The Sun.
London, England, 1852-09-11 00:00:00

LONDON, SATURDAY

THE INCOME-TAX.
(From the Times )
We can imagine the cs3vocates of an undiscriminating
income-tea looking with some complacency on the
proceedings now reported, and deriving from the stormy
and complicated discussions of the day a new argument
in favour of uniform injustice. " You see it is just as
we told you. You have had your own way, and you
can make nothing of it. You got a Committee, but the
Committee could come to no conclusion. You debate
the question among yourselves, and you can arrive at no
result. You are all at sixes and sevens, and you will
have to confess in the end that what we said was the
truth, and no less—that it is utterly impossible to discri-
minate between sources of income, and that the only
possible principle of assessment is a single fixed rate of
impost on all returns, whencesoever derived." Some such
observations we are quite prepared for, but we can very
confidently assure these crafty speculators that the end of
the business will be in no sort such as they ancicipate.
That there may be some degree of difficulty in
ascertaining distinctioes vowed to be undiscoverable, we
freely admit. But the public will at least never revert
to the doctrine, that solid property and precarious earn-
iegs, though the most contrasted of possessions in every
transaction of daily life, are identicaily the same for the
single purpose of State taxation. We shall find some
standing ground there is no doubt, but, in the meantime,
propositions have been started which exceed in boldness
even the maxims of official financiers. The old Govern-
ment doctrine merely maintained that the distinction
which everybody telt to exist between realised sub-
stance and professional receipts could not be practically
regarded in a system of direct taxation. The differences
itself was not denied, but it was represented as possess-
ing so many ramifications as absolutely to preclude any
equitable adjustment. Now, however, a class of econo-
mists, not without pretensions, has ventured to assert
tnat the distinction has no existence at all, and that,
though there may undoubtedly be a popular prejudice
in favour of independent property as compared with
fluctuating or uncertain gains, the returns yielded by
these two species of possessions should be considered as
identical in the eyes of a tax collector. Some difference
there may be, but it is no difference quoad hoc. Such
is the new proposition which we have even seen invested
with considerable impressiveness by the aid of alge-
braical symbols. Omitting, however, the language of
mathematics, we think we can make the question clear
enough for general reflection.
The ground taken appears to be this:—That if a tax
is to be laid upon income, one income of 1,0001. a year
must needs be as good as another income of the like
amount, so long as it lasts; that the only difference be-
tween the two consists in their respective certainties,
and that as no contributor is expected to pay excepting
for the period during which, by his own acknowledg-
ment, his income has maintained itself, such income
must, for this particular period, have had exactly the
same certainty as any other. If a man is clearly and
plainly in receipt of 1,000/. per annum as a barrister or
a banker's clerk, ho is to all intents and purposes worth
1,000/. a year as long as these returns con,inue. When
they cease his payments cease also. His taxability goes
hand-in-hand with his income, and if one is precarious
so is the other. The difference between temporary and
perpetual receipts is accounted for in the difference be-
tween temporary and perpetual taxation. If a man
earns 1,0001. a year for one year only, he pays for that
year, and no longer; if his profits fall off to 500/. his
tax diminishes in the same proportion; and if they
vanish wholly his obligation vanishes too; whereas
the possessor of land or Consols, if unceas-
ingly supplied wish income, is also as un-
ceasingly a contributor to the necessities of the
State. Transitory incomes induce transitory taxation;
permanent incomes permanent taxation. The State
which collects the year's revenue for the year's expenses
can look at nothing in the cases of individuals except
the actual income of the year for which the reckoning is
made. Such we conceive to be a fair popular exposition
of the views in question.
There never, we do believe, existed a subject on which
it would be more difficult to produce conviction by ma-
thematical formula. However cogently the conclusions
of algebra may be expressed, the common sense of every
man in the kingdom would induce him to rebel against a
result which proved 5001. a year in land to be no better
than 500/. yearly salary. The argument would fare like
that of the Protectionists, when they brought statistics
to show well fed labourers that they were starving. But
in the present case we can hit the fallacy without diffi-
culty or doubt, and we join issue at once by asserting
that an income from daily labour is not the same thing
as an income from realised property, even for the single
year to which the view in question is confined. Assuming
that the State can only regard the existing abilities of
its contributors at the moment of their contribution, we
say that the existing ability of a man earning 5001. a
year by labour is at no single moment equivalent to the
corresponding ability of a man enjoying a like income in
permanence and abundance. And if not the means of a
contributor, but his obligation to the State for a year's
protection is to be the measure of his contribution, we
say, further, that the debt of the former of these men is
not identical with the debt of the latter.
The argument before us is reducible to this plain as-
sumption—that money actually in possession is always
practically of one uniform value, whether it flows from a
permanent or precarious supply—whether there is more
forthcoming or none. According to this theory, a man
with 1,000/. for one year and an undiscernible income
for all years succeeding, is in every respect as rich a
man for that year as another with 1,0001. in perpe-
tuity. Now, is this so understood in the ordinary
business of life? Could any person, at any period of
that particular year for which his incom is pre-
sumed, command the same credit, maintain the
same position, or indulge, without prudence, in i
the same expenses as the other? The common sense
of every reader in the kingdom would answer—
No. A person thus precariously provided would not be
estimated, for any purpose whatever, at the same rate
as his independent neighbour. To take a familiar ex-
emplification—he would certainly not be expected to
contribute equally to any local or municipal institutions;
and why, then, should he be rated otherwise in respect
of the national revenue ? But further, if the doctrine
is sound it will bear carrying out ; and let us see what
it comes to. If a man with an income of 1,000/. for one
year is as good for that year as another with the like in-
come in permanence, a man with 500/. for six months is
also as good for that diminished period, as is likewise
another with 801. for a single month, or 20/. a week ;
and, by pursuing the argument, we shall find that a
person with 3s. in his pocket is quite as rich, for the
space of an hour, as the possessor of an annual thou-
sand ; during which sixty minutes he may live ac-
cordingly?, and must contribute proportionately to the
State. Was there ever such absurdity ?
Take another view of the case. Two men are called
upon to contribute to the Exchequer in proportion to
espsouonr boaunrd.
neNitehwer,
their means. One possesses 1,000/. a year from Consols,
f7rdo.minbusthi ne
escapes a large portion of his proper obligation. He has
more nor less, it must be perfectly clear that the former
got the same income as the other. Granted: but he has
iaineoat
chhe another
ft the
el iske epianyc,
hie
certainly got something
besides, for whereas the whole
went by
those of thou ther could be increased at any possessions of of one are represented by his 1,0001. of earn-
ings,se), ption of the whole of 30,0001. capi-
tal. One has an income of 1,0001., and the other a
similar income plus a capital of thirty times the amount,
and this capital, under the system before us,
pays no tax at all. If it be said that it is only upon
its returns that any species of possession is thought
taxable, and that if capital pays upon the interest
yielded it pays sufficiently, we ask what is meant
by property and income-tax, and whether it is really
Thit
desired that property, as distinguished from income,
should not only pay no more tshat
bries
income
us,
to batthe actually
pay nothing whatever? g
considered in the letter of our correspondent
which will be found elsewhere. For the purpose of
argument, each contributor may be supposed possessed
of a capital and an income. The capital of the inde-
pendent proprietor is his land or his money; that of the
professional man or trader his learning, his industry, or
his skill. Now, even if the incomes of these contri-
butors are to be reckoned pound for pound without
distinction, it is perfectly manifest that their capitals
cannot be so treated, for the capitals of the former
class are convertible at will into an aggregate of
thirty years' income, whereas those of the latter, if
negotiable at all, would not produce one-fifth of the
amount. Property generating income with infallible
certainty while its owner is asleep, and which can be
turned at any moment into thirty times its annual yield,
is clearly more than equivalent to property which can
only generate a like income under the anxious applica-
tion of its possessor, and which can be turned into
scarcely any aggregate at all. Many readers, we have
no doubt, will think we have] been at strange pains to
demonstrate what needed no such demonstration—viz ,
that 1001., together with the capital which produced it,
is a better thing than 100/. without this capital—and the
truth of the case is indeed plain enough to commend it-
self to instinctive reception. Still it is as well to
expose the fallacies which argument occasionally pro-
vokes, and in the present instance the distinction be-
tween solid property and precarious income can be shown
in terms quite as scientific as those employed to establish
,heir identity.

TO THE EDITOR OF THE TIMES.
Sir,—With reference to your late
.articles upon the
inequalities of the income tax, it will be found, I be-
lieve, upon an examination of the evidence taken before
the Select Committee, that the actuaries and the econo-
mists are at issue upon fundamental principles.
The actuaries contend that the taxes tor the year
should be levied upon the capital existing in the year;
while the economists assert that the income or produce
of the year should bear the Impost.
perpetual an-
ereeeqhuipreertshoant
shall
elai cbteuaelsvtiamluaeteodf capi-
talth_e
irhe
possessed actuaries
by
periodi-
cally, and a certain amount there
.f
set
Cheaprt for the
purposes of the Government; while conomists
a fleet-
maintaining the income or produce of
.trades and pro-
maintaining
as classes, to bo equally continuous and per.
arisingincfroomine oiranpdrodource of all shall
nmuai nt
ieeus
,t
require with
that
a th e
ingT3ea
be equally charged.
income c actuary aa3e 1J forcibly
compared
perpetuity
adduces
w jt tahne
incomeinequality
i n o f
but the economist holds that the barrister with a pro-
fessional income of 1,000/. a year is indebted to the Go-
vernment for protection in the realization of that income
equally with the landowner, the freeholder, and the
trader, and is liable to pay an equal sum with them for
th© protection of such income.
These arguments may be coriect,
ias the inequality
complained of by the actuary lies not n the income, but
in
ri he capitalized value of each.
To arrive at a true principle, therefore, it would ap-
pear that income and capital must be separately assessed;
and were it desirable to raise a 2i per cen.t. property and
income-tax, money being at 3 per cent., incomp must be
assessed at 3d, in the pound, and capital at 9d. in the

1001. The chargo upon each clasg would stand some-
what as follows:

£ s. d.

3 15 0

3 15 0

.£7 10 0