TOPICS OF THE DAY.

THE INCOME-TAX BILL IN COMMITTEE.

Foa that the Income-Tax is all but passed with every imperfection and deformity unremoved, we have in a great degree to thank the kind of opposition that has been offered to it in the House of Commons. The Opposition leader had to back him a numerous party, not very remarkable for being difficult to manage : the Mi- nistenalists had no more liking for the Income-tax than their neighbours, to say nothing of the fear of it entertained by the great body of their supporters out of doors. Never were men in more favourable circumstances for bringing the Minister to reason- able terms than the Opposition leaders. But every thing has been sacrificed to the crooked manoeuvre of embroiling PEEL with the more unreasonable of his own party. The Ministerialists might have been induced, or forced, to make their leader adopt such mo- difications as would have made his measure not perhaps desirable, but much less irksome: they were too clear-sighted to fall into the snare of Opposition politics, and by quarrelling with PEEL turn him out and afford the Whigs a chance of coming in.

The most objectionable features of Sir ROBERT PEEL'S new tax are the disproportion between the cumbrous and expensive ma- chinery required to collect it, and the trouble and annoyance given to all parties in the preliminary inquisition on the one hand, con- trasted with the amount of revenue proposed to be raised by it on the other. It may have the appearance of a paradox, but it is nevertheless strictly true, that the Income-tax would be less objec- tionable if it were intended to raise a larger sum by it and to render it permanent. When a large sum is demanded and shown to be necessary, men more easily resign themselves to the disagreeable process by which it must be levied ; the expense of the machinery employed is less disproportionate to the returns. And if the tax becomes permanent, though it undoubtedly presses more heavily at times upon some individuals than upon others, this is only what may be said of all taxes : it is a permanent ine- quality, which men take into their calculations and neutralize to a certain extent ; whereas, limited to three years it is a visi- tation to meet which no arrangements can be made and falls with undue weight upon an arbitrarily-selected number of indi- viduals. These considerations suggest two inferences. The first is—That inasmuch as the exclusion of all incomes under 150/. per annum from the operation of the tax, and the subjection to its operation of incomes derived from industry as well as from the returns of property, are chief causes of the cumbrous, expen- sive, and troublesome machinery it is intended to employ, a sin- cere and well-directed attack upon these points might have led to their being given up. The second inference is—That it is highly improbable Ministers should have dared the odium which must ne- cessarily follow from the enforcement of their measure, merely to obtain the small sum they ask in the first instance and for so short a period. The magnitude of the scale on which their taxing-ma- chinery is constructed induces a persuasion that they do intend it for more extensive and more lasting use. The apparatus by which they propose to raise the small sum now demanded will be per- fectly efficacious for raising a much larger, and will not be cast aside at the end of the three years. It may be that Ministers con- template greater advances towards a system of free trade than they at present care to avow ; or it may be that they are apprehensive as to the duration of peace, and wish to negotiate with full coffers : but, whatever their objects and intentions, there is much reason to believe that the machinery for raising the Income-tax is destined to raise heavier burdens and to last a longer time than is at present announced.

The practical lesson taught by these conclusions is the necessity of making a strong effort in Committee to render this inevitable Income-tax as little oppressive as is consistent with its nature. Lord Joust Russzkr.. and his immediate followers give out, that after the measure goes into Committee they will cease to take any concern in it. Lord JOHN cares not how much unnecessary annoy- ance the public suffer, provided there is a chance of its rousing a reaction against his political rivals. This selfish calculation may be found deceptive if he act upon it. General esteem and con- fidence are not likely to be conciliated by handing the country over to the unmitigated infliction of the Income-tax, even though it were only to last for three years : how much less when the endur- ance of the mischief is indefinite. An effort should be made in Committee. It is still possible to obtain a mitigation of some of the worst provisions of the measure. The most disagreeable feature of the bill—that which renders it most repulsive to all parties—is the grasping stringency of Schedule D—it is awfully comprehensive! Every income looks dependent for sub- sistence upon a trading or professional looks with loathing upon the minute and detailed revelations of domestic circum- stances it is intended to extort. Members of Parliament know this—even those who do not belong, as many of them do, to this class : they are aware of the decided hostility to this section of the bill entertained by a large portion of their constituencies, including those particularly useful characters (at elections) the attornies and the anomalous scribbling class. The publication of the bill has strengthened the aversion to the Income-tax : the cold detailed Minuteness of its provisions has given men a more lively sense of what awaits them than they had before. Out of doors, the eager- ness of the Minister's opponents to assail it, the reluctance of his &lends to defend it, has been quickened. The curtailed debate and miserable division of last night, on the second reading, does not disprove this : it merely shows that the House of Commons is tiied of talking about what it is evident cannot be prevented. A judiciously-arranged and spiritedly-sustained movement—free from any factious aim—against this part of the measure, when the bill goes into Committee next week, would be almost certain to insure a material relaxation of its harshness.

There are two modifications, the adoption of both or either of which would be a decided gain. The first is, instead of subjecting men to the minute and poking inquiry it is proposed to institute into their means and resources, to allow the Schedule D people to assess themselves. The pressure of their neighbours' opinion would prevent any very wide aberration from the truth. The statement made by each individual of the amount of his means may be made in secret, and the amount of the tax he pays may be kept secret ; still, there will exist a lurking fear that Commissioners or tax- gatherers may blab, sufficient to keep alive the dread of public opinion. People who associate together have a rough notion of what each has, or rather of what each ought to have in order to justify his style of living. They will be sensitively alive to all attempts that may be made by individuals to shuffle off any portion of their just proportion of the burden. Men will be obliged from a regard to their own comfort, so dependent upon the esteem and good-will of their neighbours, to assess themselves not very far wide of the truth ; and occasional undervaluations arising from stinginess will be compensated by occasional overvaluations springing from vanity. The second modification respects a fairer estimate of the real • value of men's incomes. Annuities and rents from land are so

far on a footing with professional and trading incomes, that, whatever colouring imagination may suggest, no individual can have more than a life-interest in them. But the two kinds differ in this-respect, that, be the holder of the former well or sick, in a condition to exert himself or unable to work, his income is unaf- fected. The incomes of traders and professional men are abated by every visitation that diminishes their capacity for exertion. The principles of life-assurance furnish a mode of estimating the relative values of an income derived from fixed property and one derived from commercial enterprise or professional exertions. If the former (not speaking absolutely, but for illustration) be taken as worth thirty years' purchase, the latter can scarcely be esti- mated, one with another, at more than six years' purchase. At this rate, the percentage levied upon incomes derived from personal exertion ought only to be one-fifth of the percentage levied upon incomes derived from realized property.

Separate amendments, embracing the modifications of the tax as affecting incomes derived from trade and professional exertions, if moved in Committee, would probably command a strong support. Their justice—the likelihood of their being ac- ceptable to the public—would so recommend them to Members of all parties as to render it the interest of Ministers to concede them, in whole or in part. And if carried, they would materially soften the most repulsive feature of the bill—diminish pressure upon the classes on whom the tax will press most heavily, and relieve at the same time the painful exasperation occasioned by the minute inquiries it is proposed to make into domestic circumstances. Lord ROBERT GROSVENOR'S plan would approximate in its opera- tion to the second of the modifications here suggested. The dif- ference between it and the views stated above is, first, that it fixes the percentage upon professional incomes as compared with that upon fixed incomes at one-third upon all taxable incomes below 500/. per annum, at four-fins upon all above that amount and be- low 1,0001., and makes no distinction in the case of incomes ex- ceeding the last-mentioned sum. In the second place, it proposes to levy a higher percentage upon large than upon small incomes. Without entering at present into the disputed question of the jus- tice of exacting a higher percentage from large than from small in- comes, there is an objection to the mixing up this distinct and independent principle, with that of an attempt to come nearer to a fair estimate of the relative values of the two different kinds of in- come—that many may be inclined to admit the propriety of the latter attempt who will question the justice of the former. A land- owner may say—" I see the difference between the value of an in- come dependent upon the continuance of personal exertions, and one which is subject to no fluctuations from the owner's increased or diminished ability to work, and can see that 2001. ought to pay 4/. if 1001. pay 2/. ; but I cannot see the justice of making 2001. pay Si. when 100/. pays only 21." Lord ROBERT GROSVENOR'S plan embraces the recognition of two entirely distinct principles ; and this is calculated to impede its chance of being carried, and renders it in so far objectionable. But the motion of which Mr. ROEBUCK has given notice seems preferable to that of Lord ROBERT. It is—" That for and in re- spect of the annnal profits or gains from any profession, trade, or vocation, there shall be levied annually, for every twenty shillings, threepence-halfpenny." This resolution is simple, free from the admixture of the foreign principle which might render Lord ROBERT GROSVENOR'S proposal unpalateable to the majority of the House of Commons. On the other hand, it makes just allowance for the inferior value of incomes dependent on the precarious duration of physical and intellectual health. The adoption of Mr. ROEBUCK'S amendment would not remove the inherent vices of the measure—

the time for doing that has been allowed to pass—but it would materially diminish its disproportionate pressure upon the various classes of income to which Schedule D applies. Though, with a view to the business of the Committee, we have avoided the discussion of the principle of a higher percentage from large than from small incomes, as having no chance of being en- tertained at present in the House of Commons, the question itself is important ; and it is one of those new discussions at present looming on the horizon of the practical politician. On this account we give a place here to the following masterly exposition of the affirmative view of the principle, by a correspondent who broached the subject in a letter which we inserted a few weeks ago.

A SLIDING SCALE FOR THE INCOME-TAX.

LETTER IL TO THE EDITOR OF THE SPECTATOR.

In my remarks on the proposed Income-tax, which you did me the favour to insert in your Spectator of April 2d, I pointed out, that for such a tax to be otherwise than oppressive, it ought to be laid on, not uniformly, but in a pro- portion increasing with the amount of income; and I accompanied my re- marks with a scale graduated on this principle. My view was limited to one great practical question—how the tax may be so imposed as that its pressure should be least felt by the community at large ? Other considerations were thrown aside, or slightly adverted to, not because I regarded them as unim- portant in themselves, but because they did not so properly belong to the view which I was taking.

Lord ROBERT GROSVENOR has since then advocated this principle in the House of Commons ; combining with it another—that, namely, of making the tax vary according as the income is derived from a fixed or a casual source. The bill would be improved by the admission of either principle, very much improved by the admission of both ; but, as they are not necessarily connected, as each has recommendations of its own, and each is liable to objections of its own, I question the prudence of coupling them together in one motion of amendment, and so making the success of the one suggestion dependent on the success of the other. It is generally better to do one thing at a time ; and I shall accord- ingly still confine myself, in some further observations I wish to offer on this tax, to the principle of a graduated scale, increasing with the increased amount of income.

There is, prima facie, an objection to it : It is said to be unfair to the wealthy classes. Now, be it remembered, that this is a proposal respecting the mode of laying on a tax confessedly and essentially unfair ; and that its very purpose is to diminish the main evil resulting from its inequalities and unfair exactions. Great unfairness being unavoidable, the practical question is, how best to lighten the pressure and suffering likely to be produced by it? This would be effected by a graduated scale. I am far from admitting, however, that the principle would be any additional ingredient of unfairness at all. "We are accustomed," as PALEY long ago shrewdly remarked,* "to an opinion that a tax, to be just, ought to be ac- curately proportioned to the circumstances of the persons who pay it. But upon what, it might be asked, is this opinion founded, unless it could be shown that such a proportion interferes the least with the general conveniency of subsistence? Whereas I should rather believe, that a tax constructed with a view to that convenieney ought to rise upon the different classes of the com- munity in a much higher ratio than the simple proportion of their incomes." He argues that it should be so, on the ground of the greater ability to pay. "A man," says he, "who possesses a thousand pounds a year can more easily give up a hundred, than a man with a hundred pounds a year can part with ten ; that is, those habits of life which are reasonable and innocent, and upon the ability to continue which the formation of families depends, will be much less affected by the one deduction than the other." PALEY'S argument may not be satisfactory to all : it may be questioned whether the mere ability to pay more is a ground for heavier taxation. Let us, however, look at the matter in another light. What is the rationale of equitable taxation ? What is it that people have a right to expect in return for being taxed ? The obvious reply to the ques- tion is, that they pay primarily for protection—protection of person, estate, beneficial institutions, privileges—all, in short, that is valuable to the com- munity and to the perms,' taxed as a member of it ; secondarily, for the improve- ment of the community—the advancement of the good of all collectively, and of the person taxed individually. I include under the head of protection more than the protection of property ; because it is clearly more, much more than property, for which we expect security to be provided out of the taxation of the country. Person as well as estate—rank and station as well as person— the right of transmitting to our heirs our privileges, as well as the life- enjoyment of those privileges—are all valuable—property, if you choose so to extend the meaning of the term ; but, at all events, involving all of them rights as dearly cherished by the possessor as his goods and chattels.

It is a mistake, therefore, to suppose that every man pays his fair share of taxation who pays in proportion to the amount of his estate alone, as if that were all for which taxation provides protection. Limiting our calculation to pecuniary benefits alone, does not the political power of the higher aristocracy give them the means of providing extensively for their own class in the Army, the Navy, and the Church—in various departments, civil and military, which are maintained by taxation ? It is really time to explode the notion that a man with rank, influence, privileges, as well as wealth, pays a fair and full amount of taxation if he pays in proportion to his wealth alone. Wealth is not always the most highly-prized even of those rights which are all alike pro- tected.

These remarks will apply almost as forcibly to taxation considered in its application to the improvement of the community. He who has the greater stake in the community pays his due share for improving it when he contri- butes in proportion to the whole of that stake; his individual interests of all kinds advancing with the progressive prosperity of his country. What is it, for example, that renders the higher aristocracy of this country really as great men as princes are in petty states? what but that general advance which Great Britain has made, growing in every part as it has grown as a whole ? We do, in fact, recognize the principle which I am now claiming for the Income-tax—avowedly, in the Assessed Taxes, tacitly in taxation generally. For, what is meant by ADAM SMITH'S maxim, now so generally adopted, that taxes should be laid on luxuries and superfluities, not on necessaries and conveniences of life ? Is it from any intention that our taxes should operate as sumptuary laws—that the use of luxuries and superfluities should be discouraged ? Certainly not : they are taxed because they afford the most tangible means of levying a larger proportion of the wealthy man's ex- penditure than of the expenditure of the poor man or the man of moderate in- come—a larger proportion of his property. Rank and influence are, in like manner, incidentally taxed in taxation of luxuries and superfluities, inasmuch as luxuries and superfluities are considered to be essential for keeping up and enjoying rank and influence. Nay, the principle of measuring taxation by mere ability to pay, is recognized in the very bill that is before the House, by the exemption of incomes less than 1501. Why, if that one notch is to be made on this score, should we not go on graduating the scale ? If ability to pay be an unfair ground for exemption or lesser payment, the bill as it stands goes just so far as to recognize it And not far enough to give all alike

• Political Plffloeoply, b. vi. c. xi. who need it the benefit of it. There is a numerous clams of persons with families and incomes of 2001. or 300/. a year really poorer, really of less ability to pay, than persons with 103/. a year and none to share it with them. In all other taxation, too, the tax may safely be left to adjust itself fairly to the individual case. Every man has his option either to pay the tax or to forego some benefit or privilege. In an income-tax alone there is no such op- tion. It is, therefore, incumbent on the Legislature, in imposing such a tax, to provide, as far as possible, by enactment, that equitable adjustment which, in this case alone, the people cannot arrange for themselves.

In disposing of the main objection against a graduated scale, its apparent unfairness, I have at the same time obviated, I hope, one connected with it— that it involves a democratical and revolutionary prniciple--that it is teaching the less affluent to regard the property of the wealthy as a resource which they have a right to lay their hands on whenever the exigencies of the public may seem to require it. Such a risk, if likely at all, is more likely to be created by the bill as it stands. For, from what classes of the community is confiscation of wealth most to be dreaded? from those who have moderate incomes above 1501., or from those who have incomes under that sum ? which description of persons is most likely to convert into a dangerous precedent exemption total or partial? Risk, however, there is none. We may be sure that the best security for the wealthy is that condition of society which allows the poorest and humblest the possibility of himself becoming wealthy by his exertions, and ex- hibits the rich fulfilling those duties which the possession of riches imposes. There is far more to be apprehended from the dissatisfaction which may be felt towards the wealthy classes for so discharging the trust of legislation as to place that portion of a common burden which they can bear on the shoulders of those who cannot, or cannot without serious privation and suffering.