The Sun.
London, England, 1861-02-21 00:00:00

THE INCOME TAX.

Unexpected as was Mr. Hubbard's victory on
Tuesday evening, it is impossible to deny that it
illustrates a great prineiple. There must be some-
thing sound as well as something popular about so
very enduring a belief as that which prevails con-
cerning the relative assessments of property and
income. Mr. Gladstone, indeed, is of another way
of thinking. He stated distinctly at one point of
his speech that, though people certainly did object
to the system of taxing fixed and precarious in-
comes at the same rate, he, for his part, had always
considered that " sentiment" to be " not supported
by reason." But, though he thus closed with the
question, he did not argue it. He never advanced
beyond the proposition, and fairly exposed himself
to Mr, Hubbard's remark, that he had left the
merits of the case out of view. So tenderly, indeed,
did he speak of the opposite persuasion, and so
anxiously did he appeal to the authorities recorded
on his own side, that it is hard to avoid doubting
the absolute nature of his convictions. In fact,
at different times he has himself both said and
done enough for Mr. Hubbard's clients to show
that, if he did not recognise the force of their ar-
guments, he at least, felt the hardship of their case.
When it is maintained on grounds of abstract rea-
soning that an income of £5OO derived precariously
'from daily toil is, for purposes of just taxation,
identical with an income of the same amount spon-
taneously flow ing from an inexhaustible source, the
assertion at once clashes with our instinctive ideas
of right. We seem to feel the contrary. We seem
to understand, as if by involuntary conviction, that
the two positions are certainly not identical, and
that they are not assumed to be so in any ordi-
nary transaction of life. If a man earning a
certain average income by the sweat of his brow is
held by financiers to be exactly as rich, as fortunate,
and as taxable as a man deriving the same in-
come without exertion, from permanent and inde-
pendent property, we naturally observe to our-
selves that such an estimate is strictly limited to
this one occasion. The tax-collector may take
this view, but nobody else does. No tradesman,
no capitalist, no landlord, no father of a family
would pretend to rank Mr. A., the working man,
with Mr. 8., the man of independence, or to say
that the circumstances of the former were as good
as those of the latter. Everybody would admit,
without the least hesitation, that there was all the
difference in the world between their two positions.
Take analogous occasions of contribution, and this
difference would be expressly recognized. Mr. A.
would never be expected to give so large a sub-
scription as Mr. 8., or to make so large an allow-
ance, or to be so free with his money, in any case,
or for any purpose whatever. The explanation,
too, would be perfectly obvious. One of the two
men would be always sure of the same means, in
health or sickness, manhood or old age, and at his
death it would still be his to transmit to his chil-
dren. The means of the other would certainly last
no longer than his strength, and might not last be-
yond the hour, so that in common prudence only a
portion of his income should be held available for
expenditure, while the rest was saved. All this
appears so profoundly reasonable that few would
choose to gainsay the conclusion ; and yet all that
Mr. Hubbard urged was, that if this view of the
case was taken by everybody else, and in every other
transaction of life, it ought to be taken also by
Chancellors of the Exchequer in imposing an Income
Tax.

Mr. Gladstone threw the weight of his reply, not
upon a disproof of the alleged wrong, but upon a
disparagement of the suggested remedy. He re-
capitulated the difficulties notoriously in the way
of any reconstruction of the Income Tax. He
endeavoured to obliterate the broad governing dis-
tinction between permanent and precarious incomes
by showing that the line was crossed and recrossed
from each side of the barrier till the demarcation
became invisible. There was many a business worth
25 years' purchase—that is to say, as good as any
real property. There might be many a case
of property not half so valuable, so that in
effecting the proposed transfer of burdens you
might actually be relieving the strong at the ex-
pense of the weak. You cannot take off in one
quarter without putting on in another. If you lift
33 per cent. from Schedule D, you must drop it
upon Schedule A, and then Schedule A will have to
be heard. Are small fundholders to bear the bur-
den from which great merchants or bankers or
cotton lords are to be relieved ? Go to work how
you will, you will find when you come to a read-
justment that you are leaving inequalities as glaring
as those which you are endeavouring to remedy,
and the general sense of injustice will have been
aggravated by your partial and imperfect reform.
This is what has been discovered whenever the
attempt has been made, and it has been made often
enough to teach us the truth.

So thinks Mr. Gladstone in the matter, and we
do not deny the force of his words. Yet, as Mr.
Hubbard's arguments chime in with our very
instincts of moral right, and the truth cannot be on
both sides of the question, there must be fallacy
somewhere. Is Mr. Gladstone right in saying that
you cannot draw the dividing line with anything
like justice, or that you cannot, without an aggra-
vation of existing inequalities, form two great
classes of taxpayers, one of which shall pay less
than the other ? It would be a hard case to prove.
The mere fact that distinctive characteristics may
blend and disappear at the point of contact proves
nothing. The colours of the rainbow fade into each
other in this way, but th4t does not show that
violet is the same as orange, or green the same as
red. No doubt, certain examples could be found of
incomes which, nominally precarious, would be
more eligible than property nominally
permanent ;
but does that prove that property on the whole,
and in the vast majority of cases, is not more rain-
able than income ? Might not we take Schedule D
altogether, and assume, in comparing it with
Schedule A altogether, that the incomes returned
under the latter could bear taxation better than
those under the former ? Would not this be a
just conclusion in the main, notwithstanding a
few exceptional cases to the contrary ? Again,
what is the real value of the argument founded
on the supposed aggravation of injustice which
would follow an imperfect reform ? If out of 1,000
persons aggrieved, 900 can be relieved while
100 are left without relief, is the case of the unre-
lieved really worse than before ? Of course, the
" inequalities of the Income Tax" can never be
wholly removed. We know that full well. We
are quite aware that if Mr. Hubbard could do all
that he proposes much would remain to be done
still before the incidence of the tax could be ren-
dered anything like equitable.. But is it reasonable
to hold that because all cannot be done nothing
should be done, or to argue that injustice is some-
thing less than injustice because it is made univer-
sal, instead of being, as it might be, only partial ?
All that Mr. Gladstone described as sure to remain
even after Mr. Hubbard's reform may be true
enough, but is that all half so flagrant as what Mr.
Hubbard showed to exist at present ?
These occur to us as the leading points of the
question, and we must needs add that the acts as
well as words of our successive financiers—Mr.
Gladstone among the rest—seem to prove thatthey
felt the force of the doctrine which Mr. Hubbard
advocated. It was because the Income Tax was so
sweepingly unjust that it was always declared—
we now know to what effect—to be " temporary
only." Twice has a differential rating been actually
proposed, and what did Mr. Gladstone himself say
and do a few years back? He said that the tax
did bear too hardly on precarious incomes, and not
hardly enough, in proportion, upon permanent
property ; and he proposed that a certain amount,
not exceeding one-sixth, might be deducted from
incomes before they were taxed, on the assumption
that it was the allotment for savings. But, except-
ing that he chose to prescribe the form in which
the saving must be made—viz., by life insurance
only, he was acting in this on Mr. Hubbard's own
principle. He dictated the method of proceeding,and he withdrew one-sixth only of the income
from taxation, instead of two-sixths, as
proposed
by Mr. Hubbard ; but he not recognise the force
of circumstances, if not of argument ? Perhaps the
wrong is not quite so shadowy nor the remedy
quite so impracticable as he conceives ; and we are
sure that the inquiry is opportune enough n
that the Income Tax has risen, in a time of peace,ow
and in the twentieth year of its cont.inuance, to
more than twice its original yield, while the whole
produce of direct taxation exceeds that of the
Customs, and is already 25 per cent, above that of I
the Excise.--Times,

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