Again，howeverwideascopewemayallowtothedoctrinethat
individualsaretheproperguardiansoftheirowninterests，and
thatgovernmentowesnothingtothembuttosavethemfrombeing
interferedwithbyotherpeople，thedoctrinecanneverbe
applicabletoanypersonsbutthosewhoarecapableofactingin
theirownbehalf。Theindividualmaybeaninfant，oralunatic，
orfallenintoimbecility。Thelawsurelymustlookafterthe
interestsofsuchpersons。Itdoesnotnecessarilydothis
throughofficersofitsown。Itoftendevolvesthetrustupon
somerelativeorconnexion。Butindoingsoisitsdutyended？
Canitmakeovertheinterestsofonepersontothecontrolof
another，andbeexcusedfromsupervision，orfromholdingthe
personthustrusted，responsibleforthedischargeofthetrust？
Thereisamultitudeofcasesinwhichgovernments，with
generalapprobation，assumepowersandexecutefunctionsfor
whichnoreasoncanbeassignedexceptthesimpleone，thatthey
conducetogeneralconvenience。Wemaytakeasanexample，the
function（whichisamonopolytoo）ofcoiningmoney。Thisis
assumedfornomorereconditepurposethanthatofsavingto
individualsthetrouble，delay，andexpenseofweighingand
assaying。Noone，however，evenofthosemostjealousofstate
interference，hasobjectedtothisasanimproperexerciseofthe
powersofgovernment。Prescribingasetofstandardweightsand
measuresisanotherinstance。Paving，lighting，andcleansingthe
streetsandthoroughfares，isanother;whetherdonebythe
generalgovernment，orasismoreusual，andgenerallymore
advisable，byamunicipalauthority。Makingorimproving
harbours，buildinglighthouses，makingsurveysinordertohave
accuratemapsandcharts，raisingdykestokeeptheseaout，and
embankmentstokeepriversin，arecasesinpoint。
Examplesmightbeindefinitelymultipliedwithoutintruding
onanydisputedground。Butenoughhasbeensaidtoshowthatthe
admittedfunctionsofgovernmentembraceamuchwiderfieldthan
caneasilybeincludedwithinthering—fenceofanyrestrictive
definition，andthatitishardlypossibletofindanygroundof
justificationcommontothemall，exceptthecomprehensiveoneof
generalexpediency;nortolimittheinterferenceofgovernment
byanyuniversalrule，savethesimpleandvagueone，thatit
shouldneverbeadmittedbutwhenthecaseofexpediencyis
strong。
3。Someobservations，however，maybeusefullybestowedon
thenatureoftheconsiderationsonwhichthequestionof
governmentinterferenceismostlikelytoturn，andonthemode
ofestimatingthecomparativemagnitudeoftheexpediencies
involved。Thiswillformthelastofthethreeparts，intowhich
ourdiscussionoftheprinciplesandeffectsofgovernment
interferencemayconvenientlybedivided。Thefollowingwillbe
ourdivisionofthesubject。
Weshallfirstconsidertheeconomicaleffectsarisingfrom
themannerinwhichgovernmentsperformtheirnecessaryand
acknowledgedfunctions。
Weshallthenpasstocertaingovernmentalinterferencesof
whatIhavetermedtheoptionalkind（i。e。oversteppingthe
boundariesoftheuniversallyacknowledgedfunctions）whichhave
heretoforetakenplace，andinsomecasesstilltakeplace，under
theinfluenceoffalsegeneraltheories。
Itwilllastlyremaintoinquirewhether，independentlyof
anyfalsetheory，andconsistentlywithacorrectviewofthe
lawswhichregulatehumanaffairs，therebeanycasesofthe
optionalclassinwhichgovernmentalinterferenceisreally
advisable，andwhatarethosecases。
Thefirstofthesedivisionsisofanextremelymiscellaneous
character:sincethenecessaryfunctionsofgovernment，andthose
whicharesomanifestlyexpedientthattheyhaveneverorvery
rarelybeenobjectedto，are，asalreadypointedout，toovarious
tobebroughtunderanyverysimpleclassification。Those，
however，whichareofprincipalimportance，whichaloneitis
necessaryheretoconsider，maybereducedtothefollowing
generalheads。
First，themeansadoptedbygovernmentstoraisetherevenue
whichistheconditionoftheirexistence。
Secondly，thenatureofthelawswhichtheyprescribeonthe
twogreatsubjectsofPropertyandContracts。
Thirdly，theexcellencesordefectsofthesystemofmeansby
whichtheyenforcegenerallytheexecutionoftheirlaws，namely，
theirjudicatureandpolice。
Wecommencewiththefirsthead，thatis，withthetheoryof
Taxation。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book5
Chapter2
OntheGeneralPrinciplesofTaxation
1。Thequalitiesdesirable，economicallyspeaking，ina
systemoftaxation，havebeenembodiedbyAdamSmithinfour
maximsorprinciples，which，havingbeengenerallyconcurredby
subsequentwriters，maybesaidtohavebecomeclassical，and
thischaptercannotbebettercommencedthanbyquotingthem。（1*）
’1。Thesubjectsofeverystateoughttocontributetothe
supportofthegovernment，asnearlyaspossibleinproportionto
theirrespectiveabilities:thatis，inproportiontotherevenue
whichtheyrespectivelyenjoyundertheprotectionofthestate。
Intheobservationorneglectofthismaximconsistswhatis
calledtheequalityorinequalityoftaxation。
’2。Thetaxwhicheachindividualisboundtopayoughttobe
certain，andnotarbitrary。Thetimeofpayment，themannerof
payment，thequantitytobepaid，oughtalltobeclearandplain
tothecontributor，andtoeveryotherperson。Whereitis
otherwise，everypersonsubjecttothetaxisputmoreorlessin
thepowerofthetax—gatherer，whocaneitheraggravatethetax
uponanyobnoxiouscontributor，orextortbytheterrorofsuch
aggravation，somepresentorperquisitetohimself。The
uncertaintyoftaxationencouragestheinsolenceandfavoursthe
corruptionofanorderofmenwhoarenaturallyunpopular，even
whentheyareneitherinsolentnorcorrupt。Thecertaintyofwhat
eachindividualoughttopayis，intaxation，amatterofso
greatimportance，thataveryconsiderabledegreeofinequality，
itappears，Ibelieve，fromtheexperienceofallnations，isnot
nearsogreatanevil，asaverysmalldegreeofuncertainty。
’3。Everytaxoughttobeleviedatthetime，orinthe
manner，inwhichitismostlikelytobeconvenientforthe
contributortopayit。Ataxupontherentoflandorofhouses，
payableatthesametermatwhichsuchrentsareusuallypaid，is
leviedatatimewhenitismostlikelytobeconvenientforthe
contributortopay;orwhenheismostlikelytohavewherewithal
topay。Taxesuponsuchconsumablegoodsasarearticlesof
luxury，areallfinallypaidbytheconsumer，andgenerallyina
mannerthatisveryconvenienttohim。Hepaysthembylittleand
little，ashehasoccasiontobuythegoods。Asheisatliberty，
too，eithertobuyornottobuy，ashepleases，itmustbehis
ownfaultifheeversuffersanyconsiderableinconveniencefrom
suchtaxes。
’4。Everytaxoughttobesocontrivedasbothtotakeout
andtokeepoutofthepocketsofthepeopleaslittleas
possibleoverandabovewhatitbringsintothepublictreasury
ofthestate。Ataxmayeithertakeoutorkeepoutofthe
pocketsofthepeopleagreatdealmorethanitbringsintothe
publictreasury，inthefourfollowingways。First，thelevying
ofitmayrequireagreatnumberofofficers，whosesalariesmay
eatupthegreaterpartoftheproduceofthetax，andwhose
perquisitesmayimposeanotheradditionaltaxuponthepeople。
Secondly，itmaydivertaportionofthelabourandcapitalof
thecommunityfromamoretoalessproductiveemployment。
Thirdly，bytheforfeituresandotherpenaltieswhichthose
unfortunateindividualsincurwhoattemptunsuccessfullytoevade
thetax，itmayfrequentlyruinthem，andtherebyputanendto
thebenefitwhichthecommunitymighthavederivedfromthe
employmentoftheircapitals。Aninjudicioustaxoffersagreat
temptationtosmuggling。Fourthly，bysubjectingthepeopleto
thefrequentvisitsandtheodiousexaminationofthe
tax—gatherers，itmayexposethemtomuchunnecessarytrouble，
vexation，andoppression’:towhichmaybeadded，thatthe
restrictiveregulationstowhichtradesandmanufacturesare
oftensubjectedtopreventevasionofatax，arenotonlyin
themselvestroublesomeandexpensive，butoftenoppose
insuperableobstaclestomakingimprovementsintheprocesses。
Thelastthreeofthesefourmaximsrequirelittleother
explanationorillustrationthaniscontainedinthepassage
itself。Howfaranygiventaxconformsto，orconflictswith
them，isamattertobeconsideredinthediscussionof
particulartaxes。Butthefirstofthefourpoints，equalityof
taxation，requirestobemorefullyexamined，beingathingoften
imperfectlyunderstood，andonwhichmanyfalsenotionshave
becometoacertaindegreeaccredited，throughtheabsenceofany
definiteprinciplesofjudgmentinthepopularmind。
2。Forwhatreasonoughtequalitytobetheruleinmatters
oftaxation？Forthereason，thatitoughttobesoinall
affairsofgovernment。Asagovernmentoughttomakeno
distinctionofpersonsorclassesinthestrengthoftheirclaims
onit，whateversacrificesitrequiresfromthemshouldbemade
tobearasnearlyaspossiblewiththesamepressureuponall，
which，itmustbeobserved，isthemodebywhichleastsacrifice
isoccasionedonthewhole。Ifanyonebearslessthanhisfair
shareoftheburthen，someotherpersonmustsuffermorethanhis
share，andthealleviationtotheoneisnot，caeterisparibus，
sogreatagoodtohim，astheincreasedpressureupontheother
isanevil。Equalityoftaxation，therefore，asamaximof
politics，meansequalityofsacrifice。Itmeansapportioningthe
contributionofeachpersontowardstheexpensesofgovernment，
sothatheshallfeelneithermorenorlessinconveniencefrom
hisshareofthepaymentthaneveryotherpersonexperiencesfrom
his。Thisstandard，likeotherstandardsofperfection，cannotbe
completelyrealized;butthefirstobjectineverypractical
discussionshouldbetoknowwhatperfectionis。
Therearepersons，however，whoarenotcontentwiththe
generalprinciplesofjusticeasabasistogroundaruleof
financeupon，butmusthavesomething，astheythink，more
specificallyappropriatetothesubject。Whatbestpleasesthem
is，toregardthetaxespaidbyeachmemberofthecommunityas
anequivalentforvaluereceived，intheshapeofserviceto
himself;andtheyprefertorestthejusticeofmakingeach
contributeinproportiontohismeans，upontheground，thathe
whohastwiceasmuchpropertytobeprotected，receives，onan
accuratecalculation，twiceasmuchprotection，andought，onthe
principlesofbargainandsale，topaytwiceasmuchforit。
Since，however，theassumptionthatgovernmentexistssolelyfor
theprotectionofproperty，isnotonetobedeliberatelyadhered
to;someconsistentadherentsofthequidproquoprinciplegoon
toobserve，thatprotectionbeingrequiredforpersonaswellas
property，andeverybody’spersonreceivingthesameamountof
protection，apoll—taxofafixedsumperheadisaproper
equivalentforthispartofthebenefitsofgovernment，whilethe
remainingpart，protectiontoproperty，shouldbepaidforin
proportiontoproperty。Thereisinthisadjustmentafalseair
ofniceadaptation，veryacceptabletosomeminds。Butinthe
firstplace，itisnotadmissiblethattheprotectionofpersons
andthatofpropertyarethesolepurposesofgovernment。The
endsofgovernmentareascomprehensiveasthoseofthesocial
union。Theyconsistofallthegood，andalltheimmunityfrom
evil，whichtheexistenceofgovernmentcanbemadeeither
directlyorindirectlytobestow。Inthesecondplace，the
practiceofsettingdefinitevaluesonthingsessentially
indefinite，andmakingthemagroundofpracticalconclusions，is
peculiarlyfertileinfalseviewsofsocialquestions。Itcannot
beadmitted，thattobeprotectedintheownershipoftentimes
asmuchproperty，istobetentimesasmuchprotected。Neither
canitbetrulysaidthattheprotectionof1000l。ayearcosts
thestatetentimesasmuchasthatof100l。ayear，ratherthan
twiceasmuch，orexactlyasmuch。Thesamejudges，soldiers，and
sailorswhoprotecttheoneprotecttheother，andthelarger
incomedoesnotnecessarily，thoughitmaysometimes，require
evenmorepolicemen。Whetherthelabourandexpenseofthe
protection，orthefeelingsoftheprotectedperson，oranyother
definitethingbemadethestandard，thereisnosuchproportion
astheonesupposed，noranyotherdefinableproportion。Ifwe
wantedtoestimatethedegreesofbenefitwhichdifferentpersons
derivefromtheprotectionofgovernment，weshouldhaveto
considerwhowouldsuffermostifthatprotectionwerewithdrawn:
towhichquestionifanyanswercouldbemade，itmustbe，that
thosewouldsuffermostwhowereweakestinmindorbody，either
bynatureorbyposition。Indeed，suchpersonswouldalmost
infalliblybeslaves。Iftherewereanyjustice，therefore，in
thetheoryofjusticenowunderconsideration，thosewhoare
leastcapableofhelpingordefendingthemselves，beingthoseto
whomtheprotectionofgovernmentisthemostindispensable，
oughttopaythegreatestshareofitsprice:thereverseofthe
trueideaofdistributivejustice，whichconsistsnotin
imitatingbutinredressingtheinequalitiesandwrongsof
nature。
Governmentmustberegardedassopre。eminentlyaconcernof
all，thattodeterminewhoaremostinterestedinitisofno
realimportance。Ifapersonorclassofpersonsreceivesosmall
ashareofthebenefitasmakesitnecessarytoraisethe
question，thereissomethingelsethantaxationwhichisamiss，
andthethingtobedoneistoremedythedefect，insteadof
recognizingitandmakingitagroundfordemandinglesstaxes。
As，inacaseofvoluntarysubscriptionforapurposeinwhich
allareinterested，allarethoughttohavedonetheirpart
fairlywheneachhascontributedaccordingtohismeans，thatis，
hasmadeanequalsacrificeforthecommonobject;inlikemanner
shouldthisbetheprincipleofcompulsorycontributions:andit
issuperfluoustolookforamoreingeniousorreconditeground
toresttheprincipleupon。
3。Settingout，then，fromthemaximthatequalsacrifices
oughttobedemandedfromall，wehavenexttoinquirewhether
thisisinfactdone，bymakingeachcontributethesame
percentageonhispecuniarymeans。Manypersonsmaintainthe
negative，sayingthatatenthparttakenfromasmallincomeisa
heavierburthenthanthesamefractiondeductedfromonemuch
larger:andonthisisgroundedtheverypopularschemeofwhat
iscalledagraduatedpropertytax，viz。anincometaxinwhich
thepercentageriseswiththeamountoftheincome。
OnthebestconsiderationIamabletogivetothisquestion，
itappearstomethattheportionoftruthwhichthedoctrine
contains，arisesprincipallyfromthedifferencebetweenatax
whichcanbesavedfromluxuries，andonewhichtrenches，inever
sosmalladegree，uponthenecessariesoflife。Totakea
thousandayearfromthepossessoroftenthousand，wouldnot
deprivehimofanythingreallyconduciveeithertothesupportor
tothecomfortofexistence;andifsuchwouldbetheeffectof
takingfivepoundsfromonewhoseincomeisfifty，thesacrifice
requiredfromthelastisnotonlygreaterthan，butentirely
incommensurablewith，thatimposeduponthefirst。Themodeof
adjustingtheseinequalitiesofpressure，whichseemstobethe
mostequitable，isthatrecommendedbyBentham，ofleavinga
certainminimumofincome，sufficienttoprovidethenecessaries
oflife，untaxed。Suppose50l。ayeartobesufficienttoprovide
thenumberofpersonsordinarilysupportedfromasingleincome，
withtherequisitesoflifeandhealth，andwithprotection
againsthabitualbodilysuffering，butnotwithanyindulgence。
Thisthenshouldbemadetheminimum，andincomesexceedingit
shouldpaytaxesnotupontheirwholeamount，butuponthe
surplus。Ifthetaxbetenpercent，anincomeof60l。shouldbe
consideredasanetincomeof10l。，andchargedwith1l。ayear，
whileanincomeof1000l。shouldbechargedasoneof950l。Each
wouldthenpayafixedproportion，notofhiswholemeans，butof
hissuperfluities。（2*）Anincomenotexceeding50l。shouldnotbe
taxedatall，eitherdirectlyorbytaxesonnecessaries;foras
bysuppositionthisisthesmallestincomewhichlabouroughtto
beabletocommand，thegovernmentoughtnottobeapartyto
makingitsmaller。Thisarrangementhoweverwouldconstitutea
reason，inadditiontootherswhichmightbestated，for
maintainingtaxesonarticlesofluxuryconsumedbythepoor。The
immunityextendedtotheincomerequiredfornecessaries，should
dependonitsbeingactuallyexpendedforthatpurpose;andthe
poorwho，nothavingmorethanenoughfornecessaries，divertany
partofittoindulgences，shouldlikeotherpeoplecontribute
theirquotaoutofthoseindulgencestotheexpensesofthe
state。
Theexemptioninfavourofthesmallerincomesshouldnot，I
think，bestretchedfurtherthantotheamountofincomeneedful
forlife，health，andimmunityfrombodilypain。If50l。ayear
issufficient（whichmaybedoubted）forthesepurposes，an
incomeof100l。ayearwould，asitseemstome，obtainal1the
reliefitisentitledto，comparedwithoneof1000l。，bybeing
taxedonlyon50l。ofitsamount。Itmaybesaid，indeed，thatto
take100l。from1000l。（evengivingbackfivepounds）isa
heavierimpostthan1000l。takenfrom10，000l。（givingbackthe
samefivepounds）。Butthisdoctrineseemstometoodisputable
altogether，andeveniftrueatall，nottruetoasufficient
extent，tobemadethefoundationofanyruleoftaxation。
Whetherthepersonwith10，000l。ayearcareslessfor1000l。
thanthepersonwithonly1000l。ayearcaresfor100l。，andif
so，howmuchless，doesnotappeartomecapableofbeingdecided
withthedegreeofcertaintyonwhichalegislatororafinancier
oughttoact。
Someindeedcontendthattheruleofproportionaltaxation
bearsharderuponthemoderatethanuponthelargeincomes，
becausethesameproportionalpaymenthasmoretendencyinthe
formercasethaninthelatter，toreducethepayertoalower
gradeofsocialrank。Thefactappearstomemorethan
questionable。Butevenadmittingit，Iobjecttoitsbeing
consideredincumbentongovernmenttoshapeitscoursebysuch
considerations，ortorecognizethenotionthatsocialimportance
isorcanbedeterminedbyamountofexpenditure。Government
oughttosetanexampleofratingallthingsattheirtruevalue，
andriches，therefore，attheworth，forcomfortorpleasure，of
thethingswhichtheywillbuy:andoughtnottosanctionthe
vulgarityofprizingthemforthepitifulvanityofbeingknown
topossessthem，orthepaltryshameofbeingsuspectedtobe
withoutthem，thepresidingmotivesofthree—fourthsofthe
expenditureofthemiddleclasses。Thesacrificesofrealcomfort
orindulgencewhichgovernmentrequires，itisboundtoapportion
amongallpersonswithasmuchequalityaspossible;buttheir
sacrificesoftheimaginarydignitydependentonexpense，itmay
spareitselfthetroubleofestimating。
BothinEnglandandontheContinentagraduatedpropertytax
（l’impotprogressif）hasbeenadvocated，ontheavowedground
thatthestateshouldusetheinstrumentoftaxationasameans
ofmitigatingtheinequalitiesofwealth。Iamasdesirousasany
one，thatmeansshouldbetakentodiminishthoseinequalities，
butnotsoastorelievetheprodigalattheexpenseofthe
prudent。Totaxthelargerincomesatahigherpercentagethan
thesmaller，istolayataxonindustryandeconomy;toimposea
penaltyonpeopleforhavingworkedharderandsavedmorethan
theirneighbours。Itisnotthefortuneswhichareearned，but
thosewhichareunearned，thatitisforthepublicgoodtoplace
underlimitation。Ajustandwiselegislationwouldabstainfrom
holdingoutmotivesfordissipatingratherthansavingthe
earningsofhonestexertion。Itsimpartialitybetweencompetitors
wouldconsistinendeavouringthattheyshouldallstartfair，
andnotinhangingaweightupontheswifttodiminishthe
distancebetweenthemandtheslow。Many，indeed，failwith
greatereffortsthanthosewithwhichotherssucceed，notfrom
differenceofmerits，butdifferenceofopportunities;butifall
weredonewhichitwouldbeinthepowerofagoodgovernmentto
do，byinstructionandbylegislation，todiminishthis
inequalityofopportunities，thedifferencesoffortunearising
frompeople’sownearningscouldnotjustlygiveumbrage。With
respecttothelargefortunesacquiredbygiftorinheritance，
thepowerofbequeathingisoneofthoseprivilegesofproperty
whicharefitsubjectsforregulationongroundsofgeneral
expediency;andIhavealreadysuggested，asapossiblemodeof
restrainingtheaccumulationoflargefortunesinthehandsof
thosewhohavenotearnedthembyexertion，alimitationofthe
amountwhichanyonepersonshouldbepermittedtoacquireby
gift，bequest，orinheritance。Apartfromthis，andfromthe
proposalofBentham（alsodiscussedinaformerchapter）that
collateralinheritanceabintestatoshouldcease，andthe
propertyescheattothestate，Iconceivethatinheritancesand
legacies，exceedingacertainamount，arehighlypropersubjects
fortaxation:andthattherevenuefromthemshouldbeasgreat
asitcanbemadewithoutgivingrisetoevasions，bydonation
intervivosorconcealmentofproperty，suchasitwouldbe
impossibleadequatelytocheck。Theprincipleofgraduation（as
itiscalled，）thatis，oflevyingalargerpercentageona
largersum，thoughitsapplicationtogeneraltaxationwouldbe
inmyopinionobjectionable，seemstomebothjustandexpedient
asappliedtolegacyandinheritanceduties。
Theobjectiontoagraduatedpropertytaxappliesinan
aggravateddegreetothepropositionofanexclusivetaxonwhat
iscalled’realizedproperty’，thatis，propertynotforminga
partofanycapitalengagedinbusiness，orratherinbusiness
underthesuperintendenceoftheowner:asland，thepublic
funds，moneylentonmortgage，andshares（Ipresume）in
joint—stockcompanies。Excepttheproposalofapplyingasponge
tothenationaldebt，nosuchpalpableviolationofcommon
honestyhasfoundsufficientsupportinthiscountry，duringthe
presentgeneration，toberegardedaswithinthedomainof
discussion。Ithasnotthepalliationofagraduatedproperty
tax，thatoflay。ingtheburthenonthosebestabletobearit;
for’realizedproperty’includesthefarlargerportionofthe
provisionmadeforthosewhoareunabletowork，andconsists，in
greatpart，ofextremelysmallfractions。Icanhardlyconceivea
moreshamelesspretension，thanthatthemajorpartofthe
propertyofthecountry，thatofmerchants，manufacturers，
farmers，andshopkeepers，shouldbeexemptedfromitsshareof
taxation;thattheseclassesshouldonlybegintopaytheir
proportionafterretiringfrombusiness，andiftheyneverretire
shouldbeexcusedfromitaltogether。Buteventhisdoesnotgive
anadequateideaoftheinjusticeoftheproposition。Theburthen
thusexclusivelythrownontheownersofthesmallerportionof
thewealthofthecommunity，wouldnotevenbeaburthenonthat
classofpersonsinperpetualsuccession，butwouldfall
exclusivelyonthosewhohappenedtocomposeitwhenthetaxwas
laidon。Aslandandthoseparticularsecuritieswould
thenceforthyieldasmallernetincome，relativelytothegeneral
interestofcapitalandtotheprofitsoftrade;thebalance
wouldrectifyitselfbyapermanentdepreciationofthosekinds
ofproperty。Futurebuyerswouldacquirelandandsecuritiesata
reductionofprice，equivalenttothepeculiartax，whichtax
theywould，therefore，escapefrompaying;whiletheoriginal
possessorswouldremainburthenedwithitevenafterpartingwith
theproperty，sincetheywouldhavesoldtheirlandorsecurities
atalossofvalueequivalenttothefee—simpleofthetax。Its
impositionwouldthusbetantamounttotheconfiscationfor
publicusesofapercentageoftheirproperty，equaltothe
percentagelaidontheirincomebythetax。Thatsucha
propositionshouldfindanyfavour，isastrikinginstanceofthe
wantofconscienceinmattersoftaxation，resultingfromthe
absenceofanyfixedprinciplesinthepublicmind，andofany
indicationofasenseofjusticeonthesubjectinthegeneral
conductofgovernments。Shouldtheschemeeverenlistalarge
partyinitssupport，thefactwouldindicatealaxityof
pecuniaryintegrityinnationalaffairs，scarcelyinferiorto
Americanrepudiation。
4。Whethertheprofitsoftrademaynotrightfullybetaxed
atalowerratethanincomesderivedfrominterestorrent，is
partofthemorecomprehensivequestion，sooftenmootedonthe
occasionofthepresentincometax，whetherlifeincomesshould
besubjectedtothesamerateoftaxationasperpetualincomes:
whethersalaries，forexample，orannuities，orthegainsof
professions，shouldpaythesamepercentageastheincomefrom
inheritableproperty。
Theexistingtaxtreatsallkindsofincomesexactlyalike，
takingitssevenpence（nowfourpence）inthepound，aswellfrom
thepersonwhoseincomedieswithhim，asfromthelandholder，
stockholder，ormortgagee，whocantransmithisfortune
undiminishedtohisdescendants。Thisisavisibleinjustice:yet
itdoesnotarithmeticallyviolatetherulethattaxationought
tobeinproportiontomeans。Whenitissaidthatatemporary
incomeoughttobetaxedlessthanapermanentone，thereplyis
irresistible，thatitistaxedless;fortheincomewhichlasts
onlytenyearspaysthetaxonlytenyears，whilethatwhich
lastsforeverpaysforever。Onthispointsomefinancial
reformersareguiltyofagreatfallacy。Theycontendthat
incomesoughttobeassessedtotheincometaxnotinproportion
totheirannualamount，buttotheircapitalizedvalue:that，for
example，ifthevalueofaperpetualannuityof100l。is3000l。，
andalifeannuityofthesameamount，beingworthonlyhalfthe
numberofyears’purchase，couldonlybesoldfor1500l。，the
perpetualincomeshouldpaytwiceasmuchpercentincometaxas
theterminableincome;iftheonepays10l。ayeartheother
shouldpayonly5l。Butinthisargumentthereistheobvious
oversight，thatitvaluestheincomesbyonestandardandthe
paymentsbyanother;itcapitalizestheincomes，butforgetsto
capitalizethepayments。Anannuityworth3000l。ought，itis
alleged，tobetaxedtwiceashighlyasonewhichisonlyworth
1500l。，andnoassertioncanbemoreunquestionable;butitis
forgottenthattheincomeworth3000l。paystothesupposed
incometax10l。ayearinperpetuity，whichisequivalent，by
supposition，to300l。，whiletheterminableincomepaysthesame
10l。onlyduringthelifeofitsowner，whichonthesame
calculationisavalueof150l。，andcouldactuallybeboughtfor
thatsum。Already，therefore，theincomewhichisonlyhalfas
valuable，paysonlyhalfasmuchtothetax;andifinaddition
tothisitsannualquotawerereducedfrom10l。to5l。，itwould
pay，nothalf，butafourthpartonlyofthepaymentdemanded
fromtheperpetualincome。Tomakeitjustthattheoneincome
shouldpayonlyhalfasmuchperannumastheother，itwouldbe
necessarythatitshouldpaythathalfforthesameperiod，that
is，inperpetuity。
Theruleofpaymentwhichthisschooloffinancialreformers
contendfor，wouldbeveryproperifthetaxwereonlytobe
leviedonce，tomeetsomenationalemergency。Ontheprincipleof
requiringfromallpayersanequalsacrifice，everypersonwho
hadanythingbelongingtohim，reversionersincluded，wouldbe
calledonforapaymentproportionedtothepresentvalueofhis
property。Iwonderitdoesnotoccurtothereformersin
question，thatpreciselybecausethisprincipleofassessment
wouldbejustinthecaseofapaymentmadeonceforall，it
cannotpossiblybejustforapermanenttax。Wheneachpaysonly
once，onepersonpaysnooftenerthananother。andtheproportion
whichwouldbejustinthatcase，cannotalsobejustifone
personhastomakethepaymentonlyonce，andtheotherseveral
times。This，however，isthetypeofthecasewhichactually
occurs。Thepermanentincomespaythetaxasmuchoftenerthan
thetemporaryones，asaperpetuityexceedsthecertainor
uncertainlengthoftimewhichformsthedurationoftheincome
forlifeoryears。
Allattemptstoestablishaclaiminfavourofterminable
incomesonnumericalgrounds—tomakeout，inshort，thata
proportionaltaxisnotaproportionaltax—aremanifestly
absurd。Theclaimdoesnotrestongroundsofarithmetic，butof
humanwantsandfeelings。Itisnotbecausethetemporary
annuitanthassmallermeans，butbecausehehasgreater
necessities，thatheoughttobeassessedatalowerrate。
Inspiteofthenominalequalityofincome，A，anannuitant
of1000l。ayear，cannotsowellaffordtopay100l。outofit，
asBwhoderivesthesameannualsumfromheritableproperty;A
havingusuallyademandonhisincomewhichBhasnot，namely，to
providebysavingforchildrenorothers;towhich，inthecase
ofsalariesorprofessionalgains，mustgenerallybeaddeda
provisionforhisownlateryears;whileBmayexpendhiswhole
incomewithoutinjurytohisoldage，andstillhaveitallto
bestowonothersafterhisdeath。IfA，inordertomeetthese
exigencies，mustlayby300l。ofhisincome，totake100l。from
himasincometaxistotake100l。from700l。，sinceitmustbe
retrenchedfromthatpartonlyofhismeanswhichhecanafford
tospendonhisownconsumption。Werehetothrowitrateablyon
whathespendsandonwhathesaves，abating70l。fromhis
consumptionand30l。fromhisannualsaving，thenindeedhis
immediatesacrificewouldbeproportionatelythesameasB’s:but
thenhischildrenorhisoldagewouldbeworseprovidedforin
consequenceofthetax。Thecapitalsumwhichwouldbe
accumulatedforthemwouldbeone—tenthless，andonthereduced
incomeaffordedbythisreducedcapital，theywouldbeasecond
timechargedwithincometax;whileB’sheirswouldonlybe
chargedonce。
Theprinciple，therefore，ofequalityoftaxation，
interpretedinitsonlyjustsense，equalityofsacrifice，
requiresthatapersonwhohasnomeansofprovidingforoldage，
orforthoseinwhomheisinterested，exceptbysavingfrom
income，shouldhavethetaxremittedonallthatpartofhis
incomewhichisreallyandbonafideappliedtothatpurpose。
If，indeed，reliancecouldbeplacedontheconscienceofthe
contributors，orsufficientsecuritytakenforthecorrectnessof
theirstatementsbycollateralprecautions，thepropermodeof
assessinganincometaxwouldbetotaxonlythepartofincome
devotedtoexpenditure，exemptingthatwhichissaved。Forwhen
savedandinvested（andallsavings，speakinggenerally，are
invested）itthenceforthpaysincometaxontheinterestor
profitwhichitbrings，notwithstandingthatithasalreadybeen
taxedontheprincipal。Unless，therefore，savingsareexempted
fromincometax，thecontributorsaretwicetaxedonwhatthey
save，andonlyonceonwhattheyspend。Apersonwhospendsall
hereceives，pays7d。inthepound，orsaythreepercent，tothe
tax，andnomore;butifhesavespartoftheyear’sincomeand
buysstock，theninadditiontothethreepercentwhichhehas
paidontheprincipal，andwhichdiminishestheinterestinthe
sameratio，hepaysthreepercentannuallyontheinterest
itself，whichisequivalenttoanimmediatepaymentofasecond
threepercentontheprincipal。Sothatwhileunproductive
expenditurepaysonlythreepercent，savingspaysixpercent:
ormorecorrectly，threepercentonthewhole，andanotherthree
percentontheremainingninety—seven。Thedifferencethus
createdtothedisadvantageofprudenceandeconomy，isnotonly
impoliticbutunjust。Totaxthesuminvested，andafterwardstax
alsotheproceedsoftheinvestment，istotaxthesameportion
ofthecontributor’smeanstwiceover。Theprincipalandthe
interestcannotbothtogetherformpartofhisresources;they
arethesameportiontwicecounted:ifhehastheinterest，itis
becauseheabstainsfromusingtheprincipal;ifhespendsthe
principal，hedoesnotreceivetheinterest。Yetbecausehecan
doeitherofthetwo，heistaxedasifhecoulddoboth，and
couldhavethebenefitofthesavingandthatofthespending，
concurrentlywithoneanother。
Ithasbeenurgedasanobjectiontoexemptingsavingsfrom
taxation，thatthelawoughtnottodisturb，byartificial
interference，thenaturalcompetitionbetweenthemotivesfor
savingandthoseforspending。Butwehaveseenthatthelaw
disturbsthisnaturalcompetitionwhenittaxessavings，notwhen
itsparesthem;forasthesavingspayatanyratethefulltax
assoonastheyareinvested，theirexemptionfrompaymentinthe
earlierstageisnecessarytopreventthemfrompayingtwice，
whilemoneyspentinunproductiveconsumptionpaysonlyonce。It
hasbeenfurtherobjected，thatsincetherichhavethegreatest
meansofsaving，anyprivilegegiventosavingsisanadvantage
bestowedontherichattheexpenseofthepoor。Ianswer，that
itisbestowedonthemonlyinproportionastheyabdicatethe
personaluseoftheirriches;inproportionastheydiverttheir
incomefromthesupplyoftheirownwants，toaproductive
investment，throughwhich，insteadofbeingconsumedby
themselves，itisdistributedinwagesamongthepoor。Ifthisbe
favouringtherich，Ishouldliketohaveitpointedout，what
modeofassessingtaxationcandeservethenameoffavouringthe
poor。
Noincometaxisreallyjust，fromwhichsavingsarenot
exempted;andnoincometaxoughttobevotedwithoutthat
provision，iftheformofthereturns，andthenatureofthe
evidencerequired，couldbesoarrangedastopreventthe
exemptionfrombeingtakenfraudulentadvantageof，bysaving
withonehandandgettingintodebtwiththeother，orby
spendinginthefollowingyearwhathadbeenpassedtax—freeas
savingintheyearpreceding。Ifthisdifficultycouldbe
surmounted，thedifficultiesandcomplexitiesarisingfromthe
comparativeclaimsoftemporaryandpermanentincomes，would
disappear;for，sincetemporaryincomeshavenojustclaimto
lightertaxationthanpermanentincomes，exceptinsofaras
theirpossessorsaremorecalledupontosave，theexemptionof
whattheydosavewouldfullysatisfytheclaim。Butifnoplan
canbedevisedfortheexemptionofactualsavings，sufficiently
freefromliabilitytofraud，itisnecessary，asthenextthing
inpointofjustice，totakeintoaccountinassessingthetax，
whatthedifferentclassesofcontributorsoughttosave。And
therewouldprobablybenoothermodeofdoingthisthanthe
roughexpedientoftwodifferentratesofassessment。Therewould
begreatdifficultyintakingintoaccountdifferencesof
durationbetweenoneterminableincomeandanother;andinthe
mostfrequentcase，thatofincomesdependentonlife，
differencesofageandhealthwouldconstitutesuchextreme
diversityasitwouldbeimpossibletotakepropercognizanceof。
Itwouldprobablybenecessarytobecontentwithoneuniform
rateforallincomesofinheritance，andanotheruniformratefor
allthosewhichnecessarilyterminatewiththelifeofthe
individual。Infixingtheproportionbetweenthetworates，there
mustinevitablybesomethingarbitrary;perhapsadeductionof
one—fourthinfavouroflife—incomeswouldbeaslittle
objectionableasanywhichcouldbemade，itbeingthusassumed
thatone—fourthofalife—incomeis，ontheaverageofallages
andstatesofhealth，asuitableproportiontobelaidbyasa
provisionforsuccessorsandforoldage。（3*）
Ofthenetprofitsofpersonsinbusiness，apart，asbefore
observed，maybeconsideredasinterestoncapital，andofa
perpetualcharacter，andtheremainingpartasremunerationfor
theskillandlabourofsuperintendence。Thesurplusbeyond
interestdependsonthelifeoftheindividual，andevenonhis
continuanceinbusiness，andisentitledtothefullamountof
exemptionallowedtoterminableincomes。Ithasalso，Iconceive，
ajustclaimtoafurtheramountofexemptioninconsiderationof
itsprecariousness。Anincomewhichsomenotunusualvicissitude
mayreducetonothing，orevenconvertintoaloss，isnotthe
samethingtothefeelingsofthepossessorasapermanentincome
of1000l。ayear，eventhoughonanaverageofyearsitmayyield
1000l。ayear。Iflife。incomeswereassessedatthree—fourthsof
theiramount，theprofitsofbusiness，afterdeductinginterest
oncapital，shouldnotonlybeassessedatthree—fourths，but
shouldpay，onthatassessment，alowerrate。Orperhapsthe
claimsofjusticeinthisrespectmightbesufficientlymetby
allowingthedeductionofafourthontheentireincome，interest
included。
Thesearethechiefcases，ofordinaryoccurrence，inwhich
anydifficultyarisesininterpretingthemaximofequalityof
taxation。Thepropersensetobeputuponit，aswehaveseenin
theprecedingexample，is，thatpeopleshouldbetaxed，notin
proportiontowhattheyhave，buttowhattheycanaffordto
spend。Itisnoobjectiontothisprinciplethatwecannotapply
itconsistentlytoallcases。Apersonwithalife—incomeand
precarioushealth，orwhohasmanypersonsdependingonhis
exertions，must，ifhewishestoprovideforthemafterhis
death，bemorerigidlyeconomicalthanonewhohasalife—income
ofequalamount，withastrongconstitution，andfewclaimsupon
him;andifitbeconcededthattaxationcannotaccommodate
itselftothesedistinctions，itisarguedthatthereisnouse
inattendingtoanydistinctions，wheretheabsoluteamountof
incomeisthesame。Butthedifficultyofdoingperfectjustice
isnoreasonagainstdoingasmuchaswecan。Thoughitmaybea
hardshiptoanannuitantwhoselifeisonlyworthfiveyears’
purchase，tobeallowednogreaterabatementthanisgrantedto
onewhoselifeisworthtwenty，itisbetterforhimevenso，
thanifneitherofthemwereallowedanyabatementatall。
5。BeforeleavingthesubjectofEqualityofTaxation，Imust
remarkthattherearecasesinwhichexceptionsmaybemadeto
it，consistentlywiththatequaljusticewhichisthegroundwork
oftherule。Supposethatthereisakindofincomewhich
constantlytendstoincrease，withoutanyexertionorsacrifice
onthepartoftheowners:thoseownersconstitutingaclassin
thecommunity，whomthenaturalcourseofthingsprogressively
enriches，consistentlywithcompletepassivenessontheirown
part。Insuchacaseitwouldbenoviolationoftheprinciples
onwhichprivatepropertyisgrounded，ifthestateshould
appropriatethisincreaseofwealth，orpartofit，asitarises。
Thiswouldnotproperlybetakinganythingfromanybody;itwould
merelybeapplyinganaccessionofwealth，createdby
circumstances，tothebenefitofsociety，insteadofallowingit
tobecomeanunearnedappendagetotherichesofaparticular
class。
Nowthisisactuallythecasewithrent。Theordinary
progressofasocietywhichincreasesinwealth，isatalltimes
tendingtoaugmenttheincomesoflandlords;togivethembotha
greateramountandagreaterproportionofthewealthofthe
community，independentlyofanytroubleoroutlayincurredby
themselves。Theygrowricher，asitwereintheirsleep，without
working，risking，oreconomizing。Whatclaimhavethey，onthe
generalprincipleofsocialjustice，tothisaccessionofriches？
Inwhatwouldtheyhavebeenwrongedifsocietyhad，fromthe
beginning，reservedtherightoftaxingthespontaneousincrease
ofrent，tothehighestamountrequiredbyfinancialexigencies？
Iadmitthatitwouldbeunjusttocomeuponeachindividual
estate，andlayholdoftheincreasewhichmightbefoundtohave
takenplaceinitsrental;becausetherewouldbenomeansof
distinguishinginindividualcases，betweenanincreaseowing
solelytothegeneralcircumstancesofsociety，andonewhichwas
theeffectofskillandexpenditureonthepartofthe
proprietor。Theonlyadmissiblemodeofproceedingwouldbebya
generalmeasure。Thefirststepshouldbeavaluationofallthe
landinthecountry。Thepresentvalueofalllandshouldbe
exemptfromthetax;butafteranintervalhadelapsed，during
whichsocietyhadincreasedinpopulationandcapital，arough
estimatemightbemadeofthespontaneousincreasewhichhad
accruedtorentsincethevaluationwasmade。Ofthistheaverage
priceofproducewouldbesomecriterion:ifthathadrisen，it
wouldbecertainthatrenthadincreased，and（asalreadyshown）
eveninagreaterratiothantheriseofprice。Onthisandother
data，anapproximateestimatemightbemade，howmuchvaluehad
beenaddedtothelandofthecountrybynaturalcauses;andin
layingonageneralland—tax，whichforfearofmiscalculation
shouldbeconsiderablywithintheamountthusindicated，there
wouldbeanassuranceofnottouchinganyincreaseofincome
whichmightbetheresultofcapitalexpendedorindustryexerted
bytheproprietor。
Butthoughtherecouldbenoquestionastothejusticeof
taxingtheincreaseofrent，ifsocietyhadavowedlyreservedthe
right，hasnotsocietywaivedthatrightbynotexercisingit？In
England，forexample，havenotallwhoboughtlandforthelast
centuryormore，givenvaluenotonlyfortheexistingincome，
butfortheprospectsofincrease，underanimpliedassuranceof
beingonlytaxedinthesameproportionwithotherincomes？This
objection，insofarasvalid，hasadifferentdegreeofvalidity
indifferentcountries;dependingonthedegreeofdesuetudeinto
whichsocietyhasallowedarighttofall，which，asnoonecan
doubt，itoncefullypossessed。InmostcountriesofEurope，the
righttotakebytaxation，asexigencymightrequire，an
indefiniteportionoftherentofland，hasneverbeenallowedto
slumber。InseveralpartsoftheContinent，theland—taxformsa
largeproportionofthepublicrevenues，andhasalwaysbeen
confessedlyliabletoberaisedorloweredwithoutreferenceto
othertaxes。Inthesecountriesnoonecanpretendtohavebecome
theowneroflandonthefaithofneverbeingcalledupontopay
anincreasedland—tax。InEnglandtheland—taxhasnotvaried
sincetheearlypartofthelastcentury。Thelastactofthe
legislatureinrelationtoitsamount，wastodiminishit;and
thoughthesubsequentincreaseintherentalofthecountryhas
beenimmense，notonlyfromagriculture，butfromthegrowthof
townsandtheincreaseofbuildings，theascendancyof
landholdersinthelegislaturehaspreventedanytaxfrombeing
imposed，asitsojustlymight，upontheverylargeportionof
thisincreasewhichwasunearned，and，asitwere，accidental。
Fortheexpectationsthusraised，itappearstomethatanamply
sufficientallowanceismade，ifthewholeincreaseofincome
whichhasaccruedduringthislongperiodfromamerenatural
law，withoutexertionorsacrifice，isheldsacredfromany
peculiartaxation。Fromthepresentdate，oranysubsequenttime
atwhichthelegislaturemaythinkfittoasserttheprinciple，I
seenoobjectiontodeclaringthatthefutureincrementofrent
shouldbeliabletospecialtaxation;indoingwhichall
injusticetothelandlordswouldbeobviated，ifthepresent
market—priceoftheirlandweresecuredtothem;sincethat
includesthepresentvalueofallfutureexpectations。With
referencetosuchatax，perhapsasafercriterionthaneithera
riseofrentsorariseofthepriceofcorn，wouldbeageneral
riseinthepriceofland。Itwouldbeeasytokeepthetax
withintheamountwhichwouldreducethemarketvalueofland
belowtheoriginalvaluation:anduptothatpoint，whateverthe
amountofthetaxmightbe，noinjusticewouldbedonetothe
proprietors。
6。Butwhatevermaybethoughtofthelegitimacyofmaking
theStateasharerinallfutureincreaseofrentfromnatural
causes，theexistingland—tax（whichinthiscountry
unfortunatelyisverysmall）oughtnottoberegardedasatax，
butasarent—chargeinfavourofthepublic;aportionofthe
rent，reservedfromthebeginningbytheState，whichhasnever
belongedtoorformedpartoftheincomeofthelandlords，and
shouldnotthereforebecountedtothemaspartoftheir
taxation，soastoexemptthemfromtheirfairshareofevery
othertax。Aswellmightthetitheberegardedasataxonthe
landlords:aswell，inBengal，wheretheState，thoughentitled
tothewholerentoftheland，gaveawayone—tenthofitto
individuals，retainingtheothernine—tenths，mightthose
nine—tenthsbeconsideredasanunequalandunjusttaxonthe
granteesofthetenth。Thatapersonownspartoftherent，does
notmaketherestofithisjustright，injuriouslywithheldfrom
him。Thelandlordsoriginallyheldtheirestatessubjectto
feudalburthens，forwhichthepresentland—taxisanexceedingly
smallequivalent，andfortheirrelieffromwhichtheyshould
havebeenrequiredtopayamuchhigherprice。Allwhohave
boughtlandsincethetaxexistedhaveboughtitsubjecttothe
tax。Thereisnotthesmallestpretenceforlookinguponitasa
paymentexactedfromtheexistingraceoflandlords。
Theseobservationsareapplicabletoaland—tax，onlyinso
farasitisapeculiartax，andnotwhenitismerelyamodeof
levyingfromthelandlordstheequivalentofwhatistakenfrom
otherclasses。InFrance，forexample，therearepeculiartaxes
onotherkindsofpropertyandincome（themobilierandthe
patente），andsupposingtheland—taxtobenotmorethan
equivalenttothese，therewouldbenogroundforcontendingthat
theStatehadreservedtoitselfarent—chargeontheland。But
whereverandinsofarasincomederivedfromlandis
prescriptivelysubjecttoadeductionforpublicpurposes，beyond
therateoftaxationleviedonotherincomes，thesurplusisnot
properlytaxation，butashareofthepropertyinthesoil，
reservedbythestate。Inthiscountrytherearenopeculiar
taxesonotherclasses，correspondingto，orintendedto
countervail，theland—tax。Thewholeofit，therefore，isnot
taxation，butarent—charge，andisasifthestatehadretained，
notaportionoftherent，butaportionoftheland。Itisno
moreaburthenonthelandlord，thantheshareofonejoint
tenantisaburthenontheother。Thelandlordsareentitledto
nocompensationforit，norhavetheyanyclaimtoitsbeing
allowedfor，aspartoftheirtaxes。Itscontinuanceonthe
existingfootingisnoinfringementoftheprincipleofEqual
Taxation。（4*）
Weshallhereafterconsider，intreatingofIndirect
Taxation，howfar，andwithwhatmodifications，theruleof
equalityisapplicabletothatdepartment。
7。Inadditiontotheprecedingrules，anothergeneralrule
oftaxationissometimeslaiddown，namely，thatitshouldfall
onincome，andnotoncapital。Thattaxationshouldnotencroach
upontheamountofthenationalcapital，isindeedofthe
greatestimportance;butthisencroachment，whenitoccurs，is
notsomuchaconsequenceofanyparticularmodeoftaxation，as
ofitsexcessiveamount。Over—taxation，carriedtoasufficient
extent，isquitecapableofruiningthemostindustrious
community，especiallywhenitisinanydegreearbitrary，sothat
thepayerisnevercertainhowmuchorhowlittleheshallbe
allowedtokeep;orwhenitissolaidonastorenderindustry
andeconomyabadcalculation。Butiftheseerrorsbeavoided，
andtheamountoftaxationbenotgreaterthanitisatpresent
eveninthemostheavilytaxedcountryofEurope，thereisno
dangerlestitshoulddeprivethecountryofaportionofits
capital。