TOPICS OF THE DAY.
A SPECIAL TAX ON LAND.
APIECE of land, a house, a share in a company, or a block of Government stock,—none of these can find money to meet the demands of the tax-collector. Such material objects have no purses and no pockets into which they can put their hands. It takes a man to pay a tax. What, then, do we mean when we talk about land or stocks or other things of the kind paving taxes or bearing this or that burden imposed by Government P. What we mean is that the individuals who own these particular forms of property pay in accordance with the amount of their possession of these objects or proprietary rights. Men are required to contribute to the needs of the State in respect of them. That is only another way of saying that these objects are taken as proofs, standards, or measures of men's ability to pay. Unless we are to assume that the State ought to show itself opposed to certain forms of property, and ought to desire to penalise their possessors, the true principle of taxation must obviously be that each man shall contribute to the needs of the State according to his ability. The State does not ask that everybody should give it £1 or £5 a year whether he be rich or poor, but says instead that a certain percentage or proportion of each man's property is to be given for the public needs. If a man is poor, the contribution is necessarily a small one. If he is rich, the contribution is necessarily large. This principle Of making each man contribute in direct proportion to his ability to contribute has, however, been found by Governments easier to lay down than to carry out. It is difficult to ascertain accurately a man's ability to bear taxation, because men cannot be depended upon to disclose truthfully to the State the extent of their wealth. Hence the possession of certain kinds of property has been taken as an indication or measure of wealth. One of the most obvious of these measures is the value of the house in which a man lives. Speaking generally, the richer the plan, the better and more valuable his house.
We can hardly doubt that the majority of people, what- ever their particular political conviztions, will in the abstract agree to what we have just stated, and will not desire to fasten upon any particular form of property and treat its possession as bad in itself and rendering a man liable to having extra and onerous burdens imposed on him by the State. But though this may be an abstract ]principle to which most men would assent, we constantly land people in practice picking out a particular form of property and declaring that it ought to be made to pay a special tax. A striking example of this is to be found in Wednesday's Daily Chronicle. The Daily Chronicle has distinguished itself among Liberal papers by the courage and persistence with which it has pointed out what it terms "The Budget Crisis,"—namely, the very large amount of new taxa- tion which will have to be imposed next spring in order that the present Government shall pay their way. In an article on Monday the Daily Chronicle put the amount which will be required for new taxation almost, if not quite, as high as we did last Saturday. It told us that twenty millions would be needed, and in going into detail indicated clearly that the writer felt that he was hardly putting tho figure high enough, and that in reality our calculation of twenty- five millions was nearer the mark He next proceeded to show, with no little force and ability, how almost all the suggestions that had been made for getting the twenty millions in question were either impracticable or else would fail to yield anything approaching the sum required. On Wednesday the writer in the Daily Chronicle unfolded his own plan, a plan which we cannot help thinking has had some official suggestion or inspiration. The Daily Chronicle's plan is to impose a new tax on land. " Land value," we are told, " is the great reservoir of national wealth," and " to this ample reservoir the Chancellor of the Exchequer may resort with confidence." Nay, more, according to the writer in the Daily chronicle, such a Land- tax is to partake of the magical nature which Tariff Reformers attribute to their schemes. The new Land-tax will not merely fill the national Exchequer, but will, we are assured, be from the inaustrial standpoint a means of increasing the nation's wealth. It will, that is, be one of those delightful imposts which actually create money. It will apparently -be twice blessed. The gold will breed gold.—If this is so, we cannot help being a little disappointed at the moderation, nay, niggard- liness, of the Daily Chronicle in its handling of its great discovery. A tax capable of " filling the coffers of the Treasury " in this way, and at the same time of actually " increasing the nation's wealth," ought to be run for all it is worth, and not stopped in this arbitrary and wasteful way at twenty-two millions.—The manner in which the tax is to be levied is simple enough. A new valuation of the capital value of landed property is to be made throughout the United Kingdom, and upon this capital value a tax of a penny in the pound is to be levied. The Daily Chronicle estimates that the true annual rateable value of all the land in England is £243,660,000. From this is to be deducted the value of the buildings, &c., on the land, and these are put at £146,640,000. The result is that the land value is some £97,000,000. To this the Daily Chronicle adds £5,000,000 for the annual value of vacant land not at present assessed, and finally obtains as the total net annual value of land in England the sum of £102,000,000. To this, however, the Daily Chronicle, "in order to comply with the definition of ' capital land value' in Class III. of the Government Bill for the ascer- tainment of land values in Scotland," adds the amount of all the public burdens on real property, which it puts at some £78,000,000 a year. We thus arrive at a total annual value of £180,000,000. For Scotland the total land value is placed at £21,000,000, and for Ireland. at £14,500,000. Thus the total for the United Kingdoni. is £215,500,000. At twenty-five years' purchase (i.e., on a 4 per cent. basis), this represents a capital laud value of £5,387,500,000. On such a sum a tax of a penny in the pound means a gross yield of just under £22,500,000 per annum. That is the Daily Chronicle scheme.
We venture to say that not only a more ridiculous but a more unjust proposal for raising revenue has never been made in the history of taxation,—granted always that the true principle is to make men pay according to their ability, and not to penalise a man because lie happens to be the owner of a particular kind of property. The best way to understand the grossness of this injustice is to imagine the law put into operation, and then to examine a specific case. We will apply this test, and we venture to say that if there is any sense of justice left in this country, the result should be to blow the Daily Chronicle scheme out of the water. Mr. Smith, who was a successful man of business, made £480,000, and invested half of it, or £240,000, in land, and the other half in Government securities and in shares in various companies. Mr. Smith had two daughters, and resolved to divide his wealth equally between them. For family reasons, he determined to leave the laud to one daughter, Mrs. Jones, and the stocks and shares to the other daughter, Mrs. Robinson, the incomes from the two sources of property being roughly the same, a valuation made for the purposes of his will showing that the capital value of the two halves of the property was also about equal. Therefore, as far as their ability to contribute to the needs of the State was concerned, the two sisters were left in an identical position. Neither ought to be asked to contribute more than the other under any just system of taxation. Now let us assume the Daily Chronicle's scheme to have come into operation, and compare its effect on the two equally wealthy sisters. To the landed proprietor, Mrs. Jones, comes the tax-collector, and informs her that the capital value of her land is £240,000, and that, therefore, under the land value taxation scheme she will have to pay £1,000 a year in new and extra taxation. Mrs. Robinson he leaves entirely alone because she does not happen to be possessed of any landed property. Now can it be said that there is any reason, moral, economic, or political, why the State should thus take £1,000 a year more from Mrs. Jones than from Mrs. Robinson ?
It is idle to meet our argument by saying that of course there may be some hard cases, or that we have taken a special or unlikely case, and that therefore our argument falls. Cases resembling in a greater or less degree that which we have chosen will occur to any one who gives the subject a few moments' thought. The whole country will be full of such instances of injustice if land is singled out for special taxation. There is not the slightest reason why. if the State decides to tax capital values, this enormous preference should be given to the possessors of non-landed property. Curiously enough, our ancestors realised this fact over two hundred years ago. When the Land-tax was imposed in the reign of William and Mary, though it was called a Land-tax, it was in reality an Income-tax. As far as the somewhat unscientific officials and lawyers of those days were able, the so-called Land-tax was imposed also upon other forms of property. In reality the tax of 1692 was a clumsy Income-tax. No doubt personal property, after its wont, soon slipped its neck out of the cellar, but down till a hundred years ago there were still some traces of the Income-tax side of the imposition, and a certain number of official salaries, we believe, still paid Land-tax. At present, however, only land remains taxable under the Land-tax of William and Mary.. The Daily Chronicle land value tax would, as we have shown, be monstrously unjust. even if at the present moment personal and real property bore equal burdens. As a matter of fact, however, the possession of land is already heavily penalised, for a special burden in the shape of rates falls upon landed property. Even though agricultural land has been relieved of half the rates, the man whose money happens to be in land bears a far greater share of public burdens than the man whose income is derived from stocks and shares. Both men pay rates on their, houses, and both men pay rates on their outbuildings ; but when this is done, the owner of stocks and shares escapes any further contribution to the local burdens. The man whose money is in land has to bear in addition that special tax on the industry of agriculture which we call rates on agricultural land. And here we may note also that when rates were first imposed they were intended to be a local Income-tax, the statute of Elizabeth requiring all men to contribute " according to their ability." Personal property, however, here as in the case of the Land-tax of William and Mary, escaped the burden, and the whole weight of taxation fell upon the laud. Curiously enough, the fact that the rates were once a local Income-tax is still remembered in our laws. Every year a special Act is passed exempting personal property from the rates, and imposing rates only upon land, houses, tithes, and underwoods.
We venture to say that if the plan we are discussing is examined by any impartial body which has the facts before it, and which does not set out with the desire to penalise the possessors of land as if they were for some reason or other enemies of their country, it will be found that if anything in the nature of the Daily Chronicle scheme is to be adopted, not only capital land values, but all capital values, must be taxed. - If that were done, the special injustice to which we are now drawing attention would disappear. In the abstract there is a good deal to be said in favour of a general tax upon capital, because such a tax, if fairly imposed, would be in complete accordance with the true principle of making each man contribute according to his ability,—that is, according to his total wealth. Granted the difficulty of assessment could be got over, nothing would be fairer than for the tax-collector to call upon the Mrs. Jones and Mrs. Robinson of the case we have put above and say to each of them :—" Your total wealth is estimated at £240,000. The Government., for the needs of the State, require a contribution from you, and you are accordingly assessed at a farthing, or whatever the sum may be, in the pound on the capital value of your whole property." If this were done, and done equitably, we should have a just tax. The difficulty, of course, lies in the assessment, and in preventing persons from concealing a portion of their wealth. No doubt the thing is done in the case of the Death-duties, and it may well be urged that what can be done on an average every thirty years can be done every year. In one sense, indeed, the task would become easier by being annual, because the taxation authorities would be able to check new acquisi- tions of property by individuals. There are, however, we admit, a good many objections to a system for the taxation of capital values. But into these we cannot enter just now. All we are concerned to say at the present moment is that if there is to be taxation of land values, there must also be taxation of capital values in general. To single out and penalise land would be an injustice so gross that it could never be maintained.
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