The Sun.
London, England, 1861-09-09 00:00:00

THE SUN, LONDON, MONDAY EVENING, SEPTEMBER 9, 1861.

THE INCOME-7AX.

The grand dispute about the policy of an Income
tax is tame beside the minor dispute about the
inequality of its incidence. The question of direct
or indirect taxation is only a question of rich and
poor, and this distinction of interests is too familiar
and old-fashioned to excite much active party spirit;
but the arguments for deducting savings from
income, for giving the professional man or merchant
an advantage over the landholder or fundholder, for
relieving the annuitant at the expense of the grantee
of a rentcharge for life, touch the very points upon
which mankind, as taxpayers are most sensitive.
It is not, after all, the division of society
into " horizontal layers," but the jarring together
of the various sections and fragments in the
same stratum, that causes most disturbance and
uneasiness, and with all their social equality we
suspect our American cousins will find this the rub
in the financial experiment which they are now
making. No one can peruse, however cursorily,
the report, or rather the four reports, on the
property and income tax, of which the most meagre
and negative was curtailed and adopted by the
committee, without marvelling how conclusively
each or every side of the question can be stated,
if only the others can be excluded from view.
Some of the problems, indeed, that used to be
solved with infinite ingenuity were found to re-
semble that said to have been submitted by
Charles 11. to the Royal Society. For instance,
it was common to ask with perfect assurance why
precarious incomes should pay as much as perma-
nent incomes, and it was not discovered for some
little time that in fact they do not, inasmuch as
the receipts from the one class are quite as pre-
carious as, and cease together with, the income
itself, while the other contributes to the Exche-
quer for ever, if the tax should last so long.
Still, there are many which cannot be disposed
of so easily. The oftener we read over Mr. Hub-
bard's draught report, with Mr. Lowe's answer
to it, the report proposed by Mr. Sotheron Est-
court, and the argumentative passages struck out
of Sir Stafford Northcote's before it was adopted,
and the cross-examination of Mr. Mill by Mr.
Gladstone, the more we shall be tempted to despair
of a really equitable adjustment of the income tax.
If we take Mr. Hume's scheme for adjusting the
assessment in accordance with the value of pro-
perty, the tenure of the owner, and the age of
owner, we shall find that we are in effect capi-
talising the income, and taxing it on its value as
capital or property—a plan the injustice and im-
practicability of which are denounced by Mr. Mill
himself. If we prefer Mr. Mill's own principle,
and rigorously apply the rule of exempting savings
we shall have converted the tax from a tax on
income into a tax on expenditure—a source
already ransacked by indirect taxation. If, with-
out importing this motive into our theory we
divide incomes, with Mr. Hubbard, into " indus-
trial" and " spontaneous," we confound under
the former head the profits and even the interest on
trading capital with the hard earnings of labour;
and, under the latter, subject such incomes as the
dividends of shareholders to a higher rate of taxa-
tion than we apply to partners in business. Every
move in this great, game of calculation has a counter-
move corresponding to it, every objection admits of
an answer, and every answer of a further objection,
till we see that it must be a drawn battle unless
some party can succeed in getting both the first
and last word. _ _ _

Taking, however, the three main features of Mr.
Hubbard's scheme, as analysed in the Report, we
need not shrink from having an opinion, not, indeed,
on their fitness to become the primary axioms of
taxation, but on their intrinsic merits, The first
of these is a proposal to make nett, instead of gross,
income the basis of assessment. The existing prac-
tice is, of course, founded on practical convenience,
and, though we are bound to reject all arguments
in its favour which might equally well be brought
against all change, however salutary, practical con-
venience has a strong prima facie case. When we
examine Mr. Hubbard's details we find that even
he is forced to have recourse to an average, that this
average must vary with each class of gross incomes,
such as " mines and mining adventure," " land-
rents," "house-rents," and " fines," and that the
very postulate by which the deduction is to stand
or fall is shifting, sometimes taking the form that
a man should not be taxed "in respect of income
which ho does not get," sometimes that " capital
should not be taxed in its transfer." Without pre-
tending to have exhausted the pros and cons of
this proposal, or to have fully weighed the validity
of the sweeping exception to the second rule claimed
for the Succession Duty, we cannot wonder that
Mr. Hubbard failed to convert the committee to this
article of his creed. Again, in the suggestion for
distinguishing between that element in an annuity
which represents capital and that which represents
income, we can detect the presence of two very
questionable doctrines. It is assumed, in the first
place, that the capital invested in an annuity retain
its identity as capital, so to speak, iu the annual in-
stalments, and that the same reasons which prevailed
against taxing it in its former shape continue to ope-
rate against taxing it after its conversion. Secondly,
it seems to be taken for granted, by a petitio
principii the very converse of that which under-
lies the demand for the protection of savings as
savings, that the law is specially interested in spar-
ing those who have deliberately sacrificed a fund
which would have survived them to the augmenta-
tion of present income. Moreover, why should the
taxgatherer discriminate between annuities which
are the " annual product of a permanent property"
and annuities which " consume the property itself,"
when the two, as Mr. Lowe puts it, are "equal in
amount, duration, and value, and actually conver-
tible the one into the other ?"

While, therefore, we are far from denying that
remedies might be devised for these two grievances,
we cannot blame the committee for drifting into
the conclusion that their chairman's plan " does not
afford a basis for the practicable and equitable re-
adj astment of the income tax." The case of those
whose profits are made by personal skill or intelli-
gence rests on different grounds. This class is toler-
ably clearly defined, and all its members are entitled
to nearly equal consideration. " Industrial incomes
are both precarious as to amount and also temporary
as to duration ;" so that, if both or either of these
are grounds of exemption, their claims are para-
mount. But this is not all. Labour of this kind
is the very machinery of accumulation ; its earnings
are the reward of the most valuable work that is
done for the country, and much the same reasons of
policy which led to the remission of import duties
on raw materials militate against docking heavily
the gains of professional men. It will not do to
limit the motives for the concession in question,
with Mr. Mill, to the " necessity of saving." If
this view be adopted, means must be taken to as-
certain not only that the saving might be made, but
that it has actually been made, and the best way
of doing this might be by extending the encourage-
ment already given to life insurance by the Act of
1853. But then it may well be doubted whether
it be any part of the duty of the State " to give
bounties to saving, or to lay penalties on expendi-
ture." "A father may do more wisely if he expend
£2OO a year in giving his son a good education than
by laying by the money," yet, if saving be the condi-
tion of relief, he will thereby put himself on the same
footing with the owners of land or Consols. The
truth is that it is very difficult to find any technical
formula that will comprise all the ideas that con-
verge in the all but unanimous sentiment that this
class of incomes should be lightly taxed. It is
partly the feeling that they are chiefly made by men
during the short working prime of life, with many
dependent on them, and amid many anxieties for
the future. It is partly, no doubt, that the sense of
property in the yearly produce of one's own hands
or brains is stronger than in that which has been
received from others, or even acquired and invested
by oneself at an earlier period. But it is probably
the precariousness of such receipts, and the fact that
so much of them goes to replace the cost of educa-
tion and the expenditure of those long years of
waiting that precede professional success, that
weighs most with the majority of minds. Mr.
Newmarch did but sum up an anomaly which has
Le en recognised, without being redressed, by every
Minieter from Pitt to Gladstone, when he specified
two risks and two wants affecting the owners of
industrial incomes, as such, which do not affect the
owners of permanent incomes, as such. An appeal
for indulgence so favourably ebtertained by the
country for so long a time can never be shelved by
the mere reluctance of a committee to unsettle the
present basis of the tax. The hardship has been
admitted by Mr. Gladstone himself; the difficulty
of remedying it, with justice to other claimants, is
confessed by all. This then is just a case in which
a Chancellor of the Exchequer should face the diffi-
culty boldly, ami set himself to smooth over the
administrative and political obstacles for which Mr.
Mill could not undertake to find a specific. If we
cannot have absolute justice, we must have an ap.
proximation to it. There is little likelihood of the
meinha ve grownoft
hi
at s
repealedfamiliarinw
with
hr
tdhea
tax
length being
B e
monster that, from scarce enduring, we have almost
Yhsideo W
use
learnt to embrace it. But we fear that the acqui-

escence of many people is founded on a guilty com-
plicity rather than on genuine affection, A sense
of wrong is apt to beget a lax conscience, and the
demoralising character of the income tax has loug
been added to the list of complaints which are
periodically brought against it. There can be no
doubt that Schedule 1) takes very good care of itself,
but we believe that much of the temptation to fraud
would be removed were the law to recognise those
distinctions between industrial and permanent in-
comes, which, however difficult to reduce to a ma-
thematical formula, every man's instinct pronounces
to be real.—Times.

the keys which holds the girders together, and
when all are united, the timber staying is removed
forward, and the girder rests with its two ends
upon the supports of the pier or column. Three of
the girders are already finished, a fourth is on
the eve of completion, and the distance between
the Surrey side and the first brick pier is spanned
by two lengths of girders ; the centre, or widest
portion will be spanned by four girders; and from
the second brick pier to the Middlesex, the space
will be covered by two more girders, making to-
gether eight •of these gigantic iron girders for
each side of the bridge. There will be ten of the
iron columns, and the two brick piers, to carry the
bridge. There will be, of course, none of the
chains which at present make the graceful cate-
nary curve across the river, nor the towers
which are such conspicuously ugly object in the
centre of the stream. The original estimates
for the bridge were £166,000, but the cost had
been increased by making it wide enough for four
pairs of rails, instead of two, as first suggested.
The station at Charing-cross, including the cost of
Hungerford-market, was estimated at £320,000 ;
the viadict between the Waterloo-road and the
south bank of the Thames, at £126,000; and the
works between London-bridge and the Waterloo
station, at £464,ooo—making the total cost
£1,070,000. Towards the expense of making the
line, the South-Eastern Company subscribe a sum
of £600,000, and they also have the power to
subscribe £350,000 towards the cost of the City
extension to Cannon-street. Between Charing-
cross and the point at which this branch will leave
the main line, there will be a third pair of rails in
the viaduct, to be used exclusively by the trains from
tle City, which will start every five minutes, and
perform the journey in that time, the trains being
kept constantly oscillating, as it were, backwards
and forwards during the day.