Thereisnofarmerwhodoesnotcomputebeforehandwhatthechurchtithe,whichisaland—taxofthiskind,is,oneyearwithanother,likelytoamountto。
Thetithe,andeveryotherland—taxofthiskind,undertheappearanceofperfectequality,areveryunequaltaxes;acertainportionoftheproducebeing,indifferentsituations,equivalenttoaverydifferentportionoftherent。Insomeveryrichlandstheproduceissogreatthattheonehalfofitisfullysufficienttoreplacetothefarmerhiscapitalemployedincultivation,togetherwiththeordinaryprofitsoffarmingstockintheneighbourhood。Theotherhalf,or,whatcomestothesamething,thevalueoftheotherhalf,hecouldaffordtopayasrenttothelandlord,iftherewasnotithe。Butifatenthoftheproduceistakenfromhiminthewayoftithe,hemustrequireanabatementofthefifthpartofhisrent,otherwisehecannotgetbackhiscapitalwiththeordinaryprofit。Inthiscasetherentofthelandlord,insteadofamountingtoahalforfive—tenthsofthewholeproduce,willamountonlytofour—tenthsofit。Inpoorerlands,onthecontrary,theproduceissometimessosmall,andtheexpenseofcultivationsogreat,thatitrequiresfour—fifthsofthewholeproducetoreplacetothefarmerhiscapitalwiththeordinaryprofit。Inthiscase,thoughtherewasnotithe,therentofthelandlordcouldamounttonomorethanone—fifthortwo—tenthsofthewholeproduce。Butifthefarmerpaysone—tenthoftheproduceinthewayoftithe,hemustrequireanequalabatementoftherentofthelandlord,whichwillthusbereducedtoone—tenthonlyofthewholeproduce。Upontherentofrichlands,thetithemaysometimesbeataxofnomorethanone—fifthpart,orfourshillingsinthepound;whereasuponthatofpoorerlands,itmaysometimesbeataxofone—half,oroftenshillingsinthepound。
Thetithe,asitisfrequentlyaveryunequaltaxupontherent,soitisalwaysagreatdiscouragementbothtotheimprovementsofthelandlordandtothecultivationofthefarmer。Theonecannotventuretomakethemostimportant,whicharegenerallythemostexpensiveimprovements,northeothertoraisethemostvaluable,whicharegenerallytoothemostexpensivecrops,whenthechurch,whichlaysoutnopartoftheexpense,istosharesoverylargelyintheprofit。ThecultivationofmadderwasforalongtimeconfinedbythetithetotheUnitedProvinces,which,beingPresbyteriancountries,anduponthataccountexemptedfromthisdestructivetax,enjoyedasortofmonopolyofthatusefuldyeingdrugagainsttherestofEurope。ThelateattemptstointroducethecultureofthisplantintoEnglandhavebeenmadeonlyinconsequenceofthestatutewhichenactedthatfiveshillingsanacreshouldbereceivedinlieuofallmanneroftitheuponmadder。
AsthroughthegreaterpartofEuropethechurch,soinmanydifferentcountriesofAsiathestate,isprincipallysupportedbyaland—tax,proportioned,nottotherent,buttotheproduceoftheland。InChina,theprincipalrevenueofthesovereignconsistsinatenthpartoftheproduceofalllandsoftheempire。Thistenthpart,however,isestimatedsoverymoderatelythat,inmanyprovinces,itissaidnottoexceedathirtiethpartoftheordinaryproduce。Theland—taxorland—rentwhichusedtobepaidtotheMahometangovernmentofBengal,beforethatcountryfellintothehandsoftheEnglishEastIndiaCompany,issaidtohaveamountedtoaboutafifthpartoftheproduce。Theland—taxofancientEgyptissaidlikewisetohaveamountedtoafifthpart。
InAsia,thissortofland—taxissaidtointerestthesovereignintheimprovementandcultivationofland。ThesovereignsofChina,thoseofBengalwhileundertheMahometangovernment,andthoseofancientEgypt,aresaidaccordinglytohavebeenextremelyattentivetothemakingandmaintainingofgoodroadsandnavigablecanals,inordertoincrease,asmuchaspossible,boththequantityandvalueofeverypartoftheproduceoftheland,byprocuringtoeverypartofitthemostextensivemarketwhichtheirowndominionscouldafford。Thetitheofthechurchisdividedintosuchsmallportionsthatnooneofitsproprietorscanhaveanyinterestofthiskind。Theparsonofaparishcouldneverfindhisaccountinmakingaroadorcanaltoadistantpartofthecountry,inordertoextendthemarketfortheproduceofhisownparticularparish。Suchtaxes,whendestinedforthemaintenanceofthestate,havesomeadvantageswhichmayserveinsomemeasuretobalancetheirinconveniency。Whendestinedforthemaintenanceofthechurch,theyareattendedwithnothingbutinconveniency。
Taxesupontheproduceoflandmaybeleviedeitherinkind,or,accordingtoacertainvaluation,inmoney。
Theparsonofaparish,oragentlemanofsmallfortunewholivesuponhisestate,maysometimes,perhaps,findsomeadvantageinreceiving,theonehistithe,andtheotherhisrent,inkind。Thequantitytobecollected,andthedistrictwithinwhichitistobecollected,aresosmallthattheybothcanoversee,withtheirowneyes,thecollectionanddisposalofeverypartofwhatisduetothem。Agentlemanofgreatfortune,wholivedinthecapital,wouldbeindangerofsufferingmuchbytheneglect,andmorebythefraudofhisfactorsandagents,iftherentsofanestateinadistantprovinceweretobepaidtohiminthismanner。Thelossofthesovereignfromtheabuseanddepredationofhistax—gathererswouldnecessarilybemuchgreater。Theservantsofthemostcarelessprivatepersonare,perhaps,moreundertheeyeoftheirmasterthanthoseofthemostcarefulprince;andapublicrevenuewhichwaspaidinkindwouldsuffersomuchfromthemismanagementofthecollectorsthataverysmallpartofwhatwaslevieduponthepeoplewouldeverarriveatthetreasuryoftheprince。SomepartofthepublicrevenueofChina,however,issaidtobepaidinthismanner。Themandarinsandothertax—gathererswill,nodoubt,findtheiradvantageincontinuingthepracticeofapaymentwhichissomuchmoreliabletoabusethananypaymentinmoney。
Ataxupontheproduceoflandwhichisleviedinmoneymaybeleviedeitheraccordingtoavaluationwhichvarieswithallthevariationsofthemarketprice,oraccordingtoafixedvaluation,abushelofwheat,forexample,beingalwaysvaluedatoneandthesamemoneyprice,whatevermaybethestateofthemarket。Theproduceofataxleviedintheformerwaywillvaryonlyaccordingtothevariationsintherealproduceoftheland,accordingtotheimprovementorneglectofcultivation。Theproduceofataxleviedinthelatterwaywillvary,notonlyaccordingtothevariationsintheproduceoftheland,butaccordingtoboththoseinthevalueofthepreciousmetalsandthoseinthequantityofthosemetalswhichisatdifferenttimescontainedincoinofthesamedenomination。Theproduceoftheformerwillalwaysbearthesameproportiontothevalueoftherealproduceoftheland。Theproduceofthelattermay,atdifferenttimes,bearverydifferentproportionstothatvalue。
When,insteadeitherofacertainportionoftheproduceofland,orofthepriceofacertainportion,acertainsumofmoneyistobepaidinfullcompensationforalltaxortithe,thetaxbecomes,inthiscase,exactlyofthesamenaturewiththeland—taxofEngland。Itneitherrisesnorfallswiththerentoftheland。Itneitherencouragesnordiscouragesimprovement。
ThetitheinthegreaterpartofthoseparisheswhichpaywhatiscalledaModusinlieuofallothertitheisataxofthiskind。
DuringtheMahometangovernmentofBengal,insteadofthepaymentinkindofafifthpartoftheproduce,amodus,and,itissaid,averymoderateone,wasestablishedinthegreaterpartofthedistrictsorzemindariesofthecountry。SomeoftheservantsoftheEastIndiaCompany,underpretenceofrestoringthepublicrevenuetoitspropervalue,have,insomeprovinces,exchangedthismodusforapaymentinkind。Undertheirmanagementthischangeislikelybothtodiscouragecultivation,andtogivenewopportunitiesforabuseinthecollectionofthepublicrevenuewhichhasfallenverymuchbelowwhatitwassaidtohavebeenwhenitfirstfellunderthemanagementofthecompany。Theservantsofthecompanymay,perhaps,haveprofitedbythischange,butattheexpense,itisprobable,bothoftheirmastersandofthecountry。
TaxesupontheRentofHouse。
Therentofahousemaybedistinguishedintotwoparts,ofwhichtheonemayveryproperlybecalledtheBuilding—rent;theotheriscommonlycalledtheGround—rent。
Thebuilding—rentistheinterestorprofitofthecapitalexpendedinbuildingthehouse。Inordertoputthetradeofabuilderuponalevelwithothertrades,itisnecessarythatthisrentshouldbesufficient,first,topayhimthesameinterestwhichhewouldhavegotforhiscapitalifhehadlentitupongoodsecurity;and,secondly,tokeepthehouseinconstantrepair,or,whatcomestothesamething,toreplace,withinacertaintermofyears,thecapitalwhichhadbeenemployedinbuildingit。Thebuilding—rent,ortheordinaryprofitofbuilding,is,therefore,everywhereregulatedbytheordinaryinterestofmoney。Wherethemarketrateofinterestisfourpercenttherentofahousewhich,overandabovepayingtheground—rent,affordssixorsixandahalfpercentuponthewholeexpenseofbuilding,mayperhapsaffordasufficientprofittothebuilder。Wherethemarketrateofinterestisfivepercent,itmayperhapsrequiresevenorsevenandahalfpercent。
If,inproportiontotheinterestofmoney,thetradeofthebuilderaffordsatanytimeamuchgreaterprofitthanthis,itwillsoondrawsomuchcapitalfromothertradesaswillreducetheprofittoitsproperlevel。Ifitaffordsatanytimemuchlessthanthis,othertradeswillsoondrawsomuchcapitalfromitaswillagainraisethatprofit。
Whateverpartofthewholerentofahouseisoverandabovewhatissufficientforaffordingthisreasonableprofitnaturallygoestotheground—rent;andwheretheownerofthegroundandtheownerofthebuildingaretwodifferentpersons,is,inmostcases,completelypaidtotheformer。Thissurplusrentisthepricewhichtheinhabitantofthehousepaysforsomerealorsupposedadvantageofthesituation。Incountryhousesatadistancefromanygreattown,wherethereisplentyofgroundtochooseupon,theground—rentisscarceanything,ornomorethanwhatthegroundwhichthehousestandsuponwouldpayifemployedinagriculture。Incountryvillasintheneighborhoodofsomegreattown,itissometimesagooddealhigher,andthepeculiarconveniencyorbeautyofsituationistherefrequentlyverywellpaidfor。Ground—rentsaregenerallyhighestinthecapital,andinthoseparticularpartsofitwheretherehappenstobethegreatestdemandforhouses,whateverbethereasonofthatdemand,whetherfortradeandbusiness,forpleasureandsociety,orformerevanityandfashion。
Ataxuponhouse—rent,payablebythetenantandproportionedtothewholerentofeachhouse,couldnot,foranyconsiderabletimeatleast,affectthebuilding—rent。Ifthebuilderdidnotgethisreasonableprofit,hewouldbeobligedtoquitthetrade;which,byraisingthedemandforbuilding,wouldinashorttimebringbackhisprofittoitsproperlevelwiththatofothertrades。Neitherwouldsuchataxfallaltogetherupontheground—rent;butitwoulddivideitselfinsuchamannerastofallpartlyupontheinhabitantofthehouse,andpartlyupontheowneroftheground。
Letussuppose,forexample,thataparticularpersonjudgesthathecanaffordforhouse—rentanexpenseofsixtypoundsayear;andletussuppose,too,thatataxoffourshillingsinthepound,orofone—fifth,payablebytheinhabitant,islaiduponhouse—rent。Ahouseofsixtypoundsrentwillinthiscasecosthimseventy—twopoundsayear,whichistwelvepoundsmorethanhethinkshecanafford。Hewill,therefore,contenthimselfwithaworsehouse,orahouseoffiftypoundsrent,which,withtheadditionaltenpoundsthathemustpayforthetax,willmakeupthesumofsixtypoundsayear,theexpensewhichhejudgeshecanafford;andinordertopaythetaxhewillgiveupapartoftheadditionalconveniencywhichhemighthavehadfromahouseoftenpoundsayearmorerent。Hewillgiveup,Isay,apartofthisadditionalconveniency;forhewillseldombeobligedtogiveupthewhole,butwill,inconsequenceofthetax,getabetterhouseforfiftypoundsayearthanhecouldhavegotiftherehadbeennotax。Forasataxofthiskindbytakingawaythisparticularcompetitor,mustdiminishthecompetitionforhousesofsixtypoundsrent,soitmustlikewisediminishitforthoseoffiftypoundsrent,andinthesamemannerforthoseofallotherrents,exceptthelowestrent,forwhichitwouldforsometimeincreasethecompetition。Buttherentsofeveryclassofhousesforwhichthecompetitionwasdiminishedwouldnecessarilybemoreorlessreduced。Asnopartofthisreduction,however,could,foranyconsiderabletimeatleast,affectthebuilding—rent,thewholeofitmustinthelong—runnecessarilyfallupontheground—rent。Thefinalpaymentofthistax,therefore,wouldfallpartlyupontheinhabitantofthehouse,who,inordertopayhisshare,wouldbeobligedtogiveupapartofhisconveniency,andpartlyupontheowneroftheground,who,inordertopayhisshare,wouldbeobligedtogiveupapartofhisrevenue。Inwhatproportionthisfinalpaymentwouldbedividedbetweenthemitisnotperhapsveryeasytoascertain。Thedivisionwouldprobablybeverydifferentindifferentcircumstances,andataxofthiskindmight,accordingtothosedifferentcircumstances,affectveryunequallyboththeinhabitantofthehouseandtheowneroftheground。
Theinequalitywithwhichataxofthiskindmightfallupontheownersofdifferentground—rentswouldarisealtogetherfromtheaccidentalinequalityofthisdivision。Buttheinequalitywithwhichitmightfallupontheinhabitantsofdifferenthouseswouldarisenotonlyfromthis,butfromanothercause。Theproportionoftheexpenseofhouse—renttothewholeexpenseoflivingisdifferentinthedifferentdegreesoffortune。Itisperhapshighestinthehighestdegree,anditdiminishesgraduallythroughtheinferiordegrees,soasingeneraltobelowestinthelowestdegree。Thenecessariesoflifeoccasionthegreatexpenseofthepoor。Theyfinditdifficulttogetfood,andthegreaterpartoftheirlittlerevenueisspentingettingit。Theluxuriesandvanitiesoflifeoccasiontheprincipalexpenseoftherich,andamagnificenthouseembellishesandsetsofftothebestadvantagealltheotherluxuriesandvanitieswhichtheypossess。Ataxuponhouse—rents,therefore,wouldingeneralfallheaviestupontherich;andinthissortofinequalitytherewouldnot,perhaps,beanythingveryunreasonable。Itisnotveryunreasonablethattherichshouldcontributetothepublicexpense,notonlyinproportiontotheirrevenue,butsomethingmorethaninthatproportion。
Therentofhouses,thoughitinsomerespectsresemblestherentofland,isinonerespectessentiallydifferentfromit。
Therentoflandispaidfortheuseofaproductivesubject。Thelandwhichpaysitproducesit。Therentofhousesispaidfortheuseofanunproductivesubject。Neitherthehousenorthegroundwhichitstandsuponproduceanything。Thepersonwhopaystherent,therefore,mustdrawitfromsomeothersourceofrevenuedistinctfromtheindependentofthissubject。Ataxupontherentofhouses,sofarasitfallsupontheinhabitants,mustbedrawnfromthesamesourceastherentitself,andmustbepaidfromtheirrevenue,whetherderivedfromthewagesoflabour,theprofitsofstock,ortherentofland。Sofarasitfallsupontheinhabitants,itisoneofthosetaxeswhichfall,notupononeonly,butindifferentlyuponallthethreedifferentsourcesofrevenue,andisineveryrespectofthesamenatureasataxuponanyothersortofconsumablecommodities。Ingeneralthereisnot,perhaps,anyonearticleofexpenseorconsumptionbywhichtheliberalityornarrownessofaman’swholeexpensecanbebetterjudgedofthanbyhishouse—rent。Aproportionaltaxuponthisparticulararticleofexpensemight,perhaps,produceamoreconsiderablerevenuethananywhichhashithertobeendrawnfromitinanypartofEurope。Ifthetaxindeedwasveryhigh,thegreaterpartofpeoplewouldendeavourtoevadeit,asmuchastheycould,bycontentingthemselveswithsmallerhouses,andbyturningthegreaterpartoftheirexpenseintosomeotherchannel。
Therentofhousesmighteasilybeascertainedwithsufficientaccuracybyapolicyofthesamekindwiththatwhichwouldbenecessaryforascertainingtheordinaryrentofland。
Housesnotinhabitedoughttopaynotax。Ataxuponthemwouldfallaltogetherupontheproprietor,whowouldthusbetaxedforasubjectwhichaffordedhimneitherconveniencynorrevenue。
Housesinhabitedbytheproprietoroughttoberated,notaccordingtotheexpensewhichtheymighthavecostinbuilding,butaccordingtotherentwhichanequitablearbitrationmightjudgethemlikelytobringifleasedtoatenant。Ifratedaccordingtotheexpensewhichtheymayhavecostinbuilding,ataxofthreeorfourshillingsinthepound,joinedwithothertaxes,wouldruinalmostalltherichandgreatfamiliesofthis,and,Ibelieve,ofeveryothercivilisedcountry。Whoeverwillexamine,withattention,thedifferenttownandcountryhousesofsomeoftherichestandgreatestfamiliesinthiscountrywillfindthat,attherateofonlysixandahalforsevenpercentupontheoriginalexpenseofbuilding,theirhouse—rentisnearlyequaltothewholenetrentoftheirestates。Itistheaccumulatedexpenseofseveralsuccessivegenerations,laidoutuponobjectsofgreatbeautyandmagnificance,indeed;but,inproportiontowhattheycost,ofverysmallexchangeablevalue。
Ground—rentsareastillmorepropersubjectoftaxationthantherentofhouses。Ataxuponground—rentswouldnotraisetherentsofhouses。Itwouldfallaltogetherupontheowneroftheground—rent,whoactsalwaysasamonopolist,andexactsthegreatestrentwhichcanbegotfortheuseofhisground。Moreorlesscanbegotforitaccordingasthecompetitorshappentobericherorpoorer,orcanaffordtogratifytheirfancyforaparticularspotofgroundatagreaterorsmallerexpense。Ineverycountrythegreatestnumberofrichcompetitorsisinthecapital,anditisthereaccordinglythatthehighestground—rentsarealwaystobefound。Asthewealthofthosecompetitorswouldinnorespectbeincreasedbyataxuponground—rents,theywouldnotprobablybedisposedtopaymorefortheuseoftheground。Whetherthetaxwastobeadvancedbytheinhabitant,orbytheowneroftheground,wouldbeoflittleimportance。Themoretheinhabitantwasobligedtopayforthetax,thelesshewouldinclinetopayfortheground;sothatthefinalpaymentofthetaxwouldfallaltogetherupontheowneroftheground—rent。Theground—rentsofuninhabitedhousesoughttopaynotax。
Bothground—rentsandtheordinaryrentoflandareaspeciesofrevenuewhichtheowner,inmanycases,enjoyswithoutanycareorattentionofhisown。Thoughapartofthisrevenueshouldbetakenfromhiminordertodefraytheexpensesofthestate,nodiscouragementwilltherebybegiventoanysortofindustry。Theannualproduceofthelandandlabourofthesociety,therealwealthandrevenueofthegreatbodyofthepeople,mightbethesameaftersuchataxasbefore。
Ground—rentsandtheordinaryrentoflandare,therefore,perhaps,thespeciesofrevenuewhichcanbestbeartohaveapeculiartaximposeduponthem。
Ground—rentsseem,inthisrespect,amorepropersubjectofpeculiartaxationthaneventheordinaryrentofland。Theordinaryrentoflandis,inmanycases,owingpartlyatleasttotheattentionandgoodmanagementofthelandlord。Averyheavytaxmightdiscouragetoo,muchthisattentionandgoodmanagement。Ground—rents,sofarastheyexceedtheordinaryrentofland,arealtogetherowingtothegoodgovernmentofthesovereign,which,byprotectingtheindustryeitherofthewholepeople,oroftheinhabitantsofsomeparticularplace,enablesthemtopaysomuchmorethanitsrealvalueforthegroundwhichtheybuildtheirhousesupon;ortomaketoitsownersomuchmorethancompensationforthelosswhichhemightsustainbythisuseofit。Nothingcanbemorereasonablethanthatafundwhichowesitsexistencetothegoodgovernmentofthestateshouldbetaxedpeculiarly,orshouldcontributesomethingmorethanthegreaterpartofotherfunds,towardsthesupportofthatgovernment。
Though,inmanydifferentcountriesofEurope,taxeshavebeenimposedupontherentofhouses,Idonotknowofanyinwhichground—rentshavebeenconsideredasaseparatesubjectoftaxation。Thecontriversoftaxeshave,probably,foundsomedifficultyinascertainingwhatpartoftherentoughttobeconsideredasground—rent,andwhatpartoughttobeconsideredasbuilding—rent。Itshouldnot,however,seemverydifficulttodistinguishthosetwopartsoftherentfromoneanother。
InGreatBritaintherentofhousesissupposedtobetaxedinthesameproportionastherentoflandbywhatiscalledtheannualland—tax。Thevaluation,accordingtowhicheachdifferentparishanddistrictisassessedtothistax,isalwaysthesame。
Itwasoriginallyextremelyunequal,anditstillcontinuestobeso。Throughthegreaterpartofthekingdomthistaxfallsstillmorelightlyupontherentofhousesthanuponthatofland。Insomefewdistrictsonly,whichwereoriginallyratedhigh,andinwhichtherentsofhouseshavefallenconsiderably,theland—taxofthreeorfourshillingsinthepoundissaidtoamounttoanequalproportionoftherealrentofhouses。Untenantedhouses,thoughbylawsubjecttothetax,are,inmostdistricts,exemptedfromitbythefavouroftheassessors;andthisexemptionsometimesoccasionssomelittlevariationintherateofparticularhouses,thoughthatofthedistrictisalwaysthesame。Improvementsofrent,bynewbuildings,repairs,etc。,gotothedischargeofthedistrict,whichoccasionsstillfurthervariationsintherateofparticularhouses。
IntheprovinceofHollandeveryhouseistaxedattwoandahalfpercentofitsvalue,withoutanyregardeithertotherentwhichitactuallypays,ortothecircumstancesofitsbeingtenantedoruntenanted。Thereseemstobeahardshipinobligingtheproprietortopayataxforanuntenantedhouse,fromwhichhecanderivenorevenue,especiallysoveryheavyatax。InHolland,wherethemarketrateofinterestdoesnotexceedthreepercent,twoandahalfpercentuponthewholevalueofthehousemust,inmostcases,amounttomorethanathirdofthebuilding—rent,perhapsofthewholerent。Thevaluation,indeed,accordingtowhichthehousesarerated,thoughveryunequal,issaidtobealwaysbelowtherealvalue。Whenahouseisrebuilt,improved,orenlarged,thereisanewvaluation,andthetaxisratedaccordingly。
ThecontriversoftheseveraltaxeswhichinEnglandhave,atdifferenttimes,beenimposeduponhouses,seemtohaveimaginedthattherewassomegreatdifficultyinascertaining,withtolerableexactness,whatwastherealrentofeveryhouse。
Theyhaveregulatedtheirtaxes,therefore,accordingtosomemoreobviouscircumstances,suchastheyhadprobablyimaginedwould,inmostcases,bearsomeproportiontotherent。
Thefirsttaxofthiskindwashearth—money,orataxoftwoshillingsuponeveryhearth。Inordertoascertainhowmanyhearthswereinthehouse,itwasnecessarythatthetax—gatherershouldentereveryroominit。Thisodiousvisitrenderedthetaxodious。Soonaftertherevolution,therefore,itwasabolishedasabadgeofslavery。
Thenexttaxofthiskindwasataxoftwoshillingsuponeverydwelling—houseinhabited。Ahousewithtenwindowstopayfourshillingsmore。Ahousewithtwentywindowsandupwardstopayeightshillings。Thistaxwasafterwardssofaralteredthathouseswithtwentywindows,andwithlessthanthirty,wereorderedtopaytenshillings,andthosewiththirtywindowsandupwardstopaytwentyshillings。Thenumberofwindowscan,inmostcases,becountedfromtheoutside,and,inallcases,withoutenteringeveryroominthehouse。Thevisitofthetax—gatherer,therefore,waslessoffensiveinthistaxthaninthehearth—money。
Thistaxwasafterwardsrepealed,andintheroomofitwasestablishedthewindow—tax,whichhasundergone,too,severalalterationsandaugmentations。Thewindow—tax,asitstandsatpresent(January1775),overandabovethedutyofthreeshillingsuponeveryhouseinEngland,andofoneshillinguponeveryhouseinScotland,laysadutyuponeverywindow,which,inEngland,augmentsgraduallyfromtwopence,thelowestrate,uponhouseswithnotmorethansevenwindows,totwoshillings,thehighestrate,uponhouseswithtwenty—fivewindowsandupwards。
Theprincipalobjectiontoallsuchtaxesoftheworstistheirinequality,aninequalityoftheworstkind,astheymustfrequentlyfallmuchheavieruponthepoorthanupontherich。A
houseoftenpoundsrentinacountrytownmaysometimeshavemorewindowsthanahouseoffivehundredpoundsrentinLondon;
andthoughtheinhabitantoftheformerislikelytobeamuchpoorermanthanthatofthelatter,yetsofarashiscontributionisregulatedbythewindow—tax,hemustcontributemoretothesupportofthestate。Suchtaxesare,therefore,directlycontrarytothefirstofthefourmaximsabovementioned。Theydonotseemtooffendmuchagainstanyoftheotherthree。
Thenaturaltendencyofthewindow—tax,andofallothertaxesuponhouses,istolowerrents。Themoreamanpaysforthetax,theless,itisevident,hecanaffordtopayfortherent。
Sincetheimpositionofthewindow—tax,however,therentsofhouseshaveuponthewholerisen,moreorless,inalmosteverytownandvillageofGreatBritainwithwhichIamacquainted。
Suchhasbeenalmosteverywheretheincreaseofthedemandforhouses,thatithasraisedtherentsmorethanthewindow—taxcouldsinkthem;oneofthemanyproofsofthegreatprosperityofthecountry,andoftheincreasingrevenueofitsinhabitants。
Haditnotbeenforthetax,rentswouldprobablyhaverisenstillhigher。
ARTICLEII
TaxesonProfit,orupontheRevenuearisingfromStockTherevenueorprofitarisingfromstocknaturallydividesitselfintotwoparts;thatwhichpaystheinterest,andwhichbelongstotheownerofthestock,andthatsurpluspartwhichisoverandabovewhatisnecessaryforpayingtheinterest。
Thislatterpartofprofitisevidentlyasubjectnottaxabledirectly。Itisthecompensation,andinmostcasesitisnomorethanaverymoderatecompensation,fortheriskandtroubleofemployingthestock。Theemployermusthavethiscompensation,otherwisehecannot,consistentlywithhisowninterest,continuetheemployment。Ifhewastaxeddirectly,therefore,inproportiontothewholeprofit,hewouldbeobligedeithertoraisetherateofhisprofit,ortochargethetaxupontheinterestofmoney;thatis,topaylessinterest。Ifheraisedtherateofhisprofitinproportiontothetax,thewholetax,thoughitmightbeadvancedbyhim,wouldbefinallypaidbyoneorotheroftwodifferentsetsofpeople,accordingtothedifferentwaysinwhichhemightemploythestockofwhichhehadthemanagement。Ifheemployeditasafarmingstockinthecultivationofland,hecouldraisetherateofhisprofitonlybyretainingagreaterportion,or,whatcomestothesamething,thepriceofagreaterportionoftheproduceoftheland;andasthiscouldbedoneonlybyareductionofrent,thefinalpaymentofthetaxwouldfalluponthelandlord。Ifheemployeditasamercantileormanufacturingstock,hecouldraisetherateofhisprofitonlybyraisingthepriceofhisgoods;inwhichcasethefinalpaymentofthetaxwouldfallaltogetherupontheconsumersofthosegoods。Ifhedidnotraisetherateofhisprofit,hewouldbeobligedtochargethewholetaxuponthatpartofitwhichwasallottedfortheinterestofmoney。Hecouldaffordlessinterestforwhateverstockheborrowed,andthewholeweightofthetaxwouldinthiscasefallultimatelyupontheinterestofmoney。Sofarashecouldnotrelievehimselffromthetaxintheoneway,hewouldbeobligedtorelievehimselfintheother。
Theinterestofmoneyseemsatfirstsightasubjectequallycapableofbeingtaxeddirectlyastherentofland。Liketherentofland,itisanetproducewhichremainsaftercompletelycompensatingthewholeriskandtroubleofemployingthestock。
Asataxupontherentoflandcannotraiserents;becausethenetproducewhichremainsafterreplacingthestockofthefarmer,togetherwithhisreasonableprofit,cannotbegreaterafterthetaxthanbeforeit,so,forthesamereason,ataxupontheinterestofmoneycouldnotraisetherateofinterest;thequantityofstockormoneyinthecountry,likethequantityofland,beingsupposedtoremainthesameafterthetaxasbeforeit。Theordinaryrateofprofit,ithasbeenshowninthefirstbook,iseverywhereregulatedbythequantityofstocktobeemployedinproportiontothequantityoftheemployment,orofthebusinesswhichmustbedonebyit。Butthequantityoftheemployment,orofthebusinesstobedonebystock,couldneitherbeincreasednordiminishedbyanytaxupontheinterestofmoney。Ifthequantityofthestocktobeemployed,therefore,wasneitherincreasednordiminishedbyit,theordinaryrateofprofitwouldnecessarilyremainthesame。Buttheportionofthisprofitnecessaryforcompensatingtheriskandtroubleoftheemployerwouldlikewiseremainthesame,thatriskandtroublebeinginnorespectaltered。Theresidue,therefore,thatportionwhichbelongstotheownerofthestock,andwhichpaystheinterestofmoney,wouldnecessarilyremainthesametoo。Atfirstsight,therefore,theinterestofmoneyseemstobeasubjectasfittobetaxeddirectlyastherentofland。
Thereare,however,twodifferentcircumstanceswhichrendertheinterestofmoneyamuchlesspropersubjectofdirecttaxationthantherentofland。
First,thequantityandvalueofthelandwhichanymanpossessescanneverbeasecret,andcanalwaysbeascertainedwithgreatexactness。Butthewholeamountofthecapitalstockwhichhepossessesisalmostalwaysasecret,andcanscarceeverbeascertainedwithtolerableexactness。Itisliable,besides,toalmostcontinualvariations。Ayearseldompassesaway,frequentlynotamonth,sometimesscarceasingleday,inwhichitdoesnotriseorfallmoreorless。Aninquisitionintoeveryman’sprivatecircumstances,andaninquisitionwhich,inordertoaccommodatethetaxtothem,watchedoverallthefluctuationsofhisfortunes,wouldbeasourceofsuchcontinualandendlessvexationasnopeoplecouldsupport。
Secondly,landisasubjectwhichcannotberemoved;whereasstockeasilymay。Theproprietoroflandisnecessarilyacitizenoftheparticularcountryinwhichhisestatelies。Theproprietorofstockisproperlyacitizenoftheworld,andisnotnecessarilyattachedtoanyparticularcountry。Hewouldbeapttoabandonthecountryinwhichhewasexposedtoavexatiousinquisition,inordertobeassessedtoaburdensometax,andwouldremovehisstocktosomeothercountrywherehecouldeithercarryonhisbusiness,orenjoyhisfortunemoreathisease。Byremovinghisstockhewouldputanendtoalltheindustrywhichithadmaintainedinthecountrywhichheleft。
Stockcultivatesland;stockemployslabour。Ataxwhichtendedtodriveawaystockfromanyparticularcountrywouldsofartendtodryupeverysourceofrevenuebothtothesovereignandtothesociety。Notonlytheprofitsofstock,buttherentoflandandthewagesoflabourwouldnecessarilybemoreorlessdiminishedbyitsremoval。
Thenations,accordingly,whohaveattemptedtotaxtherevenuearisingfromstock,insteadofanysevereinquisitionofthiskind,havebeenobligedtocontentthemselveswithsomeveryloose,and,therefore,moreorlessarbitrary,estimation。Theextremeinequalityanduncertaintyofataxassessedinthismannercanbecompensatedonlybyitsextrememoderation,inconsequenceofwhicheverymanfindshimselfratedsoverymuchbelowhisrealrevenuethathegiveshimselflittledisturbancethoughhisneighbourshouldberatedsomewhatlower。
Bywhatiscalledtheland—taxinEngland,itwasintendedthatstockshouldbetaxedinthesameproportionasland。Whenthetaxuponlandwasatfourshillingsinthepound,oratone—fifthofthesupposedrent,itwasintendedthatstockshouldbetaxedatone—fifthofthesupposedinterest。Whenthepresentannualland—taxwasfirstimposed,thelegalrateofinterestwassixpercent。Everyhundredpoundsstock,accordingly,wassupposedtobetaxedattwenty—fourshillings,thefifthpartofsixpounds。Sincethelegalrateofinteresthasbeenreducedtofivepercenteveryhundredpoundsstockissupposedtobetaxedattwentyshillingsonly。Thesumtoberaisedbywhatiscalledtheland—taxwasdividedbetweenthecountryandtheprincipaltowns。Thegreaterpartofitwaslaiduponthecountry;andofwhatwaslaiduponthetowns,thegreaterpartwasassesseduponthehouses。Whatremainedtobeassesseduponthestockortradeofthetowns(forthestockuponthelandwasnotmeanttobetaxed)wasverymuchbelowtherealvalueofthatstockortrade。
Whateverinequalities,therefore,theremightbeintheoriginalassessmentgavelittledisturbance。Everyparishanddistrictstillcontinuestoberatedforitsland,itshouses,anditsstock,accordingtotheoriginalassessment;andthealmostuniversalprosperityofthecountry,whichinmostplaceshasraisedverymuchthevalueofallthese,hasrenderedthoseinequalitiesofstilllessimportancenow。Therate,too,uponeachdistrictcontinuingalwaysthesame,theuncertaintyofthistaxsofarasitmightbeassesseduponthestockofanyindividual,hasbeenverymuchdiminished,aswellasrenderedofmuchlessconsequence。IfthegreaterpartofthelandsofEnglandarenotratedtotheland—taxathalftheiractualvalue,thegreaterpartofthestockofEnglandis,perhaps,scarceratedatthefiftiethpartofitsactualvalue。Insometownsthewholeland—taxisassesseduponhouses,asinWestminster,wherestockandtradearefree。ItisotherwiseinLondon。
Inallcountriesasevereinquisitionintothecircumstancesofprivatepersonshasbeencarefullyavoided。
AtHamburgeveryinhabitantisobligedtopaytothestateone—fourthpercentofallthathepossesses;andasthewealthofthepeopleofHamburgconsistsprincipallyinstock,thistaxmaybeconsideredasataxuponstock。Everymanassesseshimself,and,inthepresenceofthemagistrate,putsannuallyintothepubliccofferacertainsumofmoneywhichhedeclaresuponoathtobeone—fourthpercentofallthathepossesses,butwithoutdeclaringwhatitamountsto,orbeingliabletoanyexaminationuponthatsubject。Thistaxisgenerallysupposedtobepaidwithgreatfidelity。Inasmallrepublic,wherethepeoplehaveentireconfidenceintheirmagistrates,areconvincedofthenecessityofthetaxforthesupportofthestate,andbelievethatitwillbefaithfullyappliedtothatpurpose,suchconscientiousandvoluntarypaymentmaysometimesbeexpected。ItisnotpeculiartothepeopleofHamburg。