The Sun.
London, England, 1853-05-02 00:00:00

FINANCIAL ERRORS.

TO THE XDITOR OF THE SUN.
SIR,-It is a hard and even a dangerous thing for one
to differ—not, perhaps, from this eminent financier, or
that other talented political economist, for we see that
done every day, and very boldly too—but to differ from
the whole squadron of them, and to say that the steeds
they ride partake more or less of the nature of hobbies.
But if anything would shake our faith in the sober
and steady and progreSsiVe qualities of their re-
spective Rosinantes, it would be the crisis in
financial matters at which we have now bad the
luck, good or bad, to arrive.. On one side we
have the financial representative of our Sovereign ac-
knowledging our income tax, the confessed main stay of
a free-trade budget, to be unfair, and proposing its con-
tinuance for seven years in a more aggravated form. He
has virtually, as well as verbatim, acknowledged that he
cannot improve its confessed wrongs to society.
But, if we look on the other side, .we find a party
holding in its ranks the leaders of our hitherto reformers
proposing a theoretic and, it must be acknowledged, a
most complex scheme, infinitely more so than the pre-
sent one in 'which they lose themselves in details, and
for which they show no machinery that could make
it capable of a practiCal enforcement. The present sys-
tem is odious, but the other would not be better, so far
at least as the hateful, meddling inquisition into the
private affairs of the subjects of. her Majesty is con-
cerned.

As for a third party in the affair, it is easy to see its
position is not reasoned. " Delenda est Aberdeen"
forms the only solution of its having taken up a position
on the right side♦
The result of this contest bears out one's belief in the
fatuity of the leading ideas on both sides of the disputa-
tion. We see a victory apparently about to be gained
in lan aggravated form by a system which no one now
defends. I mean no one known statesman defends it,
except fir Charles Wood perhaps, if we can venture to
apply the name of statesman to the right honourable
baronet.

I am aware, indeed, a few writers, whom we cannot
reach, defend it in the limited scenes of their labours ;
and a few writers, if not the same, have pledged their
reputation to defend a paradox to the end of their days.
They can only hide their fallacies a little longer, be-
cause their foremost opponents do not know how to
attack them,

' All things, however---taken together-and calmly con-
sidered, do seem very strongly to indicate that neither
party is' on the right track altogether. They have
miSsed, both of them it would seem, some essential
condition of the problem, each would, it is to be sup-
polled, sincerely
-wish to solve. But if they are not sin-
°ere that need be little business of ours ; the truth will
find its way without, and indeed in spite of its would-be
established dry nurses. Far be it from-me-to disparage
either the powers or intentions of our party leaders ; but
this is happily a country where, if there be occasion, and
the regulars are not at hand, we can turn out plenty of
special constables in the good cause.
In fact both parties, both Whigs and Liberals, seem
to err in making this a personal tax instead of a tax on
that material and purchaseable object called property or
capital, without any reference to its holder or possessor.
They are both on a wrong platform, though they
seem to have entered it in different ways and for different
reasons. But they are in such a position to each other
that the success of neither can produce a result which
is not vicious in principle. The reason our Whig-
steisped Ministry adopt it is plain enough. The reason
that our Liberal leaders do the same is, either the nar-
rowness of their views, or an erroneous belief in the
crude maxim that taxation and representation ought to
be equal in extent. They fear to a certain unproper-
tied class untaxed, lest they may have less apparout
claim to the elective franchise. If this is so they are
wrong, and this part of their political creed wants re-
vie'v. It is the will of the nation, not the supposed
content of the individual, that ' should determine
the' incidence of taxation. As for the manner of
that expression, it is a totally different matter. The
representation should be of as many as it is safe or poli-
tic Ito entrust with the franchise, and the number is
'doubtless daily increasing. But to make a man pay as
a capitalist will not make him one, nor will the assump-
doll that a man has an independent property, in a tenant-
at-will income, tend, so far as I can see, to make him
independent.
In truth, to look for some means to remedy the ine-
qualities of men's positions, we must endeavour to make
it easier for persons, in all ranks, to acquire and hold
permanent property, instead of, as at present, allowing
so many obstacles to intervene. A tax on the springs
of industry and enterprise is not the way to do this.
There are some persons who make an outcry about the
taxation of realised savings, as if this would be dis-
couraging to the practice of saving; but if it is hard to
tax the result acquired by industry, it is surely more
hart and harsh to tax such results in the very act of
beirig acquired, or even, indeed, when they are in the
gross passage from hand to hand, and are, in fact, in
most cases, not acquired at all, but merely greasing, as
it wpm, the wheels of the industrial machine.
In truth, however, the system of those financial re-
forniers, as a proposed alleviation of evils, or at least a
change, has got fair support from even those who did not
agre;e with its principle, or rather mode of carrying out
its principle. It has, notwithstanding, done nothing
for ifs. We have the old tax proposed for seven years ;
and though that may be lessened, it is .no favourable
signiof the power of the most prominently, urged plan
of opposition.
Why should the country not demand what it has a
righ to—namely, a valuation of the property of the
con
i try ;. and while the two or three or four fac-
tion t , if they count no many, are left to worry each
.other, and try, to. cobble or tinker the effete income
tax, lwe mig4t. simply_inquire what objections could be
foung fora totally vsew direct tax .proportioned to the
valuf, of such property. This value is, as a rule, always
proportioned to the net yearly increase of 'such capital
or poperty, which net yearly increase is, in fact, identical
with the current interest of money.
It:is this net increase which is the only proper subject
of direct and permanent taxation. The difficulties of
carrying out the plan would vanish before an energetic
Minister who really had the plan and its success at heart.
A local valuation for each parish, made principally by
persons on the spot, and regulated, as is done in Ame-
rica, by perhaps some board for each county, and then
adjusted fairly between the counties by some central
authority, would not seem difficult. Much of the
machinery exists. And the best of it would -be that, by
the simplicity of such a mode, every one, landowners as
well as other capitalists, would gain by the saving of ex-
penses in collection.
I did not mean to write at so much length.
Believe me, &c., &c.,

ONOMOS.

THE DEBATE ON THE INCOME TAX.

TO THE EDITOR OP THE SUN.

Sin,—On Monday the House of Commons is to decide
the Income Tax Question. Allow me, through your
columns, to draw attention to an important view of the
question of exemptions.
Mr. Gladstone wishes to move down the sliding index
of the scale of the Income Tax, uttil it stops at the
number 100. In other words, the new Chancellor of
the Exchequer extends the circle of his operations to all
incomes above 1001. By this means he catches in his
financial net an enormous amount of incomes between
1001. and 1501. He has narrowed the area of the
meshes, and expects to inclose a number of small fish
that have hitherto disported in the ocean of irresponsi-
bility. What effect this may have upon the revenue
Mr. Gladstone ventures to estimate, but there are
others quite prepared to doubt whether the expectations
from a project of this nature will be thoroughly realised.
In the first place, many are unable to see upon what
principle the new limit is selected. There is no doubt
that there exists somewhere a boundary beyond which
taxation cannot extend. The difficulty is to decide
upon the position of this point. Mr. Gladstone,
it appears, considers that it ought to be placed
at the figure 100. Let it be granted that this is
correct. Admit that the possessor of 1001. per an-
num ought to pay a subscription to the public re-
venue—an assertion which it is not my present purpose
to contest. The question then arises, how is the Exche-
quer to deal with this taxable man ? Society has afforded
him facilities for earning this income of 1001., and re-
quests him to indemnify it for the sacrifices it has made
in order that he may be properly protected during the
acquisition of his income. To thisthere can be no reason.
able objection. Unless society had protected him, he
would have been interrupted during his labour ; he
would have been robbed of the proceeds of his labour ;
he would not have been able to obtain payment for it,
supposing that the purchaser of the proceeds of his la-
bour denied his just claims. He cannot refuse, then—
always supposing that his assent does not deprive him
of any of the necessaries of existence—to pay his share
towards the expenses which society incurs. While, how-
ever, he does not refuse to accept all the obligations
which he assumes by being elevated to the rank of tax-
' able men, he has a perfect right to protest against any
system of taxation which would make his social position
worse in a pecuniary point of view than that of nis non-
taxable brethren. Now, the great objection to the scheme
of Sir Robert Peel and that of Mr. Gladstone is, that
they each seize hold of the lower limit of taxable in-
come, and by their operation make the holder of the income
worse off than the holder of the income immediately be-
low him. A clerk in the receipt of 1001. per annum
will, by Mr. Gladstone's scheme, have to pay to there-
venue the sum of one hundred fivepences, and thus have
his salary reduced to 11. Is. Bd. less than that of a fel-
low clerk who has 991., or Is. Bd. less than that of one
who has 981. Taxation to be just ought to operate upon
each man aocording to his means ; in this case it inflicts
the positive injustice of impoverishing the payer of taxes
to such an extent that his revenue is really below that
of a person who is relieved by law from the necessity of
paying anything to the revenue. In 'other words, taxa-
tion, according to Mr. Gladstone's scheme, makes the
possessor of an income of 1001. worse off than the pos-
sessor of an income of
.991. or 981. This is evidently
unjust. The true principle to be adopted may be thus
stated : First to define the income which is the lowest
that will suffice to afford its possessor the fruition of the
necessaries of life, and then to levy a certain per centage
upon everything beyond that sum. If an income of
1001. as Mr. Gladstone asserts, ought to be subject to a
tax, and 99/. ought not, it is as clear as noonday that
the 1001. ought to pay a rax, not on the 100, but upon
the 1. This is the principle enunciated by Bentham
and adopted by Mill. Bentham placed the limit of un-
taxable income at 501. After this he would have had
the excess taxed according to a certain percentage.
Suppose Mr. Gladstone's scheme to be adopted by
the Legislature, we shall have numerous examples of
anomalies like the following. A has an annuity of 991.
per annum ; B has an annuity of 1001. per annum