THE RATIONALE OF AN INCOME-TAX.

TO THE EDITOR OF THE SPECTATOR.

"Be aye planting a tree, Jock—it'll be growing while you're sleeping."

" Service is no inheritance."

Sia—The national mind has taken a fresh pinch of snuff from its box of political economy, which has had the natural effect of "setting it a-thinking " on some important elements of that terribly abstruse science. Perhaps poste- rity, did it feel the existence of inclination, would be justified just now in bid- ding a silver penny for a nation's thoughts. Apart from the crude utility of full coffers to the Chancellor of the Exche- quer,—and alike independently of that "particular legislation" on individual hardship which snits the genius of a Chinese worker in ivory,—it is evident that it is of no small political importance, in proceeding to tax income, that those who enact, and those who are acted upon, should know what income is. As a tradesman's son, having been early taught lessons of economy of which my own experience in trade has taught me the value, I have been led to adopt views of the relation in which profits stand towards income, and to carry out those views in the daily practice of life, which correspond more closely with the facts attendant on every case of accumulated wealth, than with the opinion which prevails in favour of the principle acted on in direct taxation of income. It appears to Inc an inevitable consequence of the conclusions at which data (afforded alike by the economist and the spendthrift) enable us to arrive, that a man in receipt of profits in trade, or having analogous resources, but with no other visible means of living, is to all intents and purposes of justice A MAN wrrnouT ex INCOME, living on his ccipitaL lie has iscomutos, but he has not income. If you tax his profits or his professional remuneration, you touch the case, not of income in possession, but in prospect—not of his true income, but of his only means of acquiring that which alone is truly income—a thing s ati generis, let its mama eausandi be what it may. Annual income is an exclusive feature of realized property; owing to which, it becomes possible to retain wealth absolutely undiminished, notwithstanding a certain extent of expenditure. Mankind are indebted for the enjoyment of its advantages to observance of the fact that material property derives the same perpetual fertility from due regard of its rights and the laws to which it is sub- ject that the earth preserves under judicious tillage. But it is no more possible for income to exist without realized property from which it may proceed, than for corn to wave its yellow hair over the Dead Sea. And to regard a man as having an actual realized property in his own bodily or mental exertions, however profitable to himself or others, would be to take the first step in the series of fallacies, which, in their downward tendency, led to the institution of human slavery, and, rising upwards, expanded into the human immortality embodied into Greek and Oriental imaginative mythoa.

The case may be put in many ways, each giving still the same result. Take the following; in which, if there be a fallacy, I acknowledge that it is one most dangerous to a self-taught and circumscribed mind like mine. A is a landholder aged twenty, having fifty acres of unoccupied land, each worth 300/. principal money. He annually puts up for sale the fee-simple of one of his acres, and with the purchase-money, (which, under the circum-

stances, forms his only resource,) he meets his current expenditure. It is ob- vious, that should A die at ripe age he would in this case die a pauper. Had he procured a tenant for the land at a rent sufficient to satisfy his wants, he then would have possessed income during life, and died a substantial yeoman. But as it stands, he is living upon capital, not on income ; and it is to be hoped there will be nor wife nor child of his to mourn beside his grave. B, also aged twenty, is "lord of his presence, and no land beside." But B is in practice as an attorney ; and from the exercise of his profession there

comes yearly to his hands an uninvested sum of 3001. On the supposed strength of this supposed income he marries ; and in bringing up a family is impelled to lay out each year as much as he has acquired from the exercise of his usefulness. At the lapse of fifty years, where and of what amount is his income ? The question is to him rather an interesting one, for though he has retained all his connexions, B has become unfit for bunnies ; and if he has fot

a snug little farm, the rent of which may help him in his old age, can he or spy one give any accurate explanation but this—" that he had always lived up to his CAPITAL " ? The amount of his income must depend upon the percentage which the difference between his total outgoings and incomings may yield when invested.

It is evident that the annual recurrence of monies in hand does not consti- tute such monies taxable as income. The owners of a whaler may annually

receive freight, but it does not follow that there is anxdprofit ; and the proceeds

are clearly not all subject to income-tax. The natio"fial revenue accrues an- nually, but is at once exempted from taxation, from the necessity of the case.

If a man had a legacy of 10,000/. left him in 1841, received a fortune with his bride of 10,000/. in 1842, and was to recover 100,000/. mesne profits, in ten annual instalments, the first payable in 1843, there would be no traces of that amount of income in his fortunes.

There is an aristocracy of labour, naturally arising out of the popular feelings and prejudices on the subject of its remuneration. Dislike of being dependent on salary or on wages, impels to the attempt to begin business. The tradesman, struggling hard "to make a fortune," is apt to envy him who has already realized the possession of an income. And all feel that "the glorious privilege of being independent" cannot be exercised prudently without an independent income. Its happy possessor (like bachelors) becomes a fit object for taxation—for it is a luxury in every sense of that term.

I will attempt the further illustration of my position by a brief detail of my own case; the more as I apprehend it to be a very common case, to which there are parallels behind every second or third counter or counting-house desk on which the Income-tax paper can be laid throughout the realm of England. The firm to which 1 belong carries on business in a seat of trade, which, were it not for the residence of the Court and its etceteras, might hereafter con-

test the palm of preeminence among British cities with the Metropolis itself.

The trade is one requiring some considerable capital, and in which very heavy sums are invested. Were inquiry made here alter the leading houses in our

line, our names would perhaps be mentioned first. The profits of the business

are divided equally between the three young men who are the principals of the establishment ; and, looking at our concern with a critical eye, accustomed-to

value profits in trade, the emissary of Somerset House would very probably estbnate our profits at a clear 1,000/. a year,—or, taking thought of the cir- cumstance that none of us keep a gig, and that our reliance on our connexion is so great that we dispense with the advertisement of a country-house for the

senior partner, and the other two living respectably at the outskirts, he might set it down at 1,5001., and rely on his being within the mark. What are the facts ? Since I entered into business, my time, at weekly wages' would nearly

equal my share of profit ; which exceeds what we pay each of our men by about the difference of the hours we work. By this close application, conti- nuing regularly and sans intermission for three or six hours after the hands leave work, we have extended our business so as to require an annual increase of one-fourth of our vested capital. The sum originally embarked by me was lent me by a kind aged relative, living on 100/. a year, who further enabled me

to subsist for the first two years on less than 50/. We all devote our whole time in driving the business which else would "drive us," and our money to the increase of capital, both fixed and floating, without which we should be obliged to solicit the assistance of some Mr. GEORGE ROBINS. We have been compelled to forego the ardent wish to insure our lives, that we might be able to make current payments good, and to borrow, that we might purchase a needful increase of machinery, as we cannot distrain upon our customers when payment is in arrear. To avoid the risk of increase of personal expendi-

ture, which might interfere with the double object of increasing our capital

and repaying the borrowed part of it, the writer (I said mine was a very com- mon case, with which thousands of brother tradesmen could sympathize) has long postponed the matrimonial alliance which is the object of his chenshed hopes. His real return of profit for the last four years has been, after deducting a regular week's wages, an average of 50/. a year, as a return for his" even- ing's amusement" at the work-bench, and for his capital, which, with hard struggling, he has doubled. But the borrowed hundreds are yet unpaid. Now here are the heads of a picture of gloom darker and deeper than the influence

of a November day—items of the life of a tradesman, regarded, and not without

apparent good reason nor without real cause, as a prosperous man. Let some embarrassed landholder, whose fields are mortgaged, come and comfort him by contrasting their fortunes : but if the mortgage is allowed the landowner in abatement, let the mortgage which the laws of nature impose on the trades- man, if be would not die a beggar, be also respected. Treat not capital, as yet uninvested, as if it were an assured income. It would be preferable, in point of policy as well as equity, to raise a modicum of tax out of the descent of real property, even though entailed. It would be wiser, as well as more just, to tax the respective tenants of Chatsworth and of the nearest public-house with a rateable proportion of house-duty, adjusted to the value in rent of the premises by an assessor, whose reverence for an oath would compel him to declare that the rent of Chatsworth was nearer 10,000/. than 100/. a year, inasmuch as house-rent ever bears the natural proportion to income, on the most liberal assessment, of 1 to 12; and Chatsworth would suit well for the summer resi- dence of a nobleman of 80,000/. a year, even lacking the ornament of a nark, and with a very scanty lawn.

[We shall be glad to hear again from this correspondent. —ED.]