TAXATION AND TAXABLE CAPACITY.
IF the question between Great Britain and Ireland were one as to how much could be got out of Ireland for the selfish purposes of the " predominant partner," like the question between a conquering and a conquered State, it is certain that the very last expedient that would be proposed would be equality of individual taxation over the whole country with a good many considerable remissions in favour of Ireland. No one can say that England has ever profited by what the new financiers are pleased to call Ireland's overtaxation. We have, doubtless, spent too much on the machinery of Irish government, not altogether from any preference in that direction on the part of the British government, for nothing has been less popular in Ireland itself than the abolition of the Lord-Lieutenancy and some other economical arrangements of the same sort. For our own part we should be quite willing and even eager to reform the excessive expenditure on Irish govern- ment and administration with a strong hand, beginning with the nominal and very superfluous Viceroyalty, so that Ireland might make a great saving on the present extravagant cost of administrative machinery. But when the cry is raised for taxing on the principle of proportioning the taxation to " taxable capacity," we cannot help asking how far the Irish agitators have the least notion of applying that principle to the various taxable districts of Ireland itself. We have said, and we thoroughly believe, that no principle could be more impracticable than taxing individuals or municipalities or counties or any assignable areas not in proportion to their actual wealth, but to their actual wealth together with their general resources for increasing that wealth. Does any one imagine for a moment that Ireland would allow Belfast, Dublin, Cork, Limerick, Londonderry, and Waterford to be taxed at a much higher rate than the great landed proprietors of Ireland, only because those cities enjoy much greater opportunities of increasing their wealth than the landed gentry whose rental has formed the bete noire of the various agitations of the Land League ? We can imagine no principle less likely to find favour in Ireland. In fact, the great trading communities have done so much to improve the markets for Irish produce that they have become rather popular in Ireland, and Irishmen would look with grave suspicion on any device for arresting the increase of their prosperity in order to do justice to that much detracted and over-rated class, the country gentlemen of Ireland. Yet if " taxable capacity," as distinguished from actual wealth, is to be the gauge by which the weight of taxation is to be determined, nothing is more certain than that the chief centres of Irish commerce have far greater opportunities of increasing and multiplying their resources than the landed gentry, who have been the victims, first, of violent political odium, and, next, of a great and far-spreading economical dis- aster. Wealth for wealth, the " taxable capacity " of Irish commercial cities is far beyond the taxable capacity of Irish rent-rolls. In other words, Irish commerce has far greater opportunities of increasing and turning itself over again and again than the greatly reduced Irish rent-rolls, which are heavily burdened by mortgages and provisions for women and younger children, and even when free from such burdens, which very few, if any, of them are, have no advantageous opportunities for safe and profitable invest- ments. Is it conceivable for a moment that the principle for which Irishmen of all parties cry out as the only just one for Ireland as a whole, would be applied by them- selves to their own taxpayers, if they were given Home-rule, with the result of reducing the prosperity of their most prosperous communities, on the one band, and, on the other, of lightening the burdens of their own moat envied and jealously distrusted classes ? We have no belief that the Irish would apply the test of "taxable capacity" to their own case, though they would like very much to see it applied for the purpose of lowering the total taxation of Ireland and consequently increasing that of England. So soon as it came to lowering the taxa- tion of their landed gentry of small " taxable capacity " in order to increase that of their commercial centres with large " taxable capacity," they would throw this un- manageable principle to the winds and cry out that their commercial activity and energy should not be trenched upon at any higher rate than the incomes of those who " toil not, neither do they spin." And so they would show the world that this standard of " taxable capacity " was kept only for political use when it was desired to screw something out of England, but not for any purposes of home consumption.
The real impracticability and mischief of accepting "taxable capacity" as the standard of just taxation is that we cannot grant it to one poor area without granting it to other poor areas, and that we cannot grant it to all the poor areas generally without entirely revolutionising the whole finance of the United Kingdom, and re- volutionising it very injuriously for the interests of the poor areas themselves. The principle really means that just as any industrial area gets out of poverty into prosperity it should be mulcted for having suc- ceeded by recognising that its " taxable capacity " had increased, and that its citizens should be made to feel that they must pay at a higher rate than formerly for having in- creased the wealth of their community. That is a thoroughly anti-economical principle. And for a land like Ireland, whose prosperity is only just beginning, it would be even more dangerous and prejudicial than for Great Britain. The Irish are a very acute and subtle people, and if they once realised that the more they earned the higher would be the rate at which they would be taxed, there is no knowing what they might not do in order to evade wnat they would regard as a most unjust penalty for success. It is far from certain that they would not find in it an excuse for greater indolence, not because they would not know perfectly well that energy and sagacity would much more than compensate the evils of a higher standard of "taxable capacity," but because they would resent so much being penalised for the energy and sagacity they had already displayed, that they would take a capricious delight in foiling the designs of the Administration by either retrograding in reality, or what would in the end be the same thing, shamming a poverty that was not honest. Indeed poverty cannot be shammed, by a community at least, without passing from a pretence into a reality, for the steps necessary to appear poor would in reference to a community soon breed the languor and indifference that would result in a true relapse into poverty. We apply this argument to the case of Ireland itself because we firmly believe that in the case of Ireland it would produce its worst results, partly from the intelli- gence of the people, partly from their love of a plausible excuse for relaxing their efforts. But what is certain is that we could not possibly apply it to the case of Ireland, and not apply it generally in the United Kingdom. We have recently tried to make up for cen- turies of misrule in Ireland by treating the Irish people as the spoilt children of the United Kingdom. That however, compensating injustice by more injustice. And it is simply impossible that it can be permanently pursued' in the case of such a democracy as ours. We are already hearing the cry for an extension of the " fair-rents" principle by Land Courts to Great Britain, instead of by the increase of that shrewd independence and sense of enlightened self-interest which would give English farmers the power of insisting for themselves on such reductions of rent as would render their position tolerable. Let ua only go on to admit that " taxable capacity " should be,— in Ireland,—the true standard of taxation, and we should soon be obliged to lower our rate of taxation in every district that was declining in prosperity, and raising it as the reward for every district that was growing in thrift and prosperity. And the consequence would be not only financial mischief but absolute financial chaos. We should have one rate of taxation for the highlands of Scotland and another for the lowlands ; one rate for North Wales and another for the rich coal-seams of South Wales ; one rate for the poor prairie-land of Wiltshire and another for the richer loam of Somersetshire ; one rate for Essex and Suffolk and another for Staffordshire and Worcester- shire ; one rate for Lincolnshire and Yorkshire and another for Cumberland and Westmoreland ; and when we had established all these differences, we should have numberless new outcries against the injustice of our band- to-mouth empiricism expressed in grumbles at the figures assigned to "taxable capacity" in all its real and imaginary phases. " Taxable capacity " may be a very good principle for a conqueror to go on in extracting forced loans from the different regions in the country he has conquered, but nothing can be worse as a guide for the permanent Administration of a settled country. To let any popula- tion feel that the harder they work the higher they will be taxed, is simply a ruinous policy. That a man with one rate of earnings in one region should be taxed at the same rate with another man at the same rate of earnings in another region is equity itself compared with an attempt to achieve the impossible at the risk of mulcting growing industry to make up the deficiencies of growing idleness. Taxable capacity increases with thrift and diminishes with thriftlessness. To make the thrifty feel that they shall suffer for their thrift, and the thriftless that they shall he more leniently taxed the more thriftless 'they become, is a fatal and almost an idiotic course for any State. The true way to compensate, so far as possible, for former misgovernment is to make it evident that we are willing to put our shoulders to the wheel to help the poorer country out of any temporary difficulty into which it has fallen. Let us show not only Ireland, but the Scotch crofters and the English .ereal counties if we will, that we are not only willing, but anxious, to help them in their misfortunes, and we shall do well. But to hold out the prospect of extracting an extra contribution from every city or district which is thriving by its own merits, would be one of the most insane policies that could be adopted, even by a hare-brained people.
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