A LEVY ON CAPITAL.
(To THE EDITOR or rue SPECTATOR.")
Sie,--The State—that Is, the community organized for collect- ive action—bas certainly to pay Its debts, and also, which is perhaps more immediately important, to re-establish its pros- perity. For the latter purpose, which is that each may have enough, and, If possible, more than enough, maximum output is essential. For the former purpose the choice of mean. appears to be either increased taxation for all or a levy (intended to be punitive, If not destructive) on capitalists. For this problem the means by whioh personal riches are acquired is not so important as the way in which they are used. Broadly, industrial and professional workers tend or are forced to
spend most of their earnings; the capitalist tends tp reinvest. The spender helps to maintain existing industry; the capitalist creates new industry. If, then, we levy on capital—that is, on savings destined for the creation of new industry—we reduce our power of re-creating prosperity, and ultimately (secondarily, too) of clearing our debt; if we increase taxation on income we are at least not sapping capital, whioh for all of us is the fountain-head of income and of prosperity. Increase of taxation can he graduated by ability to pay. Whether Income Tax, with its many injustice's, Is the best means of estimating ability to pay is a different question; as a rule, a man lives in the best house he can afford, and his choice of house is probably better than his Income Tax return as a criterion of his power to contribute to the expenses of the
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