The Sun.
London, England, 1852-09-04 00:00:00

SATURDAY EVENING,

THE INCOME TAX.

We are very much mistaken if the tenacious obduracy
of certain parties on the question of a rectified income-
tax does not ultimately prove productive of similar re-
sults to those experienced by landed proprietors in re-
spect of the corn-duties. Year after year, when the gross
injustice of the actual tax was demonstrated, and vari-
ous expedients suggested for mitigating the pressure
upon the general coneumer, a resolute and successful op-
position was organised against all proposals. Sliding
scales were sneered at, colonial relaxations complained of,
and fixed duties repudiated with abhorrence. The end
of it was, that the country secured absolute freedom of
trade, and Protectionists were left so hopelessly
stranded
that even accession to office could do nothing towards
setting the m afleat again. Exactly in the same course
have matters been proceeding on the suaject of direct
taxation. Official financiers would hear of no modifica-
lion whatever of their traditional principles, and have
peristed to this moment in declaring, before the face of
a sober and mercantile people that 1,0001. a year derived
from land was precaely the same as 1,0001. a year made
across a counter, and worth nothing more. The curh4e-
sequence is, that the question has now been stirred and
discusses to its very uttermost depths, aura the public
mind, instead of being restricted in its views to the dif-
ference between 1001. and interest and the interest of
100/, is now directed towards a discriminating survey of
every species of property and possession.
In another part of our columns will be found evidence
of the advanced stage at which the inquiry has already
arrived, wed many readers, we doubt not,
will wonder to
what abstruse computations Mr. Parr's letter addresses
itself. We do not propose, on the present occasion, to
enter minutely into the dispute referred to. It will be
quite clear to those who have kept pace with the discus-
sion that Mr. Farr maintains his
ground against his op-
ponents, but he descends from his "approximaive to
assessable values" to the expression of a simple truth,
which will come home to the feelings of every man in
the country. " Every person," says he, "of common
sense I meet, knows perfectly well that the income from
trade is worth lees than an equivalent income from laud,
and feels that the man with a life interest ought to be taxed
less." Of course he ought. The tax professes to be a
tax upon property, the difference between various species
of property being recognized by the addition of the
term " income." One man has a certain description of
property producing 1001. a year, which he could turn
income, but his property in it could not be turned into
sreclacdl.ily
yinett,o
itnhea sum 3,.;
the
; another has a like yearly
" value of a thing" is
proverbially recognized as "what it will bring" these
two species of property aro assessed alike.
Be it remembered that these very statesmen who ex-
patiate so fluently on the " notorious impossibility" of
distinguishing between income and property, have actu-
ally achieved the impossibility itself in the terms of their
own Act. There are already certain distinct schedules
for different kinds of property and income, and a man
returns his taxable receipts under one or other of these,
according to his position. When it is wished to ascer-
tain our rateable capacities no difficulty is made in pro-
viding distinctions, but when it comes to an adjustment
of the dues fairly payable from each, we are told that
distinctions are beyond the reach of political arithmetic.
A man without a sovereign in the world is not permitted
to say to the collector "I have no property;" the col-
lector circumvents him, and says, "Very possibly; but
from week to week you may be getting just as much
profit,pro underfitfromy theoiir namelabou of `income,'raswill
keep you afloat, and this
it has been thought
will find every provided expressly
tt lot tmcseteatxy.
your
rseccihoeidr ue
oal e ,e
bt ht
se,raenf odr provided
pos-
sible description of ' income' included in its clauses.' But
here the discrimination stops. The law can clas-
sify property most ingeniously for the sake of
declaring it taxable, but not at all for the
sake o apportioning taxation. Schedules A.
B. C. and 1). are all carefully prepared for
catching every species of self-supporting Englishmen,
but to make the classes under A. B. C. and D. pay pro-
portionate rates of contribution is declared to be alto-
gether impracticable.
The advocates of this remarkable system of finance
have one reason and one proof. Their reason for so
legislating is, that it is " impossible" to legislate other-
wise, and their proof of the " impossibility"
is that Mr.
Pitt thought just the same. Mr. Pitt thought it would
be madness to attempt a discrimination between property
and income. But Lord Melbourne once thought it
would be " madness" to repeal the corn laws, and the
Duke of Wellington declared it would be " madness" in
him to undertake the office of Prime Minister. Never-
theless, his Grace became Prime Minister to very good
purpose, and the corn-laws were repealed to a purpose
which every family in the kingdom is now feeling. We
entertain, therefore, a most profound conviction that,
notwithstandieg the illustrious precedents for obliquity
of vision in this particular, the next three years wilt not
pass over without a very practical refutation of the doc-
trine referred to; and we suspect, indeed, as we have
already observed, that the " possibility" of far more
critical distinctions than that between half-crowns and
half-sovereigns will be demonstrated in the face of day.
" Public opinion," observes Mr. Farr on this matter,
"is now in process of formation?' The " opinions" dis-
cussed by our able correspondent have doubtless yet to
be realized and embraced, but on the main point of the
question opinion has been formed long ago. As Mr.
Farr himself acknowledges, there is " not a person of
common sense to be met with" who does not even now
feel that to tax precarious earnings as absolutely equi-
valent to solid property is a monstrous wrong. No
Englishman can ever be persuaded that 1001, a-year re-
ceived in wages for labour, which depends on all the
variable conditions of health and demand, is as good as
1001. a year derived from capital in the funds or landed
possessions. It is an insult to his judgment to
argue such a point with him. In the sense in which
" property " is to be understood as constituting
its possessor a contributor to the public revenue,
it is obvious that there must be several descrip-
tions of such goods. Whether these can ever be
so classified as to prevent all risk of injustice may be
doubtful, as it is doubtful also in every other known de-
partment of economical science whether absolute perfec-
tion bo attainable. But the difficulty of attaining to
perfection will be no longer
making no improvement at all upon what is incon-
testably:the maximum of imperfection. Already our
statesmen are discovering that they in this, as in many
other matters, are surpassed by private individuals.. Mr.
his cal-
Farr, it will be seen, is ready, for himself end
leagues, to demonstrate that his rule is, at any rate,
" twice as near perfect accuracy as the system now in
t
accepted as an excuse for
operation," and, if such a rule is to be rejected. it
nis
The question can no longer be stifled as impracticable
or be so in favour
or " closed." It has been opened and handled to very
good purpose, and direct taxation will only be toleratedbased
in future as a means of raising revenue
when
fiscal
upon those principles of equity by which all the .
transactions of a free countought
country to be regulated.—
Times. et one which is nearer still.able

TO
article THE
Sir,—TheEDlTOßiz or THE TIMES.
he Income and
he •
Times on t
Property-tax was as correct in its technical
statements as in its general' and sound ,0 writer re-
qui:es no aid to assiat him principles. . "
such absur-
dities as have appeared in in demolishing
tem
1 poraries;
but I have just seen the Economist
daitlyanc,
~ beg
to call
your attention to ono or two instancesnomis , a 1
of inconceivable
ignorance in the writer for acommercial eper. Take,
p .
ter instance, this sente all in-
come at 33 years' purchase, and taxing
it at an equal
rate, is really to tax the community, not according to
its varying
wealth, year by year, but according to au
arbitrary average of its wealth through 33 years."
New, when an annuity or an estate is said to be worth
33 years' purchase, this has no reference to the average
income through 33 years; what is meant, of course, is,
that all the rents for 30, 60, 100 an unlimited number
of years—are worth 33 times the year's rent. Every
surveyor, valuer, and actuary in the country knows
what " years' parchase" is, and such an error is discre-
ditehle to the press.
You will notice that we do not propose to cspitalizs
all incomes at thirty-three years' purchase; three per
cent. is not the basis of the plan proposal in the draught
report It is only assumed for the sake of illustration.
Whatever reasoning there is in the Economist article
goes against all valuations whatsoever. It proves—if it
proves. anything—the absurdity of the Government and
all other valuations of annuities for life, for terms of
Years, and for ever.
The country cannot be
value of the property of the
deter • mined exactly, but the values of parts of it are
dete •
retuned every day with sufficient exactness for the
purposes of commerce; and for PUjflg of taxation
the p
there is rom the rent,
assuredly no difficulty in getting
income, or sale value, a sufficiently near approximation
to the assessible value.
We b re is a certain
ascertain that in a given year tee
amount of property in the country, in the possession of
certain individuala, and we call upon each to pay in
proportion to the amount of that property in his posses-
elan, because that is the best measure of his ability,
of the amount of protection which he obtains, of the
loss which he would sustain if the protection of society
were withdrawn.
One might suppose that there was something new in
the proposal to capitalize incomes or dividends in order
to determine their relative value, whereas it is the basis
of nearly all the transactions of the day. The land
agent capitalizes the net rents in all his valuations, so
does
,the the price of the funds, of the
house agent;
Long Annuities, of life annuities saleable by the Go-
vernment is the capitalized value oft dividends. we
propose to treat life incomes from professions as life an-
nuities, and to give them the same value as such annui-
ties at some risk—covered by 5 per cent. interest, in-
stead of 3, which is the rate when there is no risk. By
this hypothesis, which wo adept for the sake of its sim-
plicity, we overrate the value of such incomes, as com-
pared with incomes derived purely from the interest of
cr'ney or the rent of land.
You will observe that in all valuations—such as in
life annuities—there is all assumed uniform rate of iii-
terest, which may be somewhat too high or too low for
the period to which it is applied. But over a series of
years the interest and the capital bear a pretty constant
relation to each other; so that in all cases the tax may
be (gsti -
tably rated on the 'Ulu° of the property, or on
the
net interest—that is, the income as it is popularly
celladt minus a deduction for capital returned, and pre-
minus to insure the capital at risk. Thus, if 1,0001.
in perfect security returns 301. a year in interest, a tax
of U. per 1,000/. on property would give the same re-
turn as a tax of 1-30th on the income.
So in life annuities, nest short annuities of all kinds,
a tax rated on the interest gives the same produce as a
tax rated on the capital, on an average, provided that
the
rat© on the property
is 1-33 d, 1-25th, 1-20th 9&c,,
of the rate on the interest.
It is one of illr. Babbage's errors that " all income is
"Rua'," and that the " expenditure" is to be paid out
of
th "
o income of the year." This is a curious paradox
in England, where so much of our actual income for the