TOPICS OF THE DAY.
THE COMING DEMOCRATIC BUDGET.
IT seems to be more than probable, almost certain, that the Chancellor of the Exchequer will endeavour to balance his Budget and obtain a new and permanent source of revenue for the State by graduating the death-duties. Mr. J. T. Hibbert has intimated as much in a public speech, and Mr. Hibbert, besides being essentially a cautious man, ranks too high among Ministers to give a hint of that kind unless he knew it was true and had reckoned on its effect. He has, in fact, probably been permitted to make his speech in order to diminish any shock of surprise which might otherwise be felt. Moreover, the political situation is suchas almost to compel Sir William Harcourt to make some proposal of the kind. He will have a deficit of about two millions to meet, he must ask from five to seven millions as extra money for shipbuilding, and even if he raises this by loan he must provide for the interest and the extinction of the debt. He may, too, feel compelled by his party pledges to do somewhat towards realising the free importation of all food, if it be only by taking off the taxes on dried fruit, and so making currant dumplings cheaper and fruit-pies possible throughout the year. Altogether, he will have a large sum to provide,—say, as a minimum, three millions more than he expected. He will not like to abandon the Sinking Fund altogether ; he cannot raise the Income-tax to ninepence without endangering his Government; and to put on any indirect tax would raise, as he thinks, a storm of opposition. He must, moreover, do something for his Radical friends, who, though obedient to the whip, are disappointed and savage, and the easiest thing is to gratify at once their secret t'kindness for " Socialism," and their malice against the plutocracy and the landed interest. A graduated probate-duty will meet all these requirements, will, if it is bold enough, provide indis- pensable supplies, and will possibly rouse less resistance than any other form of taxation. The death-duties have always human selfishness in their favour, for though there are a. good many eldest sons in the House of Commons, still the immense majority always feel that legacy-duties and probate-duties are taxes levied on somebody else, and after discussion resign themselves placably to other people's disappointment. Sir William Harcourt does not forget that, for there is a cynical element in his mind, and altogether, we think the propertied classes may reckon on some proposal of the sort before next May.
We are not prepared, as we said last week, to raise any final ejection upon principle. The ideas that surplus wealth should be separately taxed, and that there should be some equality in sacrifice between different classes, are quite defen- sible in argument, and are, indeed, acted on to some extent in our existing taxation. We exempt the respectable poor from the Income-tax, and we draw distinctions among rate- payers which, though not in themselves perhaps quite real—every charge on a house being ultimately rent—are intended to indicate that even for municipal purposes the tax-gatherer is forbidden to mulct the very feeble. The principle, in fact, may pass as accepted, and discussion will rage round practical details, more especially these three,—the favour, if any, to be shown to relatives ; the equality to be enforced between realty and personalty, and the extent to which the new principle may justifiably and expediently be carried. We have a word to say upon each of those points.
(1.) We think that most of the present distinctions in favour of relatives rest upon no foundation, except the old feudal feeling that the unit which the State should tax is not the individual subject but the family. That was right enough while the only property was land, and entail was in practice inviolable, and the thing demanded was not cash, which can be divided, but service, which cannot. It is fair enough on the Continent, where each family really forms a corporation with long continuity, distinct control both as regards marriage and expenditure over its members, and a corporate sense of dignity ; but the idea has no relation, or very little, either to our laws or our manners. For good or for evil an Englishman stands very nearly alone. There ought to be much con- sideration for the wife, who is usually only a life-renter, and at most delays, rather than breaks, the devolution of property ; and some consideration, at least during one generation, for the children, as bred up, for the most part,. under an implied promise ; but we would go no farther in- favour of relatives by blood. The testator did not make his brother or his nephew or his cousin, and if it is just to tax anybody through a probate-duty, it is quite as just to tax relatives other than children as anybody else. Their moral. "claim" is often not half as strong as that of a friend, or dependant, or—an exceedingly common case—a recipient of an annuity who cannot be forgotten in the will. Relatives other than children ought, we conceive, to pay just as much as strangers ; and, indeed, we would go one step farther in the Radical direction. It is not good policy in a demo- cratic State to impede the diffusion of property by exemp- tions, and we should be inclined in all cases where the- wealth bequeathed exceeded £100,000, to abolish exemp- tions altogether. There is plenty left and plenty of surplus too, and the "claim " of sons, of which so much is made, has been set aside by our laws for more than eight hundred years. The second son and the third son and the tenth son are all sons, and under the law as it stands the father may own half a county, and yet none of them all have a legal claim to a single farthing_ It is nonsense, in the face of that fact, for the Exchequer to be so very domestic, and though we would not offend. opinion by denying the claim of kin altogether, we cer- tainly should not respect it, except under duresse of the House, in the case of millionaires. We would, in, fact, put a moderate ascending duty upon everybody except the widow, with only a reasonable rebate to sons, confined to estates of less than £100,000 each. The Rothschilds and their like would fight and protest. but we very much doubt if opinion would back them, espe- cially if the Chancellor could see his way to a second.' rebate if devolution by death occurred twice within three years. That would be difficult, because heirs spend most in their first year of inheritance ; but still we do not think it would be entirely beyond the capacity of Somerset House to arrange a working scheme.
(2.) But then the new probate-duty should be moderate,. as it might be if it included everybody in the net. We very strongly doubt whether 10 per cent. should not be the ultimate maximum for the richest, and believe Mr. Labouchere's proposal of 15 per cent. on all fortunes above half-a-million would be injurious to the Treasury and to morals. The bonus offered for fraud would be much too big. Not only do we believe, as against. Mr. Labouchere, that gifts inter vivos would become- frequent, ordinary folk, women especially, trusting one another much more implicitly than he thinks ; but property would be conveyed out of the reach of the- depredators of the Treasury. The Jews in particular- would beat King Harcourt as they beat King John, by using bills of exchange, and we do not suppose he would• dare to order their teeth to be drawn till in their agony they revealed the secret. Somerset House is clever, but how does it propose to prevent Baron Steinheim at seventy from placing his wealth in Prussian Consols,. or selling his property to his son for a bond to pay him a life annuity ? In theory, you may of course establish a Mortmain law for private arrangements and invali- date all assignments made, say, within two years of death ; but as the Treasury does not rule the fates,. how, under that law, could ordinary business be carried on? You cannot allow a railway accident to invalidate all its victims' bargains. The suggestion is absurd, even though it was made by a newspaper usually careful.. Mr. Labouchere's alternative suggestion, that a heavy stamp-duty should be imposed on all gifts above a. certain amount is childish, and almost of a piece with his contention of last week that a portion of something might in certain contingencies be nothing,— the most remarkable bit of arithmetic we ever remember from an authority on finance. The conveyances would be sales, not gifts, and to stop sales of property on suspicion of collusion, or on the ground of relationship between the buyer and the seller, would be practically to arrest great transfers of property altogether. The Treasury must be moderate, unless it wants its richest victims to escape, its valuers to be bribed, and the secret sympathy of the public to go with fraud, and although we cannot strictly define moderation, we feel confident that 15 per cent. exceeds its limits. To take £150,000 from the estate of a millionaire is to offer his heirs a great fortune as a reward for successful cheating. That will never do. It would be better to abolish the exemption of sons, and raise the necessary means by imposing a moder- ate tax on everybody. (3.) There remains the question of equality between land and personalty. The Conservatives are sure to fight this. and though we fancy the prejudice is too strong for them to succeed, they have at least three strong arguments to adduce. One, which we mentioned last week, is that such a tax would involve a constant sale of land in a close market, which has much of the effect, or at all events of the appearance, of confiscation by law, and which will provoke the holders of ancient estates to the most bitter resistance, a resistance in which they will be favoured instead of opposed by their tenants and labourers. Both those classes know perfectly well that the hardest landlord. and employer is the auction purchaser. The second is that such a tax might lead to the destruction of the great historic mansions. Nobody could or would pay 15 per cent., or even 10 per cent., on the estimated value of Chatsworth or Hatfield, say, twice in a generation. They would pull the place down sooner, to the great injury of the statelier and therefore more ideal side of English civilisa- tion. We need such houses, if only to show us what gardening might be, and to lift the ideas of architects above the suburban villa, but they could not survive the costliness which, if they were taxed as mere property, they would involve to their possessors. And the third argument is the great reduction which the tax would cause in the value of landed property. Land would be cf all property the most heavily taxed, it would never be secure against sale, and its price would gradually go down till it reached its investment value, which just now is almost nil. " That," Mr. Labouchere will reply, " is just what I want, for tenants will then buy cheap." If they do they will speedily abolish the tax, for they will have the county votes in Parliament; but is he quite sure that will be the result ? It may be—we never dog- matise on questions of that kind—but the evidence points the other way. How many tenants have bought farms in Essex, where land has recently been a drug ? So far as we can see, the neighbouring squires do not buy land offered. for sale, and the tenants do not buy either ; but the capitalists do—the low price to be given for large areas attracting men who are desirous, not of dividends, but of dignity. They are anxious to be lairds, and will with that object put up with 1 per cent. That this is not true of certain areas in the residential counties we admit ; but Parliament has to legislate for the whole island. if, in addition to all other burdens, State taxation is to be pressed too heavily on land, we may of course see it fall to a mortgaged peasant-proprietary—which will smash up Radicalism at the first election—but we may also see it fall exclusively to men who desire large blocks. We very much doubt whether Radicals who can think, will, when they come to reflect, desire either a peasant-proprietary or a new and more influential squirearchy ; and if they do not, they will have to neglect counsels about the land which are too much tinged with spitefulness to be wise. That land evades certain State burdens to an unfair degree is, we believe, true ; but the degree is in this matter the essential question. It is not a good time to raise it ; for the class which own land are miserably poor, in their own eyes at all events, and may, if pricked to the quick, fight with a reso- lution and success they have never yet displayed. It is not yet certain, whatever Mr. Cobb may think, that if the squires and the citizens are to fight to the death over the labourers' vote, the citizens will win the stakes.
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