WHY SHOULD WE NOT HAVE A PROPERTY-TAX?
WE have so often endeavoured to show the propriety of impos- ing a moderate tax upon incomes derivable from invested pro- perty—i. e. from rents, mortgages, dividends, &c.—that we should have deemed it unnecessary again to enter into the subject, had it not been for the efforts which are making by Ministers and their partisans to rub on without making "any extensive change in our whole financial system." The principal arguments that have been put forward on this occasion, we have endeavoured to meet by an addendum to that part of our Taxation Supplement where we discussed the pros and cons of a Property-tax. As the points discussed are not unconnected with a very important "topic of the day," we quote, with some additions in consequence of Tuesday's debate, our
POSTSCRIPT TO THE PROS AND CONS OF A PROPERTY-TAN.
Since the publication of the first edition of this Supplement, the division on Mr. ROBINSON'S motion for a Commutation of Taxes, and some other unequivocal symptoms of public feeling, seem to have alarmed Ministers. The Government organs, accordingly, have been zealously disparaging any commutation of taxes. In accom. plishing their task, they have acted rather like the partisans of a faction, than like zealous inquirers after truth. Taking advantage of the vague and misty nature of Mr. ROBINSON'S plan, they generally assume, that by a Property-tax is meant a tax upon In- comes of all descriptions; and proceed to point out the inconve- niences and inequalities of an impost about which the people are much better informed than themselves. A writer in the last Number of the Edinburgh Review goes beyond this somewhat dishonest fallacy. Taking the term property in the most extended sense, he supposes (for he scarcely assumes) that by a Property- tax may be meant a tax on capital, or rather on all that each in- dividual possesses, including "stock in trade," and the additional value of "a field that has been recently limed, marled, or other- wise manured, at a heavy expense ;" and he then patheticollv pro- ceeds both in Latin and English to deprecate the mischiefs and inconveniences of a tax which no rational person except himself ever dreamed of imposing. Even when what is generally meant by a Property-tax—a tax on income arising from realized capital, from rents, dividends, an- nuities, &c.—is separately considered, it is scarcely fairly con- sidered. All its inconveniences arc brought into strong light, all its advantages thrown into shade, and not a syllable breathed about the nature of the taxes whose repeal is sought for. We hear no- thing, for instance, of the unfairness of subjecting one kind of pro- perty—House-rent—to very heavy taxes; nothing of the evils of such duties as those on Soap and Glass; nothing about the fairness of that tax on the capital of the distressed, the Auction-duty, or of the duties on Mortgages and Sales. A stranger to our fiscal system, would never imagine that we raised a farthing by taxes on the materials of manufacture, or that such incentives to lawless trad- ing as the enormous duties on Spirits and Tobacco existed. A rubber-on disregards all inconveniences but the inconveniences of official people. In this new school of philosophy, it is nothing- to cripple the skill and industry of the country, to demoralize.large masses of people, and to throw the entire load of taxes on property upon one or two kinds of property. What are the capitalist's pro- fits and the labourer's wages, what are even life and morality, compared with the ease of a Chancellor of the Exchequer? . One argument against a Property-tax which the Edinburgh Re- viewer notices at somelengtb, is its tendency to check accumulation. The practical effects of the tendency would be very slight. If a person invested 1001. in a speculation which paid him 5 per cent., the pressure of a moderate Property-tax would be 5s.; a sum much too small to prevent accumulation, for few men at present accumu- late, or (strictly) invest, if they have the opportunity of more pro- fitably employing their capital. The power of accumulating, too, is dependent on the power of production. By giVing facilities to create wealth, • the means and disposition to accumulate are in- creased.
The Globe, expanding the doctrine of the Reviewer, observes— "Many kinds of fixed property are the great instruments of production—nut only the 1,04 of our agricultural wealth, but the great aids of our agriculture, manufactures, and commerce. To say nothing of the buildings of cur manufac- tories, and of the property fixed in mines, what can more conduce to the com- mercial and manufacturing greatness of a country, than the property fixed in docks, canals, roads, and railways?" Who doubts it? But. who either doubts that clocki, &C. do not create, but flow from our "commercial and manufacturing great- ness," just as agricultural improvements spring from increased population? And as these are originally created by the prosper- ous state of productive industry, so upon that prosperity does their value depend; and one of the surest modes, not only of checking future accumulation, but of rendering former accumulations valueless, is to throw obstacles in the way of the free employment of capital and labour. if the present taxes upon industry have not driven away our capital to "French and American canals," the Globe may depend upon its not being done by a judicious Pro- perty-tax.
It is, however, scarcely necessary to discuss probable effects, when the actual results are capable of ocular demonstration. If a uniform rate were adopted in imposing a Property-tax, it would probably not rise higher than 5 per cent.; were the tax graduated, it would most likely stop at 10. The present House-duty—say- ing nothing of the Land and Window Taxes—varies from 71 to 15 per cent. Let the tendency-to-check school .mount St. Paul's, and see the operation of a tax on house-rent to check the accumulation of houses.
Another argument is urged, in the Edinburgh, that many per- sons watching for investments, buy in the Funds for short periods, who in ease of a Property-tax would keep their money at home lying idle. The effect of a tax on the Funds, as we have explained already, would be at once and for ever to diminish their value by the amount of the tax. It would fall upon the present holders; future invest- ments would go on as before. But the argument deserves notice as going at once to the root of the " tendency " fallacy ; which consists iu assuming, that because men cannot get all, they will take nothing. In the present instance, it supposes that because people cannot get 31., they will turn sulky and lock up their mo- ney- in a chest rather than take 2/. 17s. But men of the world are not so silly. We, however, doubt the Reviewer's assertion. Per- sons on the watch to employ their capital, are much more likely to discount good bills at short dates, than buy into the Funds : and for this cogent reason—that they are very likely to lose 4/. or 5/. upon their capital by the fluctuations of the market; their utmost gain would be an interest of five or ten shillings.
It is also observed, that though Property is sometimes held in large masses, yet the great bulk of land is held by small proprie- tors, who cultivate their own estates, whilst the great number of deposits in the Funds are for small amounts. To this we answer, that the accumulation of property is a proof, at all events, that these persons possess more than the means of living. Grant that the holder of this small property is entirely dependent upon it (though this is not assumed by the writer), where is the justice in taxing the annual income of the small proprietor of House pro- perty. from 10 to 20 per cent. whilst other property is exempt; or abstracting from 21 to 5 per cent. from the capital of a seller or borrower, whilst those who retain their property escape taxation altogether ? Even allowing (what the Reviewer omits) that a non-graduated Property-tax, in peculiar instances, might bear hard upon small annuitants, &c., we must not forget how very hard our present system of taxation bears upon some eighteen or twenty millions of people—first, by checking consumption and production, and thus diminishing their means of employment; second, by doubling, and more than doubling, the price of many of the necessaries of life. But in reality, the pressure upon this class would be a mere change. They would gain by the reduc- tion in prices as much as they lost by the tax. But if this be doubted, exempt the lower class of incomes from the duty, or sub- ject them to a lower rate.
It is argued by the writer in the Edinburgh, and the argument was adopted by Lord ALTHORP and Sir ROBERT PEEL, that it would be most cruel and unjust to tax realized property, and leave the property embarked in manithictures untouched. Putting out of view the essential difference between the nature of the two properties—that the trader is bound to the country, whilst the owner of a fixed income can reside abroad and escape taxation altogether—that whilst the income of the trader is dependent on his exertions and subject to constant fluctuations, the income de- rived from Property is received in " sickness or in health"—and moreover, that the value of all property is derived from and depen- dent upon productive industry,—putting all these considerations aside, it may be observed, that the cruelty and injustice deprecated by Lord ALTHORP and Sir ROBERT PEEL iS perpetrated at present, and on the wrong side. Duties are laid upon the materials of' manu- factures, and upon manufactures themselves. Taxes are levied upon the insurance of a freight, upon the bills with which articles ate purchased, upon receipts when accounts are paid, and upon licences to exercise some particular business. Nor should it be for- gotten,that if five millions were raised by means of a Property- tax, nearly three millions would at once be devoted to the equali- zation of its present pressure on property, by repealing the taxes on Auctions, Houses and Windows (for, objectionable as my Lord and Sir ROBERT may think the principle of a tax on Property, it is in furl existence at present, partially, oppressively, unjustly): and if the remaining two millions were employed in relieving "the pressure upon the springs of industry," let it be remembered, as a set-off, that upwards of twenty-five millions would still be raised by taxes on articles of consumption,—which by increasing the cost of subsisting the workmen, tend to expose the manufac- turing and trading interests to injurious competition with other countries, where the necessaries of life are cheap and the wages of labour low. It was also maintained by the "Chancellor of the .Exchequer, that a Property-tax, if imposed, should be a laige one. Why ? There is no new machinery requisite for its collection; the Tax and Dividend Offices, which would perform the duty, already exist, and they would have little more to do than they do at pre- sent. If, on a comprehensive review of our "whole financial sys- tem," it be found that its most marked defects can be got rid of by -a tax of about ls. in the pound in conjunction with other sources of supply, where, oh Chancellor ! is the indispensable law of Finance which renders a "large" one expedient? Let us not be understood as arguing that a Property-tax is a desirable thing per se. Taxation is but a choice of evils; the wise and honest will choose the least : but after wisdom and ho- nesty have done their best, forty-five or fifty millions of money can never be raised pleasantly and easily to the payers. We have steadily advocated a Property-tax, because we conceive that there is no justice in throwing the whole weight of the taxes on pro- perty upon• one particular kind of property ; because, though a tax of this kind may occasionally fall hard upon individuals, the taxes it would supersede are pressing heavily upon the bulk of the people ; and finally, because, if it has a tendency (which is, however, we conceive, practically inoperative) to check the accu- mulation of wealth, the taxes its produce would abolish actually prevent the creating of wealth.
Previous page
