RENT AND TAICES.
W3t revert to Dr. CHALMERS'S opinions on Taxation. At a time when there is a prospect of extensive changes in our financial system, more swayed than heretofore by the popular voice, the promulgation of an unsound theory, which chimes in with the vulgar prejudice against landlords and fundholders, may be pro- ductive of injurious consequences. This is especially to be appre- kended, when the eloquence, the virtues, and the station of the promulgator, with that evidence of the "humanities" which runs through his work, give a weight to his opinion, both with the re- ligious world and the public at large, which the mere exposition of -the theory might not in itself command. For these reasons, 'we-are induced to enter into the question at some length. Maintaining the doctrine that wages and profits eventually 'throw off taxes upon the consumer, Dr. CHALMERS concludes, that all taxation finally falls upon the net rent of land, which -Las dio means of evading it; and he thence deduces, that a "liberal Government expenditure" only abridges the luxuries of the landlords, and not the comforts of the people at large. In forming this theory, it seems to have escaped him, that the returns to all Invested capital are in the same predicament. The fundholder, tkle annuitant, the mortgagee-during the term of his mortgage, the proprietor of docks, rail-roads, &c.—and pro- bably the interest or net prole of circulating capital, if we could reach it with exactness—are as incapable of evading a tax as the landowner's rent. This oversight, it appears to us, has vitiated the Doctor's conclusion,—even were it conceded that neither wages nor profits can be affected by taxation.
The theory also seems opposed to probability. If all taxes finally fell upon the net rent of land, no pa-rely commercial state could pay taxes. Neither could a colony, where all the cultivated land was about the same fertility, and where no rent worth consideration was paid, Dr. CHALMERS has also met with a practical difficulty in working cut his theory. The annual tax- ation nearly equals-I- the whole rental of the country. To get over this stumblingbleck, Dr. CHALMERS is forced to call the fund- holder a co-proprietor, or mortgagee ; though a moment's considera- tion suffices to show that the income of a co-proprietor fluctuates with the produce of the estate, whilst that of the mortgagee is a fixed charge, which rises not though the rentals were trebled, and only falls short when there is not the wherewithal to discharge it. Having, however, by " looking comprehensively at the matter, identified the fundholder with the landowner, he proposes to tax the rent of' 60 millions, and the dividends of 30 millions, 50 per cent. Even this would leave the revenue minus many millions. He therefore supposes, that the present system of taxation adds to the expense of tillage, by raising the value of the " second necessaries" of the agricultuial labourer ; that with the proposed change, an in- creased cultivation would take place ; that rents would consequently rise; and that, finally, a tax of between 50 and GU per cent. upon the landlord and fundholder would leave them in the receipt of rather less than half their present revenue,—which would, how- ever, be really as valuable as now, in consequence of the fall in prices. It should, however, be remembered, that so extensive an increase of cultivation as that supposed, would speedily reduce rents, by increasing the supply of feed in comparison with the pre- sent demand, and thus throwing the lower soils out of cultivation ; or the contemplated rise•of rents (15 millions, or 33 per cent.) must be consequent on the rise in the price of food. Hence a dilemma. If rents fall, the landlord and fundholder must be taxed 60, or 70, or 80 per cent.; probably their entire incomes confiscated. In case of a rise, they would be left, when shorn of half their income, to purchase their necessaries at nearly as dear a rate as before : we imagine, by that time, both landlords and fuudholders would have ceased to trouble themselves about the price of luxuries. In making this calculation, it should be observed that Dr. CHAL- MERS seems to have taken not the mere net rent of land, but the whole gross rental of the country, including the rents of manufac- tories, houses in towns and cities, and, according to some, tithes. Correctly to ascertain the proportions between the gross and net rent of land, is, we believe, impossible. To distinguish the rent of houses and that of land, is very difficult, but an approach may be made to it sufficiently exact for our purpose. We are inclined to rate the rent of land at somewhere about 45 millions.* The amount of taxation for 1830 (deducting duties now repealed), was rather more than 50 millions ; so that if the gross rental of the land were confiscated to the state, it would fall short of its responsibilities by five millions. If tithes, the rents both of land and houses in Great Britain and Ireland, the dividends of the fundholder, and of the shareholders in the numerous joint stock companies established throughout the kingdom, were taxed to the amount of 50 per cent., the produce would not much more than meet the annual expenditure. Were the debt got rid of by the sponge, it would require a tax of 50 per cent. upon the gross rent of land to meet the current expenses of the year. We have not forgotten (although Dr. CHALMERS seems to have overlooked the fact) that certain taxes though of trifling amount, at present fall upon rent. The Land, House, and Win- dow Taxes, are of this description ; although nominally paid by the tenant, they in reality diminish the landlord's income. If they were repealed or commuted, rent (abstracting the effects of existing leases) would rise by the amount of the taxes- 3,731,6981.,—which, by the by, almost wholly fall upon house- rent. Again, the Malt and Hop duties, though supposed to fall upon the consumers of beer, may have an injurious effect upon rent, by checking the cultivation of hop grounds and barley land. * "The rate of interest is the measure of the net profit on capital. All returns beyond this on the employment of capital, are resolvable into compensations under distinct heads, for risk, trouble, or skill, or for advantages of situation or connexion."---Tomm
Dr. CHALMERS has taken his calculations rather against himself. When taxation reached 60 millions, the gross rentals, we should imagine, were not far short ail) mil- lions. This would make some difference in his favour, bat not enough to have any great effect upon the result. The error arose, we imagine, from his having taken the- revenue of Great Britain and Ireland. and the rental of Great Britain only—which is, we believe, rated higher than it ought to be. t Taking the Howe-duty at (say) one seventh of the assessed rental, house-rent. would amount to 9,531,3751. The assessment is, however, rarely taken at rackrent ; frequently 15 or 20 per cent, below it. Rating it at a medium, it would amount to 11,194,150/. To this we should have to add, all manufactories, and other places used for business, houses falling below the rental subject to the duty, and exempted houses. Taking these at one tenth, the total would be 12,300,0001. round numbers. Ireland is exempt from the Assessed Taxes; but, calculating her house-rent at a somewhat less proportion than her entire rental, it would give its a total for house-rent of about 16- millions. The whole rental of the kingdoms, including English tithes, is rated by high authority at 61 millions. We rather think that tithes should be excluded.
We are in some measure enabled to test these calculations by the labours of' Mr. Mansastr. That gentleman, from official returns, fixes the number of farm-houses- exempt from the house-duty at 223,000: at 21. a house, this would amount to nearly halla million, leavin5 little more than another half million for the other exemptions. The amountof rental in the metropolis assessed to the poor-rate in 1328, was 4,555,1991.; the actual or rackrent was 5,926,124/.--about three eighths of the whole house-rent of the kingdoms, supposing our estimate correct. But-these, we believe, are all that pros's upon landlords, excepting -a few stamp-duties. The duties an corn, butter, cheese, meat, eggs, and other articles whose reames were long to tell, are gene- rally believed to benefit rents, not by the mere amount of the tax, but by the artificial stimulus they give to prices within the sphere of the duty's operation. There are some who even think the Sugar- tax of this description,—holding, that were the duty repealed, su- gar might supersede barley in the distilleries, and be used in the feeding of cattle; thus diminishing rents, by driving portions both of grass and barley land out of cultivation. We are exceeding the space which should be devoted to discus- sion on an abstract point, but there are still some practical and political considerations connected with the subject, that ought to be touched upon. As we have already intimated, Dr. CHALMERS draws no practical distinction between the rent of houses and of land—nor between the rent of land in the scientific and in the popular meaning of the term. But when economists say that no rent is paid in a new colony, or upon the land last taken into cultivation, they do not mean that houses, farm-buildings, drainings, and enclosures, are miraculously Created. These are in effect the fixed capital of the landlord. They bear the same rela- tion to the manufacture of corn as a durable machine (lees to the manufacture of other commodities, or to the manuflIctory in which the machines are placed and the artisan's labour. The return to this outlay (and cultivation cannot be carried on without it) is strictly profit. But to distinguish this return from the rent which arises from the fertility of the soil, from local situation, or from the 'general improvement of the country—to separate, in short, the gross from the net rent—is clearly impossible. And it is to he feared, that a very heavy tax upon the rent of land (though it would doubtless pounce upon all existing machinery), would stop the future application of capital to the soil, and put an end to all .permanent improvement. Similar effects, we apprehend, would follow a grinding impost upon the interest of invested capital. The property now in existence would indeed be fixed beyond the power of evasion; its value would decline in exact proportion to the amount of the tax. A feverish stimulus would for a time be given to the active employment of capital, but a fatal check to all accumulation -; and after the forced competition had beaten down profits, capital would rapidly withdraw itself from the country, till we should find that we had inflicted a deathblow on the pros perity of the state. Dr. en ALMERs'S other proposal for an income-tax, is of a more reasonable nature. Upon whatever funds taxation may theoreti- cally be supposed to fall, few entertain any practical doubt that it is paid out of the 'aggregate incomes of the community. To an income-tax, there exists the practical objection of its inquisitorial nature. We, indeed, believe, that the inquisition need only be dreaded by the insolvent or embarrassed individual, by the rash Speculator, and by the social hypocrite, who is living apparently wealthy but really poor. The existence of the objection, however, no one can deny who has ever observed the current of opinion. Nor are we quite sure that an income-tax would, as Dr. CHALMERS suggests, enable us to confine our indirect taxation solely to the luxuries of the rich, without producing some of the effects before alluded to, and becoming too heavy to be bearable. A moderate property-tax, duly graduated, would yield sufficient to enable us to simplify our taxation, and get rid of many of the duties which press the heaviest upon productive industry. The subject is, how- ever, too important to be discussed at the end of so long an article : we shall probably return to it next week.
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