The Sun.
London, England, 1852-07-31 00:00:00

THE SUN, LONDON,

chargeable, in the proportion of the property is their I which the income-tax is based; bnt, in noticing the
possession, on three other capable persons; a majority
mode in which the tax on property may be levied so as
of the owners of property thus escape the taxes paid by to render it more equitable, they will follow the classi-
the minority; the farmers occupying large farms pay their fication of the schedules of the present Act.
wrier sehe-
Own tax, and also the tax that farmers on rents of The whole of the property now ed
2991. a you, or less, in England, and 419/. ay, ar, or dale A should be asse,:sed on its wilue, which must in a
less in Scotland, ought to pas. The rrson whi has series of years bear a c,uistant relation to the net an-
-1501. a year from s trade or profession is taxed, while nual profit. Abundant data exists frir determining the
the owner of 149/. a veer from land or money in the relation between the rack tent, minus an ave•roge cle,lue-
funds is exempt. The lAnd°4lll" of England end tion for revairs• snd the velue is the roatkr.l of 11,i)d, of
Scotland, in fact, pay for the protection of tae property houses, and of all other real property in every part of the
of the landowners of Ireland, who are resident there or United Kingdom. And it would be, upon the whole,
on the continent. advisable to collect the tax, as at present, from the
occupiers; except, perhaps, in the case of houses under

It has been stated to your Committee as possible, nn-
der the exemption, that a person having 5001. a year of
income, by lending money to persons having incomes
less than 1501., may be exempted from the income-tax
upon that portion lent to such persons; and further, that
in an income under 1601., ancrhaving bor-
a person hay g
rowed money. may deduct the tax froma
thehlendeer, the lender, al-
though he, the borrower, should not have paid any tac,
and thus not only evade the tax, but make a profit bY
the exemption.
That a direct tax should not be levied upon the whole
of the population; for as the poortheinfirm,
the including le
the aged, the helpless, the widow, fatherless children,
and others, are supported partially by the commtlmiy
in every,
under the poor-laws, it would be uotvise, and
way inexpedient, to tax them in a state of
w
na
is h their
nt. The
large class of labourers whose earnings furnish
families with the bare necessaries of hiectshxuelds,a
01 sno t
hhee
exempted from the payment of dire
grounds of a wise and humane hicThhothperotecton
of their lives, and the security
in
which
to they enjoy
the fruits of their hard toil,
are asrvotection to skilled
the proportion of their means. as p _
professional men, manufacturers,
merchants; shopkeepers, policy.
but, on the same'
merchants; or landed proprietors;
funskilledy su•
-
public rate, the class o labourers
ported by a
ground that one large class ofthe communit is p
required for the supply of the neces-
sariesshould be left in the enjoyment of the whole of their
earnings, which are .ttea
is
aware of
often repeated, that
it
is
paid in
the maxim
of life. Your Cornint,
the tax on the labourer is really a
tax on the master, by whom
maxis, is partially true. Bat if the tax is paid by the
master, it is highly inexpedient for the State to collect it
at great expense indirectly from the workman, whose
family must suffer pressure before the wages are raised
and the tax is recovered. To levy the tax on the indi-
gent poor, or on the unskilled labourers, in order to ex-
tract from them taxes which are paid out of the revenues
of the wealthier classes, is indefensible on financial
grounds, and cannot be sanctioned by your Committee.
That persons on low wages or salaries, which have a
capitalized value below a certain amount that may be
considered necessary for subsistence. should remain
exempt from direct taxation, your Committee bAi.,ve
to be expedient; and the same value should also be left
exempt from taxation, and be deducted from the indus-
trial property of every person who is taxed, which
would be a material relief to all the persons on weekly
wages and small salaries, while it would be in itself per
fectly equitable.
Your Committee recommend that, with this exception,
all, the property in the United Kingdom, and the capita-
lized incomes of the industrial classes should be assessed
at an uniform and equal rate. As the revenue of the
country is expended for the protection of pro-
perty, or of personal rights, and for objects of na-
tional utility, your Committee can see no valid reason
whatever why every subject of her Majesty should not
be taxed in proportion to his means. To levy a tax on
a small portion of the owners of the property of the
country is inequitable and dangerous.
11. ON THE PRESENT MODE OF COLLECTING THE INCOME
AND PROPERTY TAX.
11. That your Committee have taken evidence on the
mode of collecting the tax, under the several schedules,
and on the various ways in which exemptions are
claimed. They find generally that the commissioners, the
clerks, assessors, and collectors are not appointed by and
are not sufficiently under the control of the Board of
Inland Revenue; in consequence of which irregularities,
inequalities, frauds, and defalcations may occur in the
assessment and collection, which, under a simpler, more
intelligeat sad more responsible administrative ma-
chinery, might to a great extent be avoided. Instances
have occurred in which, by the default of collectors and
their sureties, the people of a district have had to pay
the tax twice over; in other instances the revenue has
sustained a loss.
Under schedules A, C, and E a large portion of the
income and property tax is collected indirectly; that is.
thestax is deducted at the Bank of England from the
dividends of the fundholder; at the Exchequer er other
public offices, and by the East India Company, from the
interest payable on securities or bonds; at the public
offices from salaries, stipends, and pensions payable by
her Majesty, and from the offices of various courts and
corporations; while under schedule A the tax is col-
lected from the occupier, who, if he is the tenant only,
is empowered to recover the duties chargeable on rent
from the landlord. Landlords again can recover from
others having an interest in the property, at the like
rate, namely, by a deduction from rent-charges under
the Act for the Commutation of Tithes, from annuities,
fee-farm rents, rent services, quit rents, feu duties, teind
duties, stipends to licensed eurates, or other rents or an-
nual payments thereupon reserved or charged. It is the
opinion of many of the officers in the revenue depart-
ment, that the whole of the tax on realized property
cannot be collected from its owners; and there can be
no doubt that the stoppage of the tax out of interest,
rents, and salaries, as it is called, at the source, at
present practised, does present, in many cases, un-
usual facilities of collection : the revenue is secured
from loss, the expense is diminished, a degree of
secrecy is preserved, and the tax collector encounters
fewer obstacles and less resistance than he might m,.e.t
with in collecting the tax directly, as under schedules
B and D, and under the assessed taxes. As, however,
the greater number of the Bank dividends, as well as the
rents of land and houses are paid by small portions,
which b long to persons some of whom have more, and
some less, than an income of 150/., much trouble, con
fui'on, and fraud spring out of the system under which
per-ens are called upon to make the great variety of
complicated returns enumerated in schedule G ; bat are
not required to return the whole amount of their
property and profits from the several sources in a single
schedule.
111. WHETHER ANY OTHER MODE OF LEVYING THE
7: INCOME AND PROPERTY' TAX, SO AS TO RENDER
IT MORE EQUITABLE. CAN BE ADOPTED ?
12. That your Committee has, besides officers en-
gaged in the revenue department, examined actuaries,
statists, political economists, and other witnesses who
are practically conversant with the valuations of annui-
ties, and have devoted much attention and thought to
the subject of this inquiry. Various plans for levying
the tax more equitably have been brought under its no-
tice ; and it appears evident to your Committee that to be
equitable the tax should every year be levied on the value
of the property, labour and skill being the property of
large classes, of the country; and that each person having
more than a minimum amount of income should contri-
bute in proportion to the share of that value in his pos-
session. The tax would thus become in the strict sense
of the word a proptrty-tax, and each person would be
taxed in proportion to his ability; which is measured
more accurately and expressed more clearly by the value
of the property in his possession under the protection of
the State, than by any other standard.
The value of the property of each person is best de-
termined by the sale value of his interest in real and
personal estate; and by the capitalized value of his in-
come derived from skill and industry. The quota on
which he would thus be assessed would be the nearest
approximation to the price for which his estate would
sell, or to the value of which he would be deprived by
its loss and the loss of his industrial income.
Various examples of assessments of this kind have
been submitted to your Committee by the several B
has 1,000/. a
wit-
nesses, from which the following have been selected:—
Assessed Value.
At has 1,0001. a year in Long Annuities ... £6,875
D has 1,000/ year in Consols at par ... ... 33,333
C has 1,0001. a year from land, worth 30 years'
purchase
F has honsesearethturning .. ... ... ... 30,000
a y;*; from land during his lire... 16,667
has the •
reversion of rents of 1,000/. a year
after the death of D ... ... ... ... 16,666
such annnitiee, eery
--
a year in current rents 1,0001.
These v'llries ...
e to ••• ••• 16,000
all designated rents,property,
securities, and estates, which are
represent the sums for which
press the exte t crrtY, would sell; and they also ex-
Your Committee repeat that
than.
ja ifty of the respective
u of loss a x•
protected by the laws
citrate indication of the aabg institutions of the country.
zdtintsitieywhich the holders are
know of no more ac-
tors to pay the tax
Properties.proprie-
Your Committee submit thatar
their respective tarnished by the.. values of
equitably on the value of the prope 't
also assessed
eut it is assessed
propeilrvPherty. Thus,
Profits of thratY,' is
be the race
example,hie h it
i 8
equitably on the average
it the interest is the profit of the
produced, then at a settled rate of inieres-t—.107
at three per cent.—a tax rated on capital,
by the number of years' purchase, will
tax on profits. Thus, a property worth 3,333/. 6sateadof
returns 100/. a year in profit; then a tax of ls. 9d. pesr
the
cent. on the property yields the same amount es
rate ofl2/. 18s. 4d. per cent. on profit; for 15.9d.X33 1-3
=--21. 18s. 4d. In the case of terminable as well as of per-
petual annuities, a tax of a given per tentage on the
value of the annuity, is in all cases equivalent to a corre-
sponding tax on the interest; and thus, in all cases, if
the income is reduced to a net form of profit, it, as well
as the property, may be made the basis of assessment.
The better plan,
to be, to however,
appears to your Committee
make the tax simply a tax on property. A
landed proprietor, whose annual income is made up
partly of rents and partly of the proceeds of the sale
of
portions of his estate, is in the same position as the pos-
sessor of a terminable annuity, or of a professional in-
come; and as the one is taxed only on his rents, the
other ought to be taxed only
on his actual Profits,
which are accurately expressed by the value of his life
income. The capital in both cases thus remains un-
touched.
13. That although it is impossible to ascertaio with 1
precision tb a value of each person's share in the pro-
perty or profits of the country, yet that, fr.om. a* return .
in a more simple form than those
com-
petent assessors, surveyors, and
.cometiss.i.oesrs, without
now
,iotained,
awnhyierxezhisersiorinqusihs,iCui(l,c7,ll:.etnax. e,d,e,r mwiintho
curacy for ,thuefErecn)tta
coen.
our com-
a 1 the purpotes of taxation;. and mie
ths v
ex_ that such a tax on all his property (with
- bmit
sassed on his in
more sapPitet°anwidready stated) would in every way be
equitable than the taxes which are as_
his dogs, ilia
ec, his house, his servants, his horses,
family requires rjr ig
eeges,
tiraes; or on the articl el which his
these ways bears no
for the expenditure in
direct or constant relation to the
amount of his Property every your under the protection
Your Committee entertains
claasification of properly no doubt that a better
la
cy be framed than that on

the annual value of 101., and of Hinds and tenements
lot to any tenant for a less period than one year,
which may be assessed on the landlords. The market
value of the shares in railway, mining, joint-stock, and
other companies would in many cases supply the best
data for their assessment, and the dividends, allowing
for risk, would in other cases furnish the basis of
valuation.
' The impossibility of collecticg the tex from the
owners of realiz, property. particularly of unpeoductive
property, has been strongly urged before your Com-
mittee by a Commissioner of Iniaed Revenue and by
others; but the evidence of gentlemen from America,
whom your Committee had an opportunity of examining,
proves that the assessment and collection of such tax is
in several States in full operation, and is effected without
difficulty.
The policy of assessing and teeing pictures, or other
articles that are for the improvement of art and science,
is deserving the favourable coneideration of Parliament,
if it should be determined to assess unproductive as well
as productive property.
In the United States all property is charged, whether
productive of interest or unproductive, as furniture and
pictures, and a tax is levied on both under the head of
real property and of personal property; but no tax is
levied on professional profits. The only exemption is
on household furniture ef the value of 250 defiers.
14. That the whole of the property iu annuities, divi-
dends, and shares of annuities payable to any person,
body politic or corporate, company, or society, whether
corporate or not corporate, ow of any public revenue,
should be levied on the respective prices of such an-
nuities, assessed on days in each year, to be fixed by
Act.
When the price of stock falls considerably, funded
property suffers a real depreciation, and it is then unjust
to tax such stock on the amount of the dividends, a
part of which every prudent fundlaolder should set aside
as insurance against the possible loss of capital. That
levy of the tax on the sale value of the stock, and not
on the dividends, in time of depreciation, would also
tend to keep up the price of the funds and support
public credit.
As the value of life and terminable annuities dirai-
niehes every year, the assessment of the tax involves more
arithmetical labour than a uniform assessment on
dividends, but this labour may be very much abridged.e
by suitable tables; and, on that the
premium is made uniform inthoerdstanmarey
the tax on a life, or a terminable annuity, may be
,cnuas:
uniform, if it be desirable. Examples of such cal_n_L.
tions are given in the evidence, and in the appendix.
The additional trouble of collection, which 1
PcraisceesioPfleinsura
re-
solvable entirely into expense, may very well
be incurred in order to make the tax equitable and
if the calculations were made with the greatest
ta
minute-
ness, the expense of the collection of this
direct
urred In
would be considerably less than the expense le
cT rate
collecting the same amount in indirect taxes. h:,
per cent. on the collection of the net receipt of d
u 6
tax was, in the year ending the sth of April,
1851,.x
21. Bs. 11d. The expense of collecting the Customs was
51. 15s. 41d., and the Excise, 51. 63. 3id- in
the same
year, besides the greatly increased price of each article
in consequence of the tax being imposed on its import,
or on its manufacture.
ed in farms
15. That as the property of persons engeg
offices,
con.
_
in manufactures, commerce, professions.
sists partly of stock and partly of the direct produce of
skill and industry, the simplest course would beordi-
nary tax
the stock on its value, as it actually appears in an
and
nary balence-sheet, and, after deducting the interest on
such capital, tax the rest of the industrial income at its
capitalized value. The whole of such property is at risk,
and does not probably return less in gross average profit
than money invested in houses. Various modes of levy-
ing the tax equitably on this class have been suggested,
but they may be reduced to three, which agree essen-
tially, and only differ in form, or in degrees of accuracy
as applicable to individual cases-
The Committee examined several actuaries and sta-
tists, and a reference to their evidence throws much
light on this subject.
Thus it has been proposed, by one witness, to assess
the tax on the portion of the income derived from the
capital invested in business, as if the income were a per-
petual annuity; to deduct this from the entire income;
to capitalise the residue as a life annuity, subject to
some deduction for sickness, and then to tax it on the
varying perpetual annuity into which it may at each age
be converted. Your Committee has already shown that,
in principle, a tax, at
any given rate, on income, di-
vested of all addition for ri,k and for capital returned, is
equivalent to a tax on property.
By the second mode. To make the calculation more
simple and intelligible, it has been proposed to take an
average age, and to assess the tax on the income of per-
sons in professions as if they were all of that age; thus,
4d. in the pound, it is said, on an income for life bears
the same relation to the net profit as Brl. in the pound
on the rent of an estate held in fee-s'rnple; while in
trade, where much capital is embarked, 61. in the pound
would be about the equitable tax on income. A plan of
this kind has been hugg,sic ci by witnesses of great saga-
city and techuicel knowledge; and the only objection
which can be justly made against it is, that while it may
be nearly correct ue applied to classes, it is a half mea-
sure of justice to ind;viduals, some of whom it would
overtax, others untiertax. It possesses the merit, how-
ever, of simplicity, and the result could not in extreme
eases be more than half so far from a true assessment
as the present system, which taxes all lite incomes, in-
clueing returned capital, at the same rate as perpetual
annuities, consisting of interest only.
By the third mode proposed for making the tax more
equitable, the tax is to be assessed at one uniform rate
upon all kinds of property; that is, upon the present
capitalised value of industrial incomes, which are called
or real. This mode appears to your
Committee both equitable and practicable. It has been
inherent
personal property, as well as upon all external property,
whether
shown in the evidence that by using the English Life
Table, and taking the interest of money at risk in trade
at 5 per cent., the tax on the value of industrial incomes
can be assessed with an approximation to accuracy suffi-
ciently near for all practicable purposes. It has also
been proved to the satisfaction of your Committee that
tables may be framed of as easy application in all ordi-
nary cases as the common tables of interest; and tables
have been given in as an example. The mode of dealing
with mixed cases is a matter of detail into which it is
unnecessary to enter. Where persons in trade, or
farmers, do not or will not return their age and the
amount of capital in the business, as well as the profit,
no allowance can be made for the lower value of the life
income. These profits must be taxed, at about 16 years'
purchase, like the rents of houses. .
Your Committee examined Mr. John Stuart Mill,
Mr. Charles Babbage, and Mr. Henry Warburton, whose
particular attention has been given to the question of
taxation; and these gentlemen have stated rully their
particular opinions, which it will be found differ very
materially.
Mr. Mill is of opinion that taxation should take into
account not solely the comparative means of the contri-
butors, but also their comparative wants, and that
equality of taxation consists in demanding from all
contributor; an equal sacrifice of their enjoyments. As
the possessors of temporary incomes have usually to
provide by saving for their own future wants, or for the
wants of others, while those whose incomes are perma-
nent are not under this necessity, he thinks it unjust to
tax both classes of income at the same rate; bat he woud
not capitalise them and tax them at their selling value;
he thinks that full justice would be done to the tempo-
rary incomes by exempting from taxatioa as much of
the income as is annually saved, so as to make the tax
in fact, a tax on expenditure. If from difficulties of ex-
ecution this plan was deemed impracticable, he would
adopt that of taxing temporary and precarious incomes
on a lower scale than permanent incomes. If real or
permanent property be taxed at 7d. in the pound on the
net income, ho would tax temporary incomes at 7d. in
the pound on three-fourths of the net income, and on
those that are not only temporary but precarious ut 6d.
in the pound on three-fourtes of the not annual income.
He would tax realised property on descent by a gra-
duated tax on legacies and inheritauces, as is done under
the Legacy Tax Act. It has been suggested also by Mr.
Mill, that the justice of extending an income-tax to the
poorer classes must depend on the amount of indirect
I taxes that are levied on articles of general consumption,
which fall on these classes in a greater proportion to the
aggregate amount of their incomes than upon the wealthy
classes; and that observation demands the serious consi-
deration of Parliament, if the income-tax is to be made
permanent. There are many other modifications, which
the evidence will explain in detail.
Mr. Babbage is of opinion that till persons should be
taxed to defray the expenses of the Government, which
afford protection to property and to personal rights; and
nc
that the amount or the tax should be measured by the
net annual income of each person, from whatever source
i r
de ved; whilst the actuaries are of opinion that the value
of the property on
propertywhich he
wouldog t
sell to b
ine taxedthe is the
price at which themarket,
stud the
thatvahi heeto each person of the annuity or industrial
i orne
portti:ion
would lose.
Warburton is of opinion that, provided the in-
feetly equitZypearnornent source of revenue, it is !m-
-end that he oonsiderstri:e
as a long or as a short'le"me'
just to charge annually the same
annuity,
elwhetherea r
oran
adsitdaebmpeeornrpseetgrtanabir,diyeed:
and in support of his
aletkedfore securi-
ties Committee several ite
has
s stock, laid
respecting them.
16. As the tax on all real
nt tables, and full explanation
pro::
can be collected most convenientlyrt '
as is the practice at present under schaetduitl
sessouArce,
and C,
your Conttnittee have.here no essential alteration to pro-
pose; but justice requires timt the person in p ' :2ioSt:lon
who is only part owner of the property, (livid ,nd4 ur
annu.,tier, should have the right or dedueing hiss just
share of the tax from the superior Owners; ,es at
e •nt the occupier should pay tee whole tax
to
on the
'igen and, if a tenant,
land in his occup should have the \
rig et to , ' dt the tax from the rent of the landlord,
edue -
the landlord having the light also to deduct the tax
chargeable on the Mortgagee or creditor, or on the re- I
vetenoe,,e. In the case or a life or terminable tenancy,
rer in Vie estate and the snare
of interest of ;ho ies servo snare
cf the tax chargeable on him increases every y,t„; but,
if thf:, tux is made permanent, it has b2i
n•seown that
hie tax can be made uniform. A table ha 3 been given
in, showing the uniform annual tax chargeable ream.