The Sun.
London, England, 1853-04-19 00:00:00

portions of the payments to be made by different classes,
and where they are to end. (Hear, hear.) If it be de-
sired to settle the question according to the views which
have pressed themselves on the minds of many moderate
and intelligent men, according to the view taken by the
right hon. gentleman opposite, and by my hon. friend the
member for Wiltshire in committee—namely, by making
land pay about 4d. and precarious income about 3d., then I
say that object is accomplished, for the payments of the two
classes bear that proportion to each other at this moment.
But let us go further in the consideration of this vastly im-
portant question. I protest against the doctrine of those
who propose to do justice between the two kinds of income
by establishing average classes in each kind. That is the
course advocated by• the hon. member for Montrose. The
hon. member is always consistent, and always manful ;
and when he sees a difficulty he takes no pains to avoid it.
(Laughter.) His instinctive sense of fairness and scorn of
artifice leads him, in his attempts to reform the income
tax, into difficulties which a man acting as a tactician
would avoid. The common notion was that incomes
should be classed in averages. In the name of reason and
common sense I ask, how those who demand equality can
obtain it by averaging classes of income ? Look at an-
nuities. The tables give the value of female life at 15
years of age at 25 years' purchase, but go upwards to 70
or 75 years of age, and the value of the life is only five
years' purchase. Yet you propose to average these dissi-
milar classes—to bring-up the value of five years' purchase
and bring clown the value of the 25 years' purchase.
What possible average can these interests admit of? A
life of 25 years' purchase is five times the value of one of
five years' purchase. Will it be any consolation to the life
of five years' purchase, when called on to pay three times
as much as he ought that the life of 25 years' purchase pays
only half as much as he should do? (Hear, hear.) Still
more absurd would be the attempt to average trades.
Many trades are worth 25 years' purchase. I venture to
say that if the matter be closely investigated it will be
found that many trades are better, on the whole, than
perpetuities, and for this reason, that trade affords oppor-
tunities for providing for children and relations such as no
other pursuit presents. •(Hear, hear.) Let us, however,
state the case moderately, and say that sometrades are
worth 25 years' purchase ; there are others not worth
more than five, four, or three years' purchase, and how
are you to average the interest of a trade worth three
and another worth 25 years' purchase? I must enter my
protest against this averaging, of classes. There is another
topic of a painful nature connected with this branch of the
subject, to which I must briefly allude. We have seen
that land pays 7d. in the pound according to a standard
of value which does not depend on the will or testimony
of its owner. (Hear, hear.) Trade, on the other hand,
pays 7d. in the pound assessed by each trader himself.
(Hear, hear.) I have no doubt that, in the majority of
instances, the returns of the traders are fairly and honour-
ably made. There are many cases, in trade, in which it
is a matter of extreme difficulty to know what return to
make, and I believe that in these cases the doubt is
solved by the honourable trader against himself, and that
he returns his profits greater than they really are. Let
it not be supposed that I am going to impute to the
trading classes of England generally the conduct which
is pursued by some individuals. I am going to state an
extreme case. It is an example, not of what has been
generally done, but of what can be and has occasionally
been done. I will mention no names--I will 'violate no
confidence—but I will state what happened in a great town
where a new street was built. The persons who lived and
carried on business in the 'old street, which was pulled
down to make way for the new one, had been charged a
certain amount to the income tax. They had, also, of
course, made returns to a certain amount under the income
tax. When the new street came to be built they claimed
compensation for the loss of their business. The amount
had to be assessed by a jury. Without wearying the com-
mittee with details, I will state the amount of compensa-
tion which these persons"—in number 28--claimed ; the
amount awarded them by the jury, which may be taken
as, on the whole, an approximation to the real value ; and
the amount at which they returned their profits under the
income tax. •IV ere I to descend to individual cases, it
would be almost impossible adequately to describe the
partly ludicrous and partly shameful aspect which they
assume. I will, therefore, deal with the matter generally,
and say that the 28 persons claimed the sum of 48,1591. as
compensation for their profits for a single year. The
amount of compensation awarded by the jury was 26,9731.,
or a little more than half what was claimed; but what was
the amount at which they
.returned their profits for assess-
ment to-the income tax `l-- They claimed 48,0001. ; they got
from the jury nearly 27,000/. ; but the return of profits for
assessment to the income tax which they separately made
amounted only to 9,000/. (Much laughter.) I deeply
regret that the great body of honourable men who have
made the name of British commerce famous throughout
the earth, even more for its truthfulness than for its energy.
should be degraded by association with persons who could
perpetrate frauds like these. (Hear, hear.) But at the
same time frauds of this kind, and in many other cases, do
exist ; they are inseparable from the character of the im-
post, human nature remaining as it is ; and it is impossible
when you are called upon to consider the question of the
readjustment of the tax wholly to dismiss them from con-
sideration. Now, sir, I leave this part of the question
with this proposition, which I think will hardly be contro-
verted—that as regards the state of the case between land
and trade, reserving other cases for separate consideration,
there is no sufficient ground to attempt the reconstruction
of the income tax. (Hear.) I have three other cases still
to consider ; and first I will take the case of schedule E,
which contains the payments that are derived from the in-
comes of the salaried servants of the public. I think that,
no class of persons is included in schedule E, with the ex-
ception of persons connected with the Bank of England,
who may not be called, in one sense or another, public ser-
vants. Some of them may be servants of local or separate
authorities, as for instance the East India Company, but
they are generally servants of her Majesty's Government.
Now, with respect to the case of these public salaries, I
think it is scarcely possible to distinguish between such
incomes and life incomes. As they are usually held almost
for life, with retirements in prospect, their durability is
little inferior to that of life incomes ; and their inferiority,
in respect of durability, is upon the whole compensated by
this—that they are usually progressive incomes, while life
incomes are fixed. It is impossible, I think, for any dis-
passionate man to draw a distinction between the case of
salaried and life incomes. With regard to remissions upon
salaries, the case seems to be argued rather high both ways.
At present there is a movement among the civil servants of
the Crown for a change in regard to their superannuation
funds, which would amount to an increase of salary. The
tide has but lately turned, for it is not very long since the
right hon. member for Oxfordshire (Mr. Healey) made a
motion in this house—and, unless I am much mistaken, he
all but carried it—for reducing salaries of this description
10 per cent. Now, if the right hon. gentleman thinks that
such salaries ought to be reduced by 10 per cent.,l would
suggest that it would be better to reduce them y a little
less than 10 per cent. rather than break up the income tax
on this account • but it would be much better to deal
with public salaries, if they are to be dealt with, by a
separate arrangement, than to make them the occasion
of an attempt to perform an operation which, up to this
time, all those who have been responsible have unani-
mously declared to be impossible and absurd. Now, sir,
I come to what is supposed to be the sore place of the in-
come tax—schedule C ; and when the committee have
heard what I have to say, I will appeal to their love of
justice, and put it to them whether schedule C, even if it
stood alone, is • not rather a reason why they should not
break up the income tax than why they should do so. I
know this is a bold challenge, but see whether I don't
maintain my position. In the first instance I will read to
the committee a testimony that has come from across the
Atlantic, in order to impress upon them the conviction that
when we approach schedule C we begin to tread upon very
delicate ground. We wrote to the United States, to ascer-
tain what was done in that country, where taxes of this
nature are levied, with respect to the public stocks or funds,
and I have here a short letter, signed by Mr. Everett,
dated " Department of State, Washington, 10th of Febru-
ary-, 1853," in which be ,says
'
Sir,l have the honour -- to acknowledge the receipt of
ydur note of the 9th instant, inquiring, by direction of her.
Majesty's principal Secretary of State for Foreign Affairs,
whether the public debt of the United States is subject to pro-
perty or income tax in the hands of those who hold the stock,
and also whether, in the acts authorising the contracting of
the debts, any provision was made,
exempting them from
taxation.
In reply, I have the honour to inform you that there. is
nothing in the constitution of the United States, in the
laws creating the public debt, which prohibits this Govern-
ment from levying a tax on that debt ; the Governments of
thb respective States, however, can levy no such tax, as this
would be an act impairing the obligation of a contract, which
is expressly forbidden by the federal constitution."
(Hear, hear.) Now, it appears to me, upon a fair review
of the case, that we must set out with this doctrine admit-
ted on all hands—that we are hound to give some rational
construction to those words in the loan acts which provide
that the public dividends shall be paid free of all taxes and
charges whatsoever. I think we are bound to give them a
rational construction. (Hear, hear.) Mr. Pitt thought the
rational construction to' give them was, that you should not
look at all to the nature of the obligation, but that you
should consider the dividends simply in relation to the re-
ceiver as so much income. lam bound to say that I think
Mr. Pitt's proposal was the safest and the wisest. It has,
at any rate, been acted upon for more than 50 years, and
under it the great bulk of the public debt has either been
borrowed or reborrowed. (Hear, hear.) I do nut mean now
to urge the difficulties you might have in the case of these
acts in proceeding at this time to impose a new construc-
tion, but what I do beg you to acknowledge is, that there is
only one other construction; in any sense rational, that
could be given to the words in the loan acts, and it is this
—that we are entitled to look, if we choose, not at the
mere amount of annual income, but at the durability of
the income, as tested by the price of stock when it is sold.
I' will suppose then the proposition now is, that we should
reconstruct the income tax, in order that we may levy the
tax upon something like the capitalised value of the in-
come. Considering
i the circumstances under which the in-
come tax was first imposed, and the circumstances under
which that change is now suggested, I never can believe
that it would be adopted by a British Parliament. Observe
the effect which it would have upon the interest of the
fundholders. When Mr. Pitt imposed the income tax he
said to those persons, "We have nothing to do with the
capitalised valve or with price ; we can look to nothing but
what you receive from year to year." At that time, when
the fundholder was taxed 'upon his income from year to
year, what was the capitalised value of his income ? Sixteen
years'.purchase. That was the average capitalised value of
the fundholder's income for 17 years of the income tax, until
tho conclusion of peace. Suppose your new doctrines had
been in vogue then, the fundholder would have paid only
one-half of what he did pay ; and shall I be told. that,
after adopting one construction unfavourable at the moment
to the fundholder, and after taxing him on the full value
of his income f0r.17 years,, when he could only have got 16
years' purchase for his property in the market, England
and the English Parliament will now turn round upon that
man, in the manner suggested, when the value of his pro-
perty has risen to 33 years' purchase ? If you now
determine that the capitalised value of the fundholder's
income ought to be taxed, I say that you inflicted
the grossest wrong upon him in time of war. When he
then consented to pay 10 per cent, upon the value of his
income he had confidence that peace would be restored,
that his income would become more valuable, that faith
would be observed with him—l mean faith according to the
common principles of equity and justice—and that no ad-
vantage would be taken of that rise in value. But if the
British. Parliament sets the example of establishing in time
of war, when funds are low, the doctrine that you have
nothing to do with capitalised income, and then in time of
peace, when the funds are high, sets up the opposite d° e
trine, I will not merely say that the character of this
-
nation will not stand as in the time of your fathers it has
stood, but I warn you that you must abandon the idea of
taking the lead among all the borrowers of the world, and
that you must prepare for a change in your relations with
those who have hitherto trusted you. (Hear, hear.) There
are persons who say,
" We ought to tax incomes at differ-
ent rates, accordingly as they proceed from property or from
skill." In fact, they would place industrious incomes- on
the one side; and lazy incomes on the other. Now, in my
opinion, a great deal may be said in favour of that doe-