as the ratio between the
annuity sat* value ; in other words, we find that any
=amity Cable life is worth 16.666 years' purchase. What
has boa add, however, would not apply in practice to the
nee of Ilk isessores in real estates or in perpetual annuities,
leseatait•lNN would not generally be any one who
could be soak responsible for that part of the tax which
applied so the value of the reversion. There would probs.
bly be Metter none arranging this, than for the life
is psi to poglis Na on the value of the fee, charging
upon laws peer to year the revenioner's share to be de-
frayed.. the latter Ilesaing into possession. Under the
pruned system the lib in possession pays the reversioner's
simnel the tax as well as his owe, the letter escaping its
be
irks altogether. By the plan proposed his estate, on
1.11/Weisa to it, 'NNW liable lie the sejoseentutivee of
for so many payments of his share of
theCissiltarCirit h
interest upon them, as had been
ion 0111001111 t. There would be no difficulty in deter-
MI6. Ills anent of the reveraioner's share; it might fairly
heldreeethe difference between the sum payable in r
lithe he, and that duo on account of the life intereateNO
1111111 tone to the consideration of that large class of incomes
atoned by means of professional pursuits, or trading occu-
pations, or mere personal labour; and here the necessity
for a somewhat different mode of treatment arises, since it
Is immediately obvious that such incomes, looked at pro-
spectively, have no value. They do not even exist till the
labour or skill which produces them is brought into activity.
At any given moment the paxswn of them may be con-
sidered (a far es their uture incomes are concerned) as
bang nothing but the power of acquiring them, and it is
this purer alone in which (irrespective, of course, of any
aseeminbition) their property may be said to exist. Now,
be Ile Wm of the professional man, it is evident that this
prow ewes its existence, in the first place, to his peculiar
asoalesosses ; and, in the second, to the possession of what
ersoneolg celled the " goodwill " of his business. The
hostaress Ole malt of the money sunk in his education,
and no kiwis what remains to him after a continued er-
osion et Ilse former in any particular sphere of action, in-
dermisatly of his pecuniary gains in it. But this latter,
OM Is to say the " goodwill," or the connexion secured in
erg pursuit, has a value in the market and may be disposed
el lainaßy at from two to five years' purchase of the net
sem& pseuds. Let us take the mean of this u the value
Wile mgeedwill," nansely.three and a half years' purchase,
Mel let us put the same vales—one that must be con-
Aimed as quite outside thotaark—on the acquirements and
eat el ideation, mad we Oben have seven years' purchase
if the ma smog Wow as the mean value at which to
soot peleolsasi kassea of al kinds. That this mode of
alhation is open is silliettion I will not deny, but that it is
Mit he from the tenth oast, I think, be conceded ; nor will
Mms dispute that it is at least more equitable than that
eror peeve/Is, and which draws no distinction between
esethis Wad and such as are altogether independeut
Wife or health, or of any necessity for personal exertions.
Mes.) It is to be remembered, too, that the nature of
keelblog will not admit of precision, and that the utmost
1.0 Camber for in any system is to avoid wide departures
*so what would be just in any particular ease. Such,
then, being the amoebae& value it an income obtained
by the awns sf relloissal kotariedge and labour, we
have the mewed lsmsmlaing the yoseent worth of those
derived win* ibustgair sae or ate ether. Thus the pro-
fits otibm:= may fairly be taken at
wee =lathe person so occupied
bong Wake awe in talky that the "goodwill"
Of 111. SOW OW alien such 'spits], or ether realised
pages an be might passes, and being under
De leseenity generally to nuke any outlay in learning
her to enemas it. At the same rate might be estimated
de =anal gains of employes of every description haring
appointments of a permanent character. To them such
appointment, stand in the place of a " goodwill," and con-
stitute, be faet, their power of acquiring income. On the
other herd. era will be found of professions or occupa-
tions dipeadior solely on acquirements, such as those of
the commilkie aid skilled artisan living merely on the sale
of his wit" and having no permanently settled eon-
nukes. Tina however, although of a different class, would
—if tbespetoo I am ad were adopted—be assessed
N the ma sole as do gg one - and no enmity
Il wadi moonse seise he drawing any distinction between
ONO. Oa Oro principles, then, the incomes obtained by
labour, whether professional or otherwise.
WallUesese as be divided into three elegies the highest
pin to be raw at seven years' purchase of the nett
Mesa prank no next at half that rate, and the last, as
oamprehendios virsttled labourers merely, escaping the
egarstlon of Na altogether. That difficulties would
one is to which of these classes particular oc-
ellatiene bed is certain, but there is reason to believe
would not be of a more formidable or inSOT-
abamsber than those frequently met
alln ant Oa poost system : and it will be observed
that otos Os dassilleation was ones arranged
the sessomoist ens tax would be carried on with the ut-
most elm ad liana% I may, however, mention that
it would be sesemerp, the first place, to deduct from
such beanie an we me are considering any interest of
capital korolog part Willem, or any other extraneous por-
de. These issuld, Of alarm have to be valued tc-
=ely, and neemffieses with the methods which have
previa* deserfbed. (Hear, hear.) Were a system
rte to by adopted there would be no reason for exclud-
ing say sae elm its operation. The man with fifty pound.'
worth of peopsay might with as much propriety be called
upon for his lisMa as the possessor of thousands; nor
would the cue be at all a sufferer in a greater degree then
the other. In this way there is reason to believe that a
vast sum might be raised, although the tax were imposed
at a very low rate, no fact apparently more frequently es-
caping the observation of government, or even of writers
on such subjects, than the extraordinary results arising
when the capabilities of the great mass of the population
are brought into play. The amount raised at present points to
an aggregate property of 6,000,000,000/. But the land alone
was valued in the beginning of the present century at about
1,000,000,0001. ; we know that nearly the same sum is now
assured on houses and goods, and there is good reason to
believe that those still remaining uninsured are of very
little less value. The holders of the national debt still pos-
sess nearly 1,000,000,0001. more, so that we have to set
against the remaining two thousand millions the capital
embarked in every kind of speculation, the value of our
mercantile uavy, our live stock and, last not least, the im-
mense collection of our professional and trading incomes,
to be estimated in the manner I have endeavoured to show
they ought to be. Considering what must be the vast
amount of these various resources, it seems wareely possible
to doubt thata tax upon even fifty pounds worth of pro-
perty at the pretest rate, namely, Is. Pd. per cent., would
more than suffice for all the purposes for which the present
luau tax is imposed ; whilst, vs the wealth of the country
increased, the government, by a gradual augmentation of
the rate, might be enabled to dispense with such odious and
disgraceful imposts as the customs and excise, and ulti-
mately su in substituting one system of direct taxation
with its sole machinery for the cumbrous and expensive pro-
ceases which have so long preyed upon the vitals of the
country. (Cheers.)
A vote of thanks was then given to Mr. Jellicoe ; a fellow
and nine associates were Mattel ; and Mee other business
having been transacted, the sassing remised.

Ste Joux FaAm:Lute—A private expedition is
now being organised to gemmed early in the ensuing year
In search of Sir Joke FmkEs In a part of the world which
h never yet been owthsteL It is based upon tho cosmic-
Mom, which is wwwwwi by high authority, that Sir John
Franklin has adommed through the Wellington Channel,
to a high latirmffis for to the westward, probably as far as
the Middles of Bobrin'i Straits, where difficulties may
have been nut wilt which, to a distressed and exhausted
party, waddle irwrweantable in penetrating to the south-
ward *wag% Widnes Straits.
RUIPSIA.—Tits Dimple Gazette gives the following
details of the ellestivo awing* of the Russian army. The
infantry, including the Imperial guar , &c., amounts to
640,1111 men; tho a...vary to 101,692 ; the artillery, includ-
ing the special corm to 42,902, making a total of about
6:*,0011 ears. By calling out the reserves and the depots,
that wombs, might he increased by 240,000. In the event
of an Basilian war 300,000 men would he disposable to
wow des mama frontier between the Baltic and the Da-
nubian peledgelities.
NATAL PrOTION.—ADMIRALTY, DEC. 29.—J.
Riskinsp_ bu Acting 0 . rotwritawr.—Gitn-
ner T. Westlake to Monarrh.
Hover., IMPLY FOR HABITATION.—By • clause in
the new City Sewers Act, now in force, the provisions
with respect so lasses Is a ruinous and dangerous state me
extwici le say braes sr building which, in the opinion of
the medial Wiser of buddy is permanently unwholesome
and unlit for Munn habitation.
UNION Badyna! COMPANT.—A petirion has just
been presented to ths COM of Chancery to wind up and
settle the affairs of this SIM undertaking, which was esta-
blished at Forties. This, with the Vale of Neath Brewery
and the Oundle Brewery Company, will make the third
joint-stock brewery company under tbe•operstion of the
act.