The Sun.
London, England, 1853-03-25 00:00:00

this would be unjust; but as certainly neither the actuaries
nor Mr. Hubbard ever proposed to confiscate capital, as Mr.
Maitland's test supposes them to do, when, through the
disregard of time, • which charactezises his reasoning, he
presents this caricature as an illustration of their views.
Assimilate periods, and they' will adopt his case.
Until 1860, repay capital, but pay no interest to the ter-
minable annuitant Until 1860 (not for ever) "pay to the
holder of Consols nothing at all yearly." Tbis, Mr. Mait-
land, would be equal dealing ; or, if you determine to pay
to the holder of Consols nothing at all yearly for ever (i. e.,
if you make perpetual an income tax of 20s. in the pound,
which is equivalent to seizing the whole revenue of the
country),iyon will for ever seize the yeaily interest'arising
from the 10,000/. realisedrfrom the terminable annuity, in
whatever form it may be subsequently invested.
I have answered Mr. Maitland's challenge. Will he now
answer-the one originally 'addressed to Mr. Warbtirton by
Mr. Ricardo, which I repeated in. terms less capable of
being evaded, and which has remained unanswered up to
the present time ? " You profess to tax income ; you do
not venture to call capital income, yet you., justify a tax
upon every payment of a terminable annuity. .Answer,
then, this question man gave oh the sth of January,
1851, 10,0001. for an annuity of 10,3001. due, on the sth of
JanuarY, 1852 ; was the 10,3001. which he received all in-
terest ? If it was not, what did the residne consist of ?
Was not 3001. interest, and the 10,0001., was it not -capi-
tal ? And does not, therefore, the deduction of 3001. Bs. 4d.
income tax (at 7d. in the pound on 10,3001.) include an ab-
straction of 2911.135. 4d.' from the capital to be repaid?"
I should aerionaly doubt. whether Mr. Maitland had ever
explored the 10th George IV„ c. 24, and the tables framed
for carrying the act into effect. Let me even now imite
his attention to them ; and he will observe that (with a
view to the reduction of the _national debt) .that ad was
passed to encourage the public to exchange their perpetual
annuities for terminable ; and that_ the effect of the opera-
tion was to extinguish a given amount of debt in a given
number of years by half-yearly payments, interest being
paid on the portion unredeemed, together with the instal-
ments of capital.
Besides their operations by terminable annuities, the
!commissioners are in every quarter instructed to apply the
surplus revenue to the reduction of the national debt by
purchases in the market, and .I beg Mr. Maitland's atten-
tion to the several results of these two operations.
On the sth of January, 1851, Consols being at par, the
commissioners apply 10,000/. out of the surplus revenue to
buy in the market 10,0001. stock, which they cancel. They
also, in exchange for 16,000/. stock, grant an annuity of
1,1641. 18s. 2d. for 10 years (and may I venture to ask Mr.
Maitland's reference for a moment to the table at page 20
of my letter to, the Chancellor of the Exchequer ?) In the
course of those 10 years they pay to the annuitant 11,3091.
Os. 4d., being 11,649/. ls. Bd., less income tax, 339/. 15. 4d.
The interest accrued during the investment amounted to
1,6491. ls. Bd., or with 481. 2s. income tax deducted, to
1,6001. 19s. 8. The difference between this last sum and
the entire sum paid by the .commissioners. leaves 9;708/.
6s. Bd. as the cost of redeeming 10,0001. Consols. The
gain to the Government of 2911. 13s. 4d. is obviously a
simple abstraction from the pocket of the annuitant, and
to this the memorial of the assurance companies. referred
when they asked that terminable annuities, granted in ex-
change for stock, might be relieved from a tax " which
would not have been charged on the perpetual annuities
for which they were exchanged." -
• When the obligations of . the Government are thus de-
monstrable, it is needless to argue the question upon any
inferior consideration; or with reference to any section of
the claimants ; and I trust we may never witness in this
country a Government compelling the public creditor to
accept less than his bond, upon the plea that he had bought
it at a discount. The ingenious suggestion of the Morning
Chronicle on the 14th of January, that " nothing can be
plainer than that purchasers of annuities under the income
tax can in no way be affected by a charge which has been
fully allowed for in the price of their purchase," is quite at
variance with Mr. Maitland's assurance (pamphlet 2, p. 25)
—` I can find no trace of any such depression ; and I be-
lieve that those who bought Lon Annuities for some time
after the last opening gave a price which (neglecting the tax
altogether) obtained for them no higher interest than they
might have got by investment in Consols."
So on one side annuitants are told, " You bought your
property at a price reduced in proportion to the tax which
is levied upon it, and you are therefore not aggrieved."
On the other they are told, "Your property has not been
reduced in value by the tax, and therefore you are not in-
jured." These contradictory allegations are both irrele-
vant, and neither of them is true.. Terminable annuities
have not maintained their value, "neglecting the tax al-
together" (or the Bank of Ireland would not have been
tempted to select . them, for their investments), nor have
they been depreciated to the extent of the ,tax in its pro-
spective incidence. The price has been variously deter-
mined as hope and fear preponderated in the balance, but,
whatever the price, the rights of the original holders
passed unimpaired to their successors, The case of the
Bank of England is identical with that of other holders of
terminable annuities, and when Mr.. Maitland meets the
statement " that to tax.the residue °fits 26 Teats annuity
ending in 1860 would be to abstract 40,0001. from the pro-
prietor's capital," by hinting that the charter has been re-
newed since 1842 ; that over-taxation, past, present, and
future must have been considered ; and "that the public
might safely plead a settled account," he really concedes
all that we ask for—we accept the admission of over-taxa-
tion, and leave him to show the " settled account."
dr. Maitland makes it a charge against me that my whole
pamphlet does not contain the word "lease," and then con-
tinues (pamphlet 2,' p. 28) Yet vast districts in London
are covered with building leases. In such cases the lessee
gives a premium—that is, he expends money in building,
the return of which he may as justly claim as the Long
Annuitant can. ,/le receives during his lease an annuity
equal to the difference between the rackrent and the
groundrent, and he has no interest in the reversion. If a
lessee whose beneficial lease expires in 1855 is to be taxed
more highly than an annuitant whose interest continues
till 1860, it must be because, according to Mr. Hubbard's
most arbitrary canon, the incidence of the tax is determined
by the essence of the property, not by the accident of the
possession. It is probably for this reason that the interests
of the leaseholder are disregarded ; but will common sense
believe that it makes much difference to the holder of a
temporary income whether the source of income does or
does not exist after his interest has entirely ceased ?"
To the perfect identity of the cases of a building lease
and of a terminable annuity-the ChronzWe points with anti-
cipated triumph, and challenges me to provide a practica-
ble scheme for the assessment, in due proportion, of the
lessee and lessor in every building lease, or to surrender
the cause of my client, the Long Annuitant.
The first alternative would not be hopeless ; but, if it
were, it need not force me upon the other horn of the
dilemma, for the premises of the argument are unfounded.
The cases, far from being identical, are essentially distinct
in the very matter which decides the rightful incidence of
the tax—the presence, viz., of capital in the moneys taxed.
Of 5001., the sum of an, annuity terminable in .1860, 4001.
is capital repaid. Of 5001., the net rent raised from a
leasehold property (and whether the lease expire in 1855,
in 1860, or in 1899 is immaterial), the whole is interest or
taxable income. Whence is that rent derived ? A has
land valued at 2,5001. to buy, or at 1251. to rent ; B takes
the land on a building lease, and erects at the cost of
7,5001. a house, which he lets, with the premises attached
to it, for 5001. , That 5001. is the interest of 10,0001. capi-
tal, and it is justly assessable to the full extent, whether
the lease have 20, 10, or 2 years to run.
It must not be forgotten that building leases are ordina-
rily taken for so long a period that the reversion is of no
value at the time of contract ; and I have omitted any
notice of such leases, because they do not affect the great
principle for which I contend, " that an income tax
should not be assessed on capital." It would be a strange
love of consistency in injustice which could impel a Go-
vernment to plunder its own creditors (the terminable
annuitants) of, 31. in every 1001. of their debt, because it
was difficult or impracticable for the lessee beneficially
bolding a real property to charge against the reversioner a
due portion of a tax legitimately imposed.
Mr. Maitland, the champion of the existing system,
would of course relax in nothing the hold of the tax upon
present ownership ; but, to discredit the claim to relief of
the Long Annuitant, he ingeniously attempts to confound
his property and tenure 'with a life interest in real pro-
perty, and proposes to constitute the " Chancellor of the
Exchequer as the reversioner of the fee simple of the Long
Annuities, in trust for the people of England." Well, this
is a financial novelty; the debtor constituted a reversioner
to his own debt—to illustrate what ? That he ought to
bear a portion of the tax on the interest of his debt ? No,
but that the creditor should be taxed upon the debt when
it is discharged !

Mr. Maitland exhibits (pp. 30 and 34) in a very striking.
manner the difficulty (the impossibility I may say) of
carrying into effect the proposition of discriminating in
the assessment of a fee simple and of a life interest, and
charging in the latter case upon a reversioner the portion
of the tax allowed to the life tenant. Here, at least, I
thought we should be agreed ; but so inveterate is Mr.
Maitland's prejudice against " the parties," that not only
he attacks Mr. Farr's proposal for a diminished assessment
upon life tenants of real property, but he also attacks the
position I took in resisting it—mainly, by the by, through
misrepresenting my idea of a "life estate" as "enjoyment
for life with an absolute power of disposition over all the
rest" (an evidently untrae definition). The extracts culled
by Mr. Maitland from the Edinburgh Review, and from the
works of Thiers, D'lvernois, and M. le Marechal Pullet, are
interesting as illustrating the comparati4e merits of direct
and indirect taxation, but are widely different to the
titles " Schedules A and D " and "The present State of
the Question," and it argues an absence either of care or
scrupulosity to cite, as he does, the language of Ricardo
and Senior. The saying of Ricardo (p. 8), " That if a tax
be unequal in its operation—if it should fall particularly
heavy- on one class of trade, the profits of that trade would
be diminished," &c., is quoted to justify a burden im-
posed upon all classes of trade. And the saying of Senior
(p. 12), ' That he would not allow a claim of compensation
for any permanent charge, subject to which people have
bought and sold" (tithe or quitrents on real property being
illustrations of the author's meaning), is cited to prove that
a temporary tax (limited originally to three years), having
been imposed in 1842 on the profits of trades and profes-
sions, the privilege of complaint of over-taxation may pos-
sibly be allowed to the original sufferers, but on no account
to any who have subsequently engaged in trade or proles-
yforurom death."the authors The
you—
alone. Mr. Maitland's reasoning is evident enough
:
" You were (professionally) born under the yoke, and
msuuspptobrtearthiits withoutamiable
doctrine murmuring
derives till
quoted is not so obvious.
The plea on which a mitigated assessment of the profits
of trades and professions has been gene y
that the portion of them which, through -argued—viz,
general) argued—viz.,
savings, becomes capital, taxable in itch the medium of
fairly be taxed at its creation, is products, cannot
land ; but for the purpose of Ish
own) i,
products,
by Mr. Mait-
ment which I adopt," he gives an g the style of argu-
which you inserted on the Bth Janof extract from the letter
observation of his readers bco uary, and assists tho
interpretation of my vro „ y mmenting upon a distorted
I'M. I had observed, that a fair
construction of the " apeci l of
the fundholder entitled hima contract" cited in favour
to have "his income assessed
with reference 'to the than
the.
value of his property no higher
the income arising from with reference to
any other source .
the 'value of the but that I
propert—
y which produces it ;
did not conceive the demand to he legal, fair, or reason-
able, that the laboriousl acquired income of the physician
or the lawyer, the
.profits of qthe intelligent merchant, and
the earnings of the a • be taxed in their
industrious tradesman, . .
dividends on funded full amount at the same rate as the
Property, yearly and spontaneously accruing to its owner,

who may be a native or a foreigner, a woman or a child
Gabinet-Minister or-a lunatic." , a
In this passage Mr. Maitland sees "-the rights of pro-
perty lightly spoken of, invidious comparisons drawn be-
tween the manner in which different incomes accrue to
their possessors ; and an odious contrast between the posi-
tion of the Cabinet Minister and that of the intelligent and
laborious classes."
I had thought my expressions to be as free from am-
biguity as my meaning from disloyalty. .The comparison
was drawn between the two classes of income—the one re-
quiring for its creation unceasing skill, intelligence, and
industry ; the other flowing from a perennial source, with
such entire spontaneity thar the absence of the foreigner,
and the helplessness.of the child, could not arrest its course,
and that it was as surely paid for the unconscious lunatic
as for
rhathe
Maitlandpowerfula diner
the opportunity of
ectualMinisteroftheiminCroginwng.
I
this distinction into greater prominence, and I proceed to
notice his inquiry -- " Why does Mr. Hubbard propose two-
thirds of the assessment on trades and professions when his
own conclusion is that one-half would be more fair?" I
r have nowhere stated that " one-half would be more fair." I
have shown that the fair interpretation of the "special con-
tract alleged to'protect the fundholder woald be satisfied
by an assessment upon the trader to the of one-half
only of his yearly receipts, but I never rested the proposed
assessment. on the special contract. On the contrary, I have
treated the income tax as a tax of compensation, and for
that very reason I. have affirmed (Letter, p. 51)—
" That the limit of expenditure in each class should be
the limit of assessment of taxation.
" That the vast increase in the,property or capital of the
country establishes the fact that a large proportion of
annual income is saved.
"That for the purpose of their relative assessment in-
comes of--the first class may be assumed to be expended in
the proportion 0f.9-10ths, and incomes of the second class
in the proportion of 6-10ths." -
And the ground upon which r fixed the proportion of
two-thirds is-still further explained in my letter to the
Times on the Bth •of San-aary.
That the precise fraction must be determined arbitrarily
I admit, but Mr. Maitland cannot logically deny the essen-
tial justness of these positions ; for he devotes a section of
lus first pamphlet to prove (pp. 36 to 48) that the "income
tax" is a tax of compensation ;" and he must admit that
the indirect taxation for which it compensates touched in-
come only to the limit of expenditure; and that expendi-
ture bears a less proportion to income when derived from
industrial sources than from real property.
He gas but one alternative: he may boldly face the hope-
lessness of his position, and justify in the operation of the
tax an assessment on .the annually-created capital of the
industrial classes. Mr. Maitland instanced the price of the
Dutch funds to show that, measured by the value of the
property, Consols would have paid more highly at 7d. on
their dividends than the Dutch' funds on theirs at sjd.
Very tru,e,,hut everybody knows that the debt of Holland
ranks in-credit next to our own; and if, as I believe, the
interest'` derived' from the aggregate of foreign loans and se-
curities held here may be estimated at 5 per cent. of their
marketable value, it follows that of hundred millions in
value would yield, at an assessment of 51d. on five millions
of interest, 109,375/:, while an equal value in Consols
would, at 7d: in the pound, yield only 87,500/.
Mr. Maitland is entitled to our thanks for bringing into
notice a fact of great importance connected with the pre-
sent system of assessment under schedule D. It is this (Ist
pamphlet, p. 23) :
" That of all those who return their profits upon a three
years'• average, no one individual has in the result been
compelled to pay as much as 7d. in the pound on his pro-
fits, unless his income has in every year Veen precisely the
same. If in any one year it has been better or worse than
in the preceding, then, however long the taxmay continue,
the aggregate of his payments need never be so much as 7d.
in the pound on the aggregate-of-his profits. The deviation
from that rate may, without any violent or improbable
supposition, be 'made very considerable, as the reader will
see if he works out any particular instance, recollecting
that the trader is protected by the act against' a payment
larger than that due to the actual profit which he makes in
the current year, while any increased profit above the
three years' average is not taken into account or required
to be paid upon until the following year, when it enters,
and raises thwaverage.
" As an example of the extent to which the rule may,
under circumstances conceivable, though 'highly impro-
bable,, operate in favour of the trader, may be suggested
the case of a man whose profits are for a series of years al-
ternately any uniform sum and nil. The aggregate pay-
ment of such a person will be, not 7d., but 2d. and a frac-
tion in the pound on his aggregate profits."
This fact, not less strange than true, is, I will undertake
to say, almost unknown to those whom it concerns, for the
instructions attached to the official form of returns under
schedule D never hint at such an indulgence. However,
there it stands in the statute-book, to cunning managers
an invitation to reduce their 7d. to 2d. by a process which
they may support by the evidence of their ledgers, and to
all traders a means to be legitimately used for diminishing
the tax upon their profits.
In the temporary object and brief duration of the act of
1842 may be found a motive for introducing this clause,
intended probably
,to relieve traders from the burden of
paying upon the gams of former good years during a bad
year which might not under a perpetuity of the tax effect
future averages. The motive seems hardly sufficient to
atone for the uncertain action which the clause involves,
but in a permanent tax it would be wholly unjustifiable ;
and I venture to say that traders would have no wish to
retain it. But I must beg Mr. Maitland to deal with this
" fact of importance." Mr. Maitland holds that traders
ought to pay on the whole of their profits 7d. in the
pound. This 133 d section of the act permits traders to
pay less than 7d. in the pound. And yet Mr. Maitland
believes the tax in its present form to be both sound and. •
just. Why is it sound and just ? Is it because in prin-
ciple it refuses to discriminate in favour of schedule D ?
Is it because in practice it does mitigate the assessment on
schedule D ? Or is it because the principle is one way and
the practice is another?
The moral evil resulting from the present tax lam
satisfied to prove by the evidence quoted by Mr. Maitland
(p. 18.)
Mr. Pressly says, " I think there has been a great eva-
sion on the subject, and I think the longer the tax exists
the evasions will go on under schedule D.
" That they will go on increasingly do."
Taken in connexion with Mr. Maitland's conclusion that
the tar will be permanent, Mr, Pressly's evidence opens a
very melancholy prospect, and, although Mr. Maitland
may declare the tax to be sound and just, I cannot but
ascribe to the general conviction of its injustice much of
the evasive and fraudulent returns which occur in the
Sssessment under schedule D. That apportioning the tax
equitably upon the receipts of traders and professional
Men would altogether prevent fraud is not to be expected ;
but the plea of self-protection •would be removed, and,
though some men might still be found who would sell
their integrity; the law would have ceased to be the
promoter and partaker of their guilt.
Mr. Maitland writes (pamphlet 2, p. 39), " The discou-
ragement to accumulation which will be occasioned by im-
posing a heavier tax on what is saved than on what is
earned must be obvious." I had thought that what is
Saved must have been first earned, and that to tax earnings
Would therefore be the greatest discouragement to accumu-
lation' but, assuming Mr. Maitland to mean that the pro-
posed discriminating tax in favour of industrial incomes
would have the effect of violating a great economic axiom,
I can only regret that he did not explain the process by
which the result, which appeared to him so obvious, was to
be effected, and I have the satisfaction of assuring him that
the readjustment I have proposed is framed upon the prin-
ciple of exempting savings altogether ; the assessment of
two-thirds on industrial incomes being equivalent to the
levy of an uniform tax after exempting one-tenth of realised
property incomes, and four-tenths of industrial incomes as
the relative savings of those classes.
After exhausting his arguments in opposition to a read-
justment of the tax under schedule D, Mr. Maitlandapplies
himself to show that a mitigation of the tax would not
benefit professional incomes (page 42), for that their fees
and profits would be diminished until the relative position
or the 4everal classes was re-established. I will not com-
bat this vision. I will allow its full influence on the ques-
tion, and suggest to Mr. Maitland that, as traders will be
7bnobgianiteneerrss bhyistadhercolLanyge.,
can be
ontoheiroscelras;sanes
and that
his o
homh;
piasition is therefore needless.

I feel that I owe an apology to your readers for carrying
t em through a review of such objections as I have been
c nsidering,hut my excuse lies in the confident assumption
writh which the pamphlets of Mr. Maitland were cast before
the public eye by his injudicious chronicler ' • and it was in
every way desirable that the public should be enabled to
appreciate the force of the objections to reform by an exa-
Mination of the labours of a gentleman who, in the estima-
tion of the Morning Chronicle, " is one of the soundest and
niost powerful writers against the popular errors by which
t4e question has been obscured."

This review of the recent objections to reform will be
fitly closed by a brief reference to Mr. Maitland's conclud-
ing paragraph. " Let me," he writes, remind the reader
that each advocate of modification has to show that the
plan which he approves is just, and useful, and practicable.
II he fail as to any one of these points the decision must
b in favour of maintaining the tax in its present form."
,I cannot guess what may be considered " useful" by Mr.
Maitland, who strangely interposes that word between
" just" and " practicable," but any plan of reform ought
undoubtedly to possess those last qualities ; and it may be
steely affirmed,—
a. That it is "just" to exempt capital or property from
the operation of a tax on income ; and,
i 2. That it is " practicable" to carry this principle into
effect by separating capital from interest when they are
combined under the form of terminable annuities, and by
these two points all reformers may cordially
assessing industrial incomes at two-thirds only of their
analnounpret.ssing
agree. . "Upon the first there is no difference of opinion
processby thet ssaemienetrieleult inthera
anion them, and the second would accomplish by the " -
imputations a i n
proposedwhich would
by 3
ibr e.
Patletainst
Farr and the body of actuaaies.
at would appear, from the character of the examination
tol which they we
at these re subjected, that
gentlemen pro-
pounded the plan of taxing reversionersrather as an answer
tota challenge than as a necessary feature in any measure
of reform, and the concession which they desired to estab-
lish in favour of land and buildings is, under my plan,
effected by an allowance on the rackrent. Were it possible, however, for the Government to shrink
frnm the task of amending the tax, the alternative would
not be such as Mr. Maitland' expects.
While every measure of
reform is canvassed with 811011
severe and searching scrutiny, the manifold andclearlyy
indefensi-
ble defects of the existing act (disclosed moretbe forgotten. Its
every discussion which is raised)
cannot
schedule D was
unequal and demoralising
operation ender
to Mr. Mait-
land's felt to be intolerable, but now .
it appears under the
land's exposure of the 133 d section)t' by one clause the additional demerit of frustrating
already
convicted of
pro-
fessed
purpose of another. the taxation of his terminable
robbing the funclboidefe j and now it is accused by Mr.
annuities under
overchargingschedule C, the landowner more than
Maitland him /
himself A.
20 per cent.in se
income tax can be recast in a form at once just
That the _
practicablel do not doubt, but, were it otherwise, the
and ould be, not the maintenance of the tax in its
an
form,ur but its utter rejection.
present _
am,
I Sir, your obedient servant,
Birohin-lane, March 15.

J. G. HUBBARD.

BEMOAAL OF THE CAB-STAND IN THE STRAND.—The
cab-stand in the Strand, from Catherine-street to Somer-
set-house, has been removed by order of the Commis-
sioners of police. It was one of the oldest in the metro-
polis, and was considered by gentlemen of the whip to
be the most profitable, as being placed in the centre of
London. During its existence it was found to be a
great obstruction to the vast amount of traffic from all
parts of the city, and also to the very many passengers
in getting in and out of omnibuses and other vehicles in
this important thoroughfare.