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Chapter 2

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CHAPTER II.

OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE OF THE SOCIETY.

The revenue which must defray, not only the expense of defending
the society and of supporting the dignity of the chief
magistrate, but all the other necessary expenses of government,
for which the constitution of the state has not provided any
particular revenue may be drawn, either, first, from some fund
which peculiarly belongs to the sovereign or commonwealth, and
which is independent of the revenue of the people ; or, secondly,
from the revenue of the people.

PART I.

Of the Funds, or Sources, of Revenue, which may peculiarly belong
to the Sovereign or Commowealth.

The funds, or sources, of revenue, which may peculiarly belong to
the sovereign or commonwealth, must consist, either in stock, or
in land.

The sovereign, like, any other owner of stock, may derive a
revenue from it, either by employing it himself, or by lending
it. His revenue is, in the one case, profit, in the other
interest.

The revenue of a Tartar or Arabian chief consists in profit. It
arises principally from the milk and increase of his own herds
and flocks, of which he himself superintends the management, and
is the principal shepherd or herdsman of his own horde or tribe.
It is, however, in this earliest and rudest state of civil
government only, that profit has ever made the principal part of
the public revenue of a monarchical state.

Small republics have sometimes derived a considerable revenue
from the profit of mercantile projects. The republic of Hamburgh
is said to do so from the profits of a public wine-cellar and
apothecary's shop.{See Memoires concernant les Droits et
Impositions en Europe, tome i. page 73. This work was compiled by
the order of the court, for the use of a commision employed for
some years past in considering the proper means for reforming the
finances of France. The account of the French taxes, which takes
up three volumes in quarto, may be regarded as perfectly
authentic. That of those of other European nations was compiled
from such information as the French ministers at the different
courts could procure. It is much shorter, and probably not quite
so exact as that of the French taxes.} That state cannot be very
great, of which the sovereign has leisure to carry on the trade
of a wine-merchant or an apothecary. The profit of a public bank
has been a source of revenue to more considerable states. It
has been so, not only to Hamhurgh, but to Venice and Amsterdam. A
revenue of this kind has even by some people been thought not
below the attention of so great an empire as that of Great
Britain. Reckoning the ordinary dividend of the bank of England
at five and a-half per cent., and its capital at ten millions
seven hundred and eighty thousand pounds, the neat annual profit,
after paying the expense of management, must amount, it is said,
to five hundred and ninety-two thousand nine hundred pounds.
Government, it is pretended, could borrow this capital at three
per cent. interest, and, by taking the management of the bank
into its own hands, might make a clear profit of two hundred and
sixty-nine thousand five hundred pounds a-year. The orderly,
vigilant, and parsimonious administration of such aristocracies
as those of Venice and Amsterdam, is extremely proper, it appears
from experience, for the management of a mercantile project of
this kind. But whether such a government us that of England,
which, whatever may be its virtues, has never been famous for
good economy; which, in time of peace, has generally conducted
itself with the slothful and negligent profusion that is,
perhaps, natural to monarchies ; and, in time of war, has
constantly acted with all the thoughtless extravagance that
democracies are apt to fall into, could be safely trusted with
the management of such a project, must at least be a good deal
more doubtful.

The post-office is properly a mercantile project. The government
advances the expense of establishing the different offices, and
of buying or hiring the necessary horses or carriages, and is
repaid, with a large profit, by the duties upon what is carried.
It is, perhaps, the only mercantile project which has been
successfully managed by, I believe, every sort of government. The
capital to be advanced is not very considerable. There is no
mystery in the business. The returns are not only certain but
immediate.

Princes, however, have frequently engaged in many other
mercantile projects, and have been willing, like private persons,
to mend their fortunes, by becoming adventurers in the common
branches of trade. They have scarce ever succeeded. The profusion
with which the affairs of princes are always managed, renders it
almost impossible that they should. The agents of a prince regard
the wealth of their master as inexhaustible; are careless at what
price they buy, are careless at what price they sell, are
careless at what expense they transport his goods from one place
to another. Those agents frequently live with the profusion of
princes ; and sometimes, too, in spite of that profusion, and by
a proper method of making up their accounts, acquire the fortunes
of princes. It was thus, as we are told by Machiavel, that
the agents of Lorenzo of Medicis, not a prince of mean abilities,
carried on his trade. The republic of Florence was several
times obliged to pay the debt into which their extravagance had
involved him. He found it convenient, accordingly to give up the
business of merchant, the business to which his family had
originally owed their fortune, and, in the latter part of his
life, to employ both what remained of that fortune, and the
revenue of the state, of which he had the disposal, in projects
and expenses more suitable to his station.

No two characters seem more inconsistent than those of trader and
sovereign. If the trading spirit of the English East India
company renders them very bad sovereigns, the spirit of
sovereignty seems to have rendered them equally bad traders.
While they were traders only, they managed their trade
successfully, and were able to pay from their profits a moderate
dividend to the proprietors of their stock. Since they became
sovereigns, with a revenue which, it is said, was originally more
than three millions sterling, they have been obliged to beg the
ordinary assistance of government, in order to avoid immediate
bankruptcy. In their former situation, their servants in India
considered themselves as the clerks of merchants ; in their
present situation, those servants consider themselves as the
ministers of sovereigns.

A state may sometimes derive some part of its public revenue from
the interest of money, as well as from the profits of stock. If
it has amassed a treasure, it may lend a part of that treasure,
either to foreign states, or to its own subjects.

The canton of Berne derives a considerable revenue by lending a
part of its treasure to foreign states, that is, by placing it in
the public funds of the different indebted nations of Europe,
chiefly in those of France and England. The security of this
revenue must depend, first, upon the security of the funds in
which it is placed, or upon the good faith of the government
which has the management of them; and, secondly, upon the
certainty or probability of the continuance of peace with the
debtor nation. In the case of a war, the very first act of
hostility on the part of the debtor nation might be the
forfeiture of the funds of its credit or. This policy of lending
money to foreign states is, so far as I know peculiar to the
canton of Berne.

The city of Hamburgh {See Memoire concernant les Droites et
Impositions en Europe tome i p. 73.}has established a sort of
public pawn-shop, which lends money to the subjects of the state,
upon pledges, at six per cent. interest. This pawn-shop, or
lombard, as it is called, affords a revenue, it is pretended, to
the state, of a hundred and fifty thousand crowns, which, at four
and sixpence the crown, amounts to £33,750 sterling.

The government of Pennsylvania, without amassing any treasure,
invented a method of lending, not money, indeed, but what is
equivalent to money, to its subjects. By advancing to private
people, at interest, and upon land security to double the value,
paper bills of credit, to be redeemed fifteen years after their
date ; and, in the mean time, made transferable from hand to
hand, like banknotes, and declared by act of assembly to be a
legal tender in all payments from one inhabitant of the province
to another, it raised a moderate revenue, which went a
considerable way towards defraying an annual expense of about
£4,500, the whole ordinary expense of that frugal and orderly
government. The success of an expedient of this kind must
have depended upon three different circumstances: first, upon the
demand for some other instrument of commerce, besides gold and
silver money, or upon the demand for such a quantity of
consumable stock as could not be had without sending abroad the
greater part of their gold and silver money, in order to purchase
it; secondly, upon the good credit of the government which made
use of this expedient ; and, thirdly, upon the moderation with
which it was used, the whole value of the paper bills of credit
never exceeding that of the gold and silver money which would
have been necessary for carrying on their circulation, had there
been no paper bills of credit. The same expedient was, upon
different occations, adopted by several other American colonies;
but, from want of this moderation, it produced, in the greater
part of them, much more disorder than conveniency.

The unstable and perishable nature of stock and credit, however,
renders them unfit to be trusted to as the principal funds of
that sure, steady, and permanent revenue, which can alone give
security and dignity to government. The government of no great
nation, that was advanced beyond the shepherd state, seems ever
to have derived the greater part of its public revenue from such
sources.

Land is a fund of more stable and permanent nature ; and the rent
of public lands, accordingly, has been the principal source of
the public revenue of many a great nation that was much advanced
beyond the shepherd state. From the produce or rent of the public
lands, the ancient republics of Greece and Italy derived for a
long the the greater part of that revenue which defrayed the
necessary expenses of the commonwealth. The rent of the crown
lands constituted for a long time the greater part of the revenue
of the ancient sovereigns of Europe.

War, and the preparation for war, are the two circumstances
which, in modern times, occasion the greater part of the
necessary expense or all great states. But in the ancient
republics of Greece and Italy, every citizen was a soldier, and
both served, and prepared himself for service, at his own
expense. Neither of those two circumstances, therefore, cou1d
occasion any very considerable expense to the state. The rent of
a very moderate landed estate might be fully sufficient for
defraying all the other necessary expenses of government.

In the ancient monarchies of Europe, the manners and customs of
the time sufficiently prepared the great body of the people for
war; and when they took the field, they were, by the condition of
their feudal tenures, to be maintained either at their own
expense, or at that of their immediate lords, without bringing
any new charge upon the sovereign. The other expenses of
government were, the greater part of them, very moderate. The
administration of justice, it has been shewn, instead of being a
cause of expense was a source of revenue. The labour of the
country people, for three days before, and for three days after,
harvest, was thought a fund sufficient for making and maintaining
all the bridges, highways, and other public works, which the
commerce of the country was supposed to require. In those
days the principal expense of the sovereign seems to have
consisted in the maintenance of his own family and household. The
officers of his household, accordingly, were then the great
officers of state. The lord treasurer received his rents.
The lord steward and lord chamberlain looked after the expense of
his family. The care of his stables was committed to the lord
constable and the lord marshal. His houses were all built in the
form of castles, and seem to have been the principal fortresses
which he possessed. The keepers of those houses or castles might
be considered as a sort of military governors. They seem to have
been the only military officers whom it was necessary to maintain
in time of peace. In these circumstances, the rent of a great
landed estate might, upon ordinary occasions, very well defray
all the necessary expenses of government.

In the present state of the greater part of the civilized
monarchies of Europe, the rent of all the lands in the country,
managed as they probably would be, if they all belonged to one
proprietor, would scarce, perhaps, amount to the ordinary revenue
which they levy upon the people even in peaceable times. The
ordinary revenue of Great Britain, for example, including not
only what is necessary for defraying the current expense of the
year, but for paying the interest of the public debts, and for
sinking a part of the capital of those debts, amounts to upwards
of ten millions a-year. But the land tax, at four shillings
in the pound, falls short of two millions a-year. This land
tax, as it is called however, is supposed to be one-fifth, not
only of the rent of all the land, but of that of all the houses,
and of the interest of all the capital stock of Great Britain,
that part of it only excepted which is either lent to the public,
or employed as farming stock in the cultivation of land. A very
considerable part of the produce of this tax arises from the rent
of houses and the interest of capital stock. The land tax of the
city of London, for example, at four shillings in the pound,
amounts to £123,399: 6: 7; that of the city of Westminster to
£63,092: 1: 5; that of the palaces of Whitehall and St. James's,
to £30,754: 6: 3. A certain proportion of the land tax is, in
the same manner, assessed upon all the other cities and towns
corporate in the kingdom ; and arises almost altogether, either
from the rent of houses, or from what is supposed to be the
interest of trading and capital stock. According to the
estimation, therefore, by which Great Britain is rated to the
land tax, the whole mass of revenue arising from the rent of all
the lands, from that of all the houses, and from the interest of
all the capital stock, that part of it only excepted which is
either lent to the public, or employed in the cultivation of
land, does not exceed ten millions sterling a-year, the ordinary
revenue which government levies upon the people, even in
peaceable times. The estimation by which Great Britain is rated
to the land tax is, no doubt, taking the whole kingdom at an
average, very much below the real value ; though in several
particular counties and districts it is said to be nearly equal
to that value. The rent of the lands alone, exclusive of that of
houses and of the interest of stock, has by many people been
estimated at twenty millions; an estimation made in a great
measure at random, and which, I apprehend, is as likely to be
above as below the truth. But if the lands of Great Britain,
in the present state of their cultivation, do not afford a rent
of more than twenty millions a-year, they could not well afford
the half, most probably not the fourth part of that rent, if they
all belonged to a single proprietor, and were put under the
negligent, expensive, and oppressive management of his factors
and agents. The crown lands of Great Britain do not at present
afford the fourth part of the rent which could probably be drawn
from them if they were the property of private persons. If the
crown lands were more extensive, it is probable, they would be
still worse managed.

The revenue which the great body of the people derives from land
is, in proportion, not to the rent, but to the produce of the
land. The whole annual produce of the land of every country,
if we except what is reserved for seed, is either annually
consumed by the great body of the people, or exchanged for
something else that is consumed by them. Whatever keeps down the
produce of the land below what it would otherwise rise to, keeps
down the revenue of the great body of the people, still more than
it does that of the proprietors of land. The rent of land, that
portion of the produce which belongs to the proprietors, is
scarce anywhere in Great Britain supposed to be more than a third
part of the whole produce. If the land which, in one state of
cultivation, affords a revenue of ten millions sterling a-year,
would in another afford a rent of twenty millions ; the rent
being, in both cases, supposed a third part of the produce, the
revenue of the proprietors would be less than it otherwise might
be, by ten millions a-year only; but the revenue of the great
hotly of the people would be less than it otherwise might be, by
thirty millions a-year, deducting only what would be necessary
for seed. The population of the country would be less by the
number of people which thirty millions a-year, deducting always
the seed, could maintain, according to the particular mode of
living, and expense which might take place in the different ranks
of men, among whom the remainder was distributed.

Though there is not at present in Europe, any civilized state of
any kind which derives the greater part of its public revenue
from the rent of lands which are the property of the state; yet,
in all the great monarchies of Europe, there are still many large
tracts of land which belong to the crown. They are generally
forest, and sometimes forests where, after travelling several
miles, you will scarce find a single tree; a mere waste and loss
of country, in respect both of produce and population. In every
great monarchy of Europe, the sale of the crown lands would
produce a very large sum of money, which, if applied to the
payment of the public debts, would deliver from mortgage a much
greater revenue than any which those lands have even afforded to
the crown. In countries where lands, improved and cultivated very
highly, and yielding, at the time of sale, as great a rent as can
easily be got from them, commonly sell at thirty years purchase;
the unimproved, uncultivated, and low-rented crown lands, might
well be expected to sell at forty, fifty, or sixty years
purchase. The crown might immediately enjoy the revenue
which this great price would redeem from mortgage. In the course
of a few years, it would probably enjoy another revenue. When the
crown lands had become private property, they would, in the
course of a few years, become well improved and well cultivated.
The increase of their produce would increase the population of
the country, by augmenting the revenue and consumption of the
people. But the revenue which the crown derives from the duties
or custom and excise, would necessarily increase with the revenue
and consumption of the people.

The revenue which, in any civilized monarchy, the crown derives
from tlhe crown lands, though it appears to cost nothing to
individuals, in reality costs more to the society than perhaps
any other equal revenue which the crown enjoys. It would, in
all cases, be for the interest of the society, to replace this
revenue to the crown by some other equal revenue, and to divide
the lands among the people, which could not well be done better,
perhaps, than by exposing them to public sale.

Lands, for the purposes of pleasure and magnificence, parks,
gardens, public walks, etc. possessions which are everywhere
considered as causes of expense, not as sources of revenue, seem
to be the only lands which, in a great and civilized monarchy,
ought to belong to the crown.

Public stock and public lands, therefore, the two sources of
revenue which may peculiarly belong to the sovereign or
commonwealth, being both improper and insufficient funds for
defraying the necessary expense of any great and civilized state
; it remains that this expense must, the greater part of it, be
defrayed by taxes of one kind or another; the people contributing
a part of their own private revenue, in order to make up a public
revenue to the sovereign or commonwealth.

PART II.

Of Taxes.

The private revenue of individuals, it has been shown in the
first book of this Inquiry, arises, ultimately from three
different sources ; rent, profit, and wages. Every tax must
finally be paid from some one or other of those three different
sources of revenue, or from all of them indifferently. I shall
endeavour to give the best account I can, first, of those taxes
which, it is intended should fall upon rent; secondly, of those
which, it is intended should fall upon profit ; thirdly, of those
which, it is intended should fall upon wages ; and fourthly, of
those which, it is intended should fall indifferently upon all
those three different sources of private revenue. The particular
consideration of each of these four different sorts of taxes will
divide the second part of the present chapter into four articles,
three of which will require several other subdivisions. Many of
these taxes, it will appear from the following review, are not
finally paid from the fund, or source of revenue, upon which it
is intended they should fall.

Before I enter upon the examination of particular taxes,it is
necessary to premise the four following maximis with regard to
taxes in general.


1. The subjects of every state ought to contribute towards the
support of the government, as nearly as possible, in proportion
to their respective abilities; that is, in proportion to the
revenue which they respectively enjoy under the protection of the
state. The expense of government to the individuals of a great
nation, is like the expense of management to the joint tenants of
a great estate, who are all obliged to contribute in proportion
to their respective interests in the estate. In the obsevation or
neglect of this maxim, consists what is called the equality or
inequality of taxation. Every tax, it must be observed once
for all, which falls finally upon one only of the three sorts of
revenue above mentioned, is necessarily unequal, in so far as it
does not affect the other two. In the following examination of
different taxes, I shall seldom take much farther notice of this
sort of inequality; but shall, in most cases, confine my
observations to that inequality which is occasioned by a
particular tax falling unequally upon that particular sort of
private revenue which is affected by it.

2. The tax which each individual is bound to pay, ought to be
certain and not arbitrary. The time of payment, the manner of
payment, the quantity to be paid, ought all to be clear and plain
to the contributor, and to every other person. Where it is
otherwise, every person subject to the tax is put more or less in
the power of the tax-gatherer, who can either aggravate the tax
upon any obnoxious contributor, or extort, by the terror of such
aggravation, some present or perquisite to himself. The
uncertainty of taxation encourages the insolence, and favours the
corruption, of an order of men who are naturally unpopular, even
where they are neither insolent nor corrupt. The certainty of
what each individual ought to pay is, in taxation, a matter of so
great importance, that a very considerable degree of inequality,
it appears, I believe, from the experience of all nations, is not
near so great an evil as a very small degree of uncertainty.

3. Every tax ought to be levied at the time, or in the manner, in
which it is most likely to be convenient for the contributor to
pay it. A tax upon the rent of land or of houses, payable at the
same term at which such rents are usually paid, is levied at the
time when it is most likely to be convenient for the contributor
to pay ; or when he is most likely to have wherewithall to pay.
Taxes upon such consumable goods as are articles of luxury, are
all finally paid by the consumer, and generally in a manner that
is very convenient for him. He pays them by little and little, as
he has occasion to buy the goods. As he is at liberty too, either
to buy or not to buy, as he pleases, it must be his own fault if
he ever suffers any considerable inconveniecy from such taxes.

4. Every tax ought to be so contrived, as both to take out and to
keep out of the pockets of the people as little as possible, over
and above what it brings into the public treasury of the state. A
tax may either take out or keep out of the pockets of the people
a great deal more than it brings into the public treasury, in the
four following ways. First, the levying of it may require a great
number of officers, whose salaries may eat up the greater part of
the produce of the tax, and whose perquisites may impose another
additional tax upon the people. Secondly, it may obstruct the
industry of the people, and discourage them from applying to
certain branches of business which might give maintenance and
employment to great multitudes. While it obliges the people
to pay, it may thus diminish, or perhaps destroy, some of the
funds which might enable them more easily to do so. Thirdly, by
the forfeitures and other penalties which those unfortunate
individuals incur, who attempt unsuccessfully to evade the tax,
it may frequently ruin them, and thereby put an end to the
benefit which the community might have received from the
employment of their capitals. An injudicious tax offers a great
temptation to smuggling. But the penalties of smuggling must
arise in proportion to the temptation. The law, contrary to all
the ordinary principles of justice, first creates the temptation,
and then punishes those who yield to it; and it commonly enhances
the punishment, too, in proportion to the very circumstance which
ought certainly to alleviate it, the temptation to commit the
crime.{ See Sketches of the History of Man page 474, and Seq.}
Fourthly, by subjecting the people to the frequent visits and the
odious examination of the tax-gatherers, it may expose them to
much unnecessary trouble, vexation, and oppression ; and though
vexation is not, strictly speaking, expense, it is certainly
equivalent to the expense at which every man would be willing to
redeem himself from it. It is in some one or other of these four
different ways, that taxes are frequently so much more burdensome
to the people than they are beneficial to the sovereign.

The evident justice and utility of the foregoing maxims have
recommended them, more or less, to the attention of all nations.
All nations have endeavoured, to the best of their judgment, to
render their taxes as equal as they could contrive ; as certain,
as convenient to the contributor, both the time and the mode of
payment, and in proportion to the revenue which they brought to
the prince, as little burdensome to the people. The following
short review of some of the principal taxes which have taken
place in different ages and countries, will show, that the
endeavours of all nations have not in this respect been equally
successful.


ARTICLE I. ˜ Taxes upon Rent ˜ Taxes upon the Rent of Land.

A tax upon the rent of land may either be imposed according to a
certain canon, every district being valued at a curtain rent,
which valuation is not afterwards to be altered; or it may be
imposed in such a manner, as to vary with every variation in the
real rent of the land, and to rise or fall with the improvement
or declension of its cultivation.

A land tax which, like that of Great Britain, is assessed upon
each district according to a certain invariable canon, though it
should be equal at the time of its first establishment,
necessarily becomes unequal in process of time, according to the
unequal degrees of improvement or neglect in the cultivation of
the different parts of the country. In England, the valuation,
according to which the different counties and parishes were
assessed to the land tax by the 4th of William and Mary, was very
unequal even at its first establishment. This tax, therefore, so
far offends against the first of the four maxims above mentioned.
It is perfectly agreeable to the other three. It is perfectly
certain. The time of payment for the tax, being the same as that
for the rent, is as convenient as it can be to the contributor.
Though the landlord is, in all cases, the real contributor, the
tax is commonly advanced by the tenant, to whom the landlord is
obliged to allow it in the payment of the rent. This tax is
levied by a much smaller number of officers than any other which
affords nearly the same revenue. As the tax upon each district
does not rise with the rise of the rent, the sovereign does not
share in the profits of the landlord's improvements. Those
improvements sometimes contribute, indeed, to the discharge of
the other landlords of the district. But the aggravation of the
tax, which this may sometimes occasion upon a particular estate,
is always so very small, that it never can discourage those
improvements, nor keep down the produce of the land below what it
would otherwise rise to. As it has no tendency to diminish the
quantity, it can have none to raise the price of that produce.
It does not obstruct the industry of the people; it subjects the
landlord to no other inconveniency besides the unavoidable one of
paying the tax.

The advantage, however, which the land-lord has derived from the
invariable constancy of the valuation. by which all the lands of
Great Britain are rated to the land-tax, has been principally
owing to some circumstances altogether extraneous to the nature
of the tax

It has been owing in part, to the great prosperity of almost
every part of the country, the rents of almost all the estates of
Great Britain having, since the time when this valuation was
first established, been continually rising, and scarce any of
them having fallen. The landlords, therefore, have almost all
gained the difference between the tax which they would have paid,
according to the present rent of their estates, and that which
they actually pay according to the ancient valuation. Had the
state of the country been different, had rents been gradually
falling in consequence of the declension of cultivation, the
landlords would almost all have lost this difference. In the
state of things which has happened to take place since the
revolution, the constancy of the valuation has been advantageous
to the landlord and hurtful to the sovereign. In a different
state of things it might have been advantageous to the sovereign
and hurtful to the landlord.

As the tax is made payable in money, so the valuation of the land
is expressed in money. Since the establishment of this valuation,
the value of silver has been pretty uniform, and there has been
no alteration in the standard of the coin, either as to weight or
fineness. Had silver risen considerably in its value, as it seems
to have done in the course of the two centuries which preceded
the discovery of the mines of America, the constancy of the
valuation might have proved very oppressive to the landlord. Had
silver fallen considerably in its value, as it certainly did for
about a century at least after the discovery of those mines, the
same constancy of valuation would have reduced very much this
branch of the revenue of the sovereign. Had any considerable
alteration been made in the standard of the money, either by
sinking the same quantity of silver to a lower denomination, or
by raising it to a higher ; had an ounce of silver, for example,
instead of being coined into five shillings and two pence, been
coined either into pieces which bore so low a denomination as two
shillings and seven pence, or into pieces which bore so high a
one as ten shillings and four pence, it would, in the one case,
have hurt the revenue of the proprietor, in the other that of the
sovereign.

In circumstances, therefore, somewhat different from those which
have actually taken place, this constancy of valuation might have
been a very great inconveniency, either to the contributors or to
the commonwealth. In the course of ages, such circumstances,
however, must at some time or other happen. But though empires,
like all the other works of men, have all hitherto proved mortal,
yet every empire aims at immortality. Every constitution,
therefore, which it is meant should be as permanent as the empire
itseif, ought to be convenient, not in certain circumstances
only, but in all circumstances; or ought to be suited, not to
those circumstances which are transitory, occasional, or
accidental, but to those which are necessary, and therefore
always the same.

A tax upon the rent of land, which varies with every variation of
the rent, or which rises and falls according to the improvement
or neglect of cultivation, is recommended by that sect of men of
letters in France, who call themselves the economists, as the
most equitable of all taxes. All taxes, they pretend, fall
ultimately upon the rent of land, and ought, therefore, to be
imposed equally upon the fund which must finally pay them. That
all taxes ought to fall as equally as possible upon the fund
which must finally pay them, is certainly true. But without
entering into the disagreeable discussion of the metaphysical
arguments by which they support their very ingenious theory, it
will sufficiently appear, from the following review, what are the
taxes which fall finally upon the rent of the land, and what are
those which fall finally upon some other fund.

In the Venetian territory, all the arable lands which are given
in lease to farmers are taxed at a tenth of the rent. { Memoires
concernant les Droits, p. 240, 241.} The leases are recorded in a
public register, which is kept by the officers of revenue in each
province or district. When the proprietor cultivates his own
lands, they are valued according to an equitable estimation, and
he is allowed a deduction of one-fifth of the tax; so that for
such land he pays only eight instead of ten per cent. of the
supposed rent.

A land-tax of this kind is certainly more equal than the land-tax
of England. It might not, perhaps, be altogether so certain, and
the assessment of the tax might freqnently occasion a good deal
more trouble to the landlord. It might, too, be a good deal more
expensive in the levying.

Such a system of administration, however, might, perhaps, be
contrived, as would in a great measure both prevent this
uncertainty, and moderate this expense.

The landlord and tenant, for example, might jointly be obliged to
record their lease in a public register. Proper penalties might
be enacted against concealing or misrepresenting any of the
conditions; and if part of those penalties were to be paid to
either of the two parties who informed against and convicted the
other of such concealment or misrepresentation, it would
effectually deter them from combining together in order to
defraud the public revenue. All the conditions of the lease might
be sufficiently known from such a record.

Some landlords, instead of raising the rent, take a fine for the
renewal of the lease. This practice is, in most cases, the
expedient of a spendthrift, who, for a sum of ready money sells a
future revenue of much greater value. It is, in most cases,
therefore, hurtful to the landlord; it is frequently hurtful to
the tenant ; and it is always hurtful to the community. It
frequently takes from the tenant so great a part of his capital,
and thereby diminishes so much his ability to cultivate the land,
that he finds it more difficult to pay a small rent than it would
otherwise have been to pay a great one. Whatever diminishes his
ability to cultivate, necessarily keeps down, below what it would
otherwise have been, the most important part of the revenue of
the community. By rendering the tax upon such fines a good deal
heavier than upon the ordinary rent, this hurtful practice might
be discouraged, to the no small advantage of all the different
parties concerned, of the landlord, of the tenant, of the
sovereign, and of the whole community.

Some leases prescribe to the tenant a certain mode of
cultivation, and a certain succession of crops, during the whole
continuance of the lease. This condition, which is generally the
effect of the landlord's conceit of his own superior knowledge (a
conceit in most cases very ill-founded), ought always to be
considered as an additional rent, as a rent in service, instead
of a rent in money. In order to discourage the practice, which is
generally a foolish one, this species of rent might be valued
rather high, and consequently taxed somewhat higher than common
money-rents.

Some landlords, instead of a rent in money, require a rent in
kind, in corn, cattle, poultry, wine, oil, etc. ; others, again,
require a rent in service. Such rents are always more hurtful to
the tenant than beneficial to the landlord. They either take
more, or keep more out of the pocket of the former, than they put
into that of the latter. In every country where they take
place, the tenants are poor and beggarly, pretty much according
to the degree in which they take place. By valuing, in the same
manner, such rents rather high, and consequently taxing them
somewhat higher than common money-rents, a practice which is
hurtful to the whole community, might, perhaps, be sufficiently
discouraged.

When the landlord chose to occupy himself a part of his own
lands, the rent might be valued according to an equitable
arbitration of the farmers and landlords in the neighbourhood,
and a moderate abatement of the tax might be granted to him, in
the same manner as in the Venetian territory, provided the rent
of the lands which he occupied did not exceed a certain sum. It
is of importance that the landlord should be encouraged to
cultivate a part of his own land. His capital is generally
greater than that of the tenant, and, with less skill, he can
frequently raise a greater produce. The landlord can afford to
try experiments, and is generally disposed to do so. His
unsuccessful experiments occasion only a moderate loss to
himself. His successful ones contribute to the improvement and
better cultivation of the whole country. It might be of
importance, however, that the abatement of the tax should
encourage him to cultivate to a certain extent only. If the
landlords should, the greater part of them, be tempted to farm
the whole of their own lands, the country (instead of sober and
industrious tenants, who are bound by their own interest to
cultivate as well as their capital and skill will allow them)
would be filled with idle and profligate bailiffs, whose abusive
management would soon degrade the cultivation, and reduce the
annual produce of the land, to the diminution, not only of the
revenue of their masters, but of the most important part of that
of the whole society.

Such a system of administration might, perhaps, free a tax of
this kind from any degree of uncertainty, which could occasion
either oppression or inconveniency to the contributor ; and
might, at the same time, serve to introduce into the common
management of land such a plan of policy as might contribute a
good deal to the general improvement and good cultivation of the
country.

The expense of levying a land-tax, which varied with every
variation of the rent, would, no doubt, be somewhat greater than
that of levying one which was always rated according to a fixed
valuation. Some additional expense would necessarily be incurred,
both by the different register-offices which it would be proper
to establish in the different districts of the country, and by
the different valuations which might occasionally be made of the
lands which the proprietor chose to occupy himself. The expense
of all this, however, might be very moderate, and much below what
is incurred in the levying of many other taxes, which afford a
very inconsiderable revenue in comparison of what might easily be
drawn from a tax of this kind.

The discouragement which a variable land-tax of this kind might
give to the improvement of land, seems to be the most important
objection which can be made to it. The landlord would certainly
be less disposed to improve, when the sovereign, who contributed
nothing to the expense, was to share in the profit of the
improvement. Even this objection might, perhaps, be obviated, by
allowing the landlord, before he began his improvement, to
ascertain, in conjunction with the officers of revenue, the
actual value of his lands, according to the equitable arbitration
of a certain number of landlords and farmers in the
neighbourhood, equally chosen by both parties: and by rating him,
according to this valuation, for such a number of years as might
be fully sufficient for his complete indemnification. To draw the
attention of the sovereign towards the improvement of the land,
from a regard to the increase of his own revenue, is one or the
principal advantages proposed by this species of land-tax. The
term, therefore, allowed, for the indemnification of the
landlord, ought not to he a great deal longer than what was
necessary for that purpose, lest the remoteness of the interest
should discourage too much this attention. It had better,
however, be somewhat too long, than in any respect too short. No
incitement to the attention of the sovereign can ever
counterbalance the smallest discouragement to that of the
landlord. The attention of the sovereign can be, at best, but a
very general and vague consideration of what is likely to
contribute to the better cultivation of the greater part of his
dominions. The attention of the landlord is a particular and
minute consideration of what is likely to be the most
advantageous application of every inch of ground upon his estate.
The principal attention of the sovereign ought to be, to
encourage, by every means in his power, the attention both of the
landlord and of the farmer, by allowing both to pursue their own
interest in their own way, and according to their own judgment ;
by giving to both the most perfect security that they shall enjoy
the full recompence of their own industry ; and by procuring to
both the most extensive market for every part of their produce,
in consequence of establishing the easiest and safest
communications, both by land and by water, through every part of
his own dominions, as well as the most unbounded freedom of
exportation to the dominions of all other princes.

If, by such a system of administration, a tax of this kind could
be so managed as to give, not only no discouragement, but, on the
contrary, some encouragement to the improvement or land, it does
not appear likely to occasion any other inconveniency to the
landlord, except always the unavoidable one of being obliged to
pay the tax.

In all the variations of the state of the society, in the
improvement and in the declension of agriculture ; in all the
variations in the value of silver, and in all those in the
standard of the coin, a tax of this kind would, of its own
accord, and without any attention of government, readily suit
itself to the actual situation of things, and would be equally
just and equitable in all those different changes. It would,
therefore, be much more proper to be established as a perpetual
and unalterable regulation, or as what is called a fudamental law
of the commonwealth, than any tax which was always to be levied
according to a certain valuation.

Some states, instead of the simple and obvious expedient of a
register of leases, have had recourse to the laborious and
expensive one of an actual survey and valuation of all the lands
in the country. They have suspected, probably, that the lessor
and lessee, in order to defraud the public revenue, might combine
to conceal the real terms of the lease. Doomsday-book seems to
have been the result of a very accurate survey of this kind.

In the ancient dominions of the king of Prussia, the land-tax is
assessed according to an actual survey and valuation, which is
reviewed and altered from time to time.{ Memoires concurent les
Droits, etc. tom, i. p. 114, 115, 116, etc.} According to that
valuation, the lay proprietors pay from twenty to twenty-five per
cent. of their revenue; ecclesiastics from forty to forty-five
per cent. The survey and valuation of Silesia was made by order
of the present king, it is said, with great accuracy. According
to that valuation, the lands belonging to the bishop of Breslaw
are taxed at twenty-five per cent. of their rent. The other
revenues of the ecclesiastics of both religions at fifty per
cent. The commanderies of the Teutonic order, and of that of
Malta, at forty per cent. Lands held by a noble tenure, at
thirty-eight and one-third per cent. Lands held by a base
tenure, at thirty-five and one-third per cent.

The survey and valuation of Bohemia is said to have been the work
of more than a hundred years. It was not perfected till after the
peace of 1748, by the orders of the present empress queen. {
Id.tom i p.85,84.} The survey of the duchy of Milan, which was
begun in the time of Charles VI., was not perfected till after
1760 It is esteemed one of the most accurate that has ever been
made. The survey of Savoy and Piedmont was executed under the
orders of the late king of Sardinia. {Id. p. 280, etc. ; also p,
287. etc. to 316.}

In the dominions of the king of Prussia, the revenue of the
church is taxed much higher than that of lay proprietors. The
revenue of the church is, the greater part of it, a burden upon
the rent of land. It seldom happens that any part of it is
applied towards the improvement of land; or is so employed as to
contribute, in any respect, towards increasing the revenue of the
great body of the people. His Prussian majesty had probably, upon
that account, thought it reasonable that it should contribute a
good deal more towards relieving the exigencies of the state. In
some countries, the lands of the church are exempted from all
taxes. In others, they are taxed more lightly than other lands.
In the duchy of Milan, the lands which the church possessed
before 1575, are rated to the tax at a third only or their value.

In Silesia, lands held by a noble tenure are taxed three per
cent. higher than those held by a base tenure. The honours and
privileges of different kinds annexed to the former, his Prussian
majesty had probably imagined, would sufficiently compensate to
the proprietor a small aggravation of the tax; while, at the same
time, the humiliating inferiority of the latter would be in some
measure alleviated, by being taxed somewhat more lightly. In
other countries, the system of taxation, instead of alleviating,
aggravates this inequality. In the dominions of the king of
Sardinia, and in those provinces of France which are subject to
what is called the real or predial taille, the tax falls
altogether upon the lands held by a base tenure. Those held by a
noble one are exempted.

A land tax assessed according to a general survey and valuation,
how equal soever it may be at first, must, in the course of a
very moderate period of time, become unequal. To prevent its
becoming so would require the continual and painful attention of
government to all the variations in the state and produce of
every different farm in the country. The governments of Prussia,
of Bohemia, of Sardinia, and of the duchy of Milan, actually
exert an attention of this kind ; an attention so unsuitable to
the nature of government, that it is not likely to be of long
continuance, and which, if it is continued, will probably, in the
long-run, occasion much more trouble and vexation than it can
possibly bring relief to the contributors.

In 1666, the generality of Montauban was assessed to the real or
predial taille, according, it is said, to a very exact survey and
valuation. { Memoires concernant les Droits, etc. tom. ii p. 139,
etc.} By 1727, this assessment had become altogether unequal. In
order to remedy this inconveniency, government has found no
better expedient, than to impose upon the whole generality an
additional tax of a hundred and twenty thousand livres. This
additional tax is rated upon all the different districts subject
to the taille according to the old assessment. But it is levied
only upon those which, in the actual state of things, are by that
assessment under-taxed ; and it is applied to the relief of those
which, by the same assessment, are over-taxed. Two districts, for
example, one of which ought, in the actual state of things, to be
taxed at nine hundred, the other at eleven hundred livres, are,
by the old assessment, both taxed at a thousand livres. Both
these districts are, by the additional tax, rated at eleven
hundred livres each. But this additional tax is levied only upon
the district under-charged, and it is applied altogether to the
relief of that overcharged, which consequently pays only nine
hundred livres. The government neither gains nor loses by the
additional tax, which is applied altogether to remedy the
inequalities arising from the old assessment. The application
is pretty much regulated according to the discretion of the
intendant of the generality, and must, therefore, be in a great
measure arbitrary.


Taxes which are proportioned, not in the Rent, but to the
Produce of Land.

Taxes upon the produce of land are, In reality, taxes upon
the rent ; and though they may be originally advanced by the
farmer, are finally paid by the landlord. When a certain portion
of the produce is to be paid away for a tax, the farmer computes
as well as he can, what the value of this portion is, one year
with another, likely to amount to, and he makes a proportionable
abatement in the rent which he agrees to pay to the landlord.
There is no farmer who does not compute beforehand what the
church tythe, which is a land tax of this kind, is, one year with
another, likely to amount to.

The tythe, and every other land tax of this kind, under the
appearance of perfect equality, are very unequal taxes; a certain
portion of the produce being in differrent situations, equivalent
to a very different portion of the rent. In some very rich
lands, the produce is so great, that the one half of it is fully
sufficient to replace to the farmer his capital employed in
cultivation, together with the ordinary profits of farming stock
in the neighbourhood. The other half, or, what comes to the
same thing, the value of the other half, he could afford to pay
as rent to the landlord, if there was no tythe. But if a tenth of
the produce is taken from him in the way of tythe, he must
require an abatement of the fifth part of his rent, otherwise he
cannot get back his capital with the ordinary profit. In
this case, the rent of the landlord, instead of amounting to a
half, or five-tenths of the whole produce, will amount only to
four-tenths of it. In poorer lands, on the contrary, the produce
is sometimes so small, and the expense of cultivation so great,
that it requires four-fifths of the whole produce, to replace to
the farmer his capital with the ordinary profit. In this
case, though there was no tythe, the rent of the landlord could
amount to no more than one-fifth or two-tenths of the whole
produce. But if the farmer pays one-tenth of the produce in
the way of tythe, he must require an equal abatement of the rent
of the landlord, which will thus be reduced to one-tenth only of
the whole produce. Upon the rent of rich lands the tythe may
sometimes be a tax of no more than one-fifth part, or four
shillings in the pound ; whereas upon that of poorer lands, it
may sometimes be a tax of one half, or of ten shillings in the
pound.

The tythe, as it is frequently a very unequal tax upon the rent,
so it is always a great discouragement, both to the improvements
of the landlord, and to the cultivation of the farmer. The one
cannot venture to make the most important, which are generally
the most expensive improvements; nor the other to raise the most
valuable, which are generally, too, the most expensive crops;
when the church, which lays out no part of the expense, is to
share so very largely in the profit. The cultivation of madder
was, for a long time, confined by the tythe to the United
Provinces, which, being presbyterian countries, and upon that
account exempted from this destructive tax, enjoyed a sort of
monopoly of that useful dyeing drug against the rest of Europe.
The late attempts to introduce the culture of this plant into
England, have been made only in consequence of the statute, which
enacted that five shillings an acre should be received in lieu of
all manner of tythe upon madder.

As through the greater part of Europe, the church, so in many
different countries of Asia, the state, is principally supported
by a land tax, proportioned not to the rent, but to the produce
of the land. In China, the principal revenue of the sovereign
consists in a tenth part of the produce of all the lands of the
empire. This tenth part, however, is estimated so very
moderately, that, in many provinces, it is said not to exceed a
thirtieth part of the ordinary produce. The land tax or land rent
which used to be paid to the Mahometan government of Bengal,
before that country fell into the hands of the English East India
company, is said to have amounted to about a fifth part of the
produce. The land tax of ancient Egypt is said likewise to have
amounted to a fifth part.

In Asia, this sort of land tax is said to interest the sovereign
in the improvement and cultivation of land. The sovereigns
of China, those of Bengal while under the Mahometan govermnent,
and those of ancient Egypt, are said, accordingly, to have been
extremely attentive to the making and maintaining of good roads
and navigable canals, in order to increase, as much as possible,
both the quantity and value of every part of the produce of the
land, by procuring to every part of it the most extensive market
which their own dominions could afford. The tythe of the church
is divided into such small portions that no one of its
proprietors can have any interest of this kind. The parson of a
parish could never find his account. in making a road or canal to
a distant part of the country, in order to extend the market for
the produce of his own particular parish. Such taxes, when
destined for the maintenance of the state, have some advantages,
which may serve in some measure to balance their inconveniency.
When destined for the maintenance of the church, they are
attended with nothing but inconveniency.

Taxes upon the produce of land may be levied, either in kind, or,
according to a certain valuation in money.

The parson of a parish, or a gentleman of small fortune who lives
upon his estate, may sometimes, perhaps find some advantage in
receiving, the one his tythe, and the other his rent, in kind.
The quantity to be collected, and the district within which it is
to be collected, are so small, that they both can oversee, with
their own eyes, the collection and disposal of every part of what
is due to them. A gentleman of great fortune, who lived in the
capital, would be in danger of suffering much by the neglect, and
more by the fraud, of his factors and agents, if the rents of an
estate in a distant province were to be paid to him in this
manner. The loss of the sovereign, from the abuse and depredation
of his tax-gatherers, would necessarily be much greater. The
servants of the most careless private person are, perhaps, more
under the eye of their master than those of the most careful
prince; and a public revenue, which was paid in kind, would
suffer so much from the mismanagement of the collectors, that a
very small part of what was levied upon the people would ever
arrive at the treasury of the prince. Some part of the public
revenue of China, however, is said to be paid in this manner. The
mandarins and other tax-gatherers will, no doubt, find their
advantage in continuing the practice of a payment, which is so
much more liable to abuse than any payment in money.

A tax upon the produce of land, which is levied in money, may be
levied, either according to a valuation, which varies with all
the variations of the market price ; or according to a fixed
valuation, a bushel of wheat, for example, being always valued at
one and the same money price, whatever may be the state of the
market. The produce of a tax levied in the former way will vary
only according to the variations in the real produce of the land,
according to the improvement or neglect of cultivation. The
produce of a tax levied in the latter way will vary, not only
according to the variations in the produce of the land, but
according both to those in the value of the precious metals, and
those in the quantity of those metals which is at different times
contained in coin of the same denomination. The produce of the
former will always bear the same proportion to the value of the
real produce of the land. The produce of the latter may, at
different times, bear very different proportions to that value.

When, instead either of a certain portion of the produce of land,
or of the price of a certain portion, a certain sum of money is
to be paid in full compensation for all tax or tythe; the tax
becomes, in this case, exactly of the same nature with the land
tax of England. It neither rises nor falls with the rent of the
land. It neither encourages nor discourages improvement. The
tythe in the greater part of those parishes which pay what is
called a modus, in lieu of all other tythe is a tax of this kind.
During the Mahometan government of Bengal, instead of the payment
in kind of the fifth part of the produce, a modus, and, it is
said, a very moderate one, was established in the greater part of
the districts or zemindaries of the country. Some of the servants
of the East India company, under pretence of restoring the public
revenue to its proper value, have, in some provinces, exchanged
this modus for a payment in kind. Under their management,
this change is likely both to discourage cultivation, and to give
new opportunities for abuse in the collection of the public
revenue, which has fallen very much below what it was said to
have been when it first fell under the management of the company.
The servants of the company may, perhaps, have profited by the
change, but at the expense, it is probable, both of their masters
and of the country.

Taxes upon the Rent of Houses.

The rent of a house may be distinguished into two parts, of which
the one may very properly be called the building-rent; the other
is commonly called the ground-rent.

The building-rent is the interest or profit of the capital
expended in building the house. In order to put the trade of a
builder upon a level with other trades, it is necessary that this
rent should be sufficient, first, to pay him the same interest
which he would have got for his capital, if he had lent it upon
good security ; and, secondly, to keep the house in constant
repair, or, what comes to the same thing, to replace, within a
certain term of years, the capital which had been employed in
building it. The building-rent, or the ordinary profit of
building, is, therefore, everywhere regulated by the ordinary
interest of money. Where the market rate of interest is four per
cent. the rent of a house, which, over and above paying the
ground-rent, affords six or six and a-half per cent. upon the
whole expense of building, may, perhaps, afford a sufficient
profit to the builder. Where the market rate of interest is five
per cent. it may perhaps require seven or seven and a half per
cent. If, in proportion to the interest of money, the trade of
the builders affords at any time much greater profit than this,
it will soon draw so much capital from other trades as will
reduce the profit to its proper level. If it affords at any time
much less than this, other trades will soon draw so much capital
from it as will again raise that profit.

Whatever part of the whole rent of a house is over and above what
is sufficient for affording this reasonable profit, naturally
goes to the ground-rent; and, where the owner of the ground and
the owner of the building are two different persons, is, in most
cases, completely paid to the former. This surplus rent is the
price which the inhabitant of the house pays for some real or
supposed advantage of the situation. In country houses, at a
distance from any great town, where there is plenty of ground to
chuse upon, the ground-rent is scarce anything, or no more than
what the ground which the house stands upon would pay, if
employed in agriculture. In country villas, in the neighbourhood
of some great town, it is sometimes a good deal higher; and the
peculiar conveniency or beauty of situation is there frequently
very well paid for. Ground-rents are generally highest in the
capital, and in those particular parts of it where there happens
to be the greatest demand for houses, whatever be the reason of
that demand, whether for trade and business, for pleasure and
society, or for mere vanity and fashion.

A tax upon house-rent, payable by the tenant, and proportioned to
the whole rent of each house, could not, for any considerable
time at least, affect the building-rent. If the builder did not
get his reasonable profit, he would be obliged to quit the trade;
which, by raising the demand for building, would, in a short
time, bring back his profit to its proper level with that of
other trades. Neither would such a tax fall altogether upon the
ground-rent; but it would divide itself in such a manner, as to
fall partly upon the inhabitant of the house. and partly upon the
owner of the ground.

Let us suppose, for example, that a particular person judges that
he can afford for house-rent all expense of sixty pounds a-year;
and let us suppose, too, that a tax of four shillings in the
pound, or of one-fifth, payable by the inhabitant, is laid upon
house-rent. A house of sixty pounds rent will, in that case, cost
him seventy-two pounds a-year, which is twelve pounds more than
he thinks he can afford. He will, therefore, content himself with
a worse house, or a house of fifty pounds rent, which, with the
additional ten pounds that he must pay for the tax, will make up
the sum of sixty pounds a-year, the expense which he judges he
can afford, and, in order to pay the tax, he will give up a part
of the additional conveniency which he might have had from a
house of ten pounds a-year more rent. He will give up, I say, a
part of this additional conveniency; for he will seldom be
obliged to give up the whole, but will, in consequence of the
tax, get a better house for fifty pounds a-year, than he could
have got if there had been no tax for as a tax of this kind, by
taking away this particular competitor, must diminish the
competition for houses of sixty pounds rent, so it must likewise
diminish it for those of fifty pounds rent, and in the same
manner for those of all other rents, except the lowest rent, for
which it would for some time increase the competition. But
the rents of every class of houses for which the competition was
diminished, would necessarily be more or less reduced. As no part
of this reduction, however, could for any considerable time at
least, affect the building-rent, the whole of it must, in the
long-run, necessarily fall upon the ground-rent. The final
payment of this tax, therefore, would fall partly upon the
inhabitant of the house, who, in order to pay his share, would be
obliged to give up a part of his conveniency ; and partly upon
the owner of the ground, who, in order to pay his share, would be
obliged to give up a part of his revenue. In what proportion this
final payment would be divided between them, it is not, perhaps,
very easy to ascertain. The division would probably be very
different in different circumstances, and a tax of this kind
might, according to those different circumstances, affect very
unequally, both the inhabitant of the house and the owner of the
ground.

The inequality with which a tax of this kind might fall upon the
owners of different ground-rents, would arise altogether from the
accidental inequality of this division. But the inequality
with which it might fall upon the inhabitants of different
houses, would arise, not only from this, but from another cause.
The proportion of the expense of house-rent to the whole expense
of living, is different in the different degrees of fortune. It
is, perhaps, highest in the highest degree, and it diminishes
gradually through the inferior degrees, so as in general to be
lowest in the lowest degree. The necessaries of life occasion the
great expense of the poor. They find it difficult to get food,
and the greater part of their little revenue is spent in getting
it. The luxuries and vanities of life occasion the principal
expense of the rich ; and a magnificent house embellishes and
sets off to the best advantage all the other luxuries and
vanities which they possess. A tax upon house-rents, therefore,
would in general fall heaviest upon the rich ; and in this sort
of inequality there would not, perhaps, be any thing very
unreasonable It is not very unreasonable that the rich should
contribute to the public expense, not only in proportion to their
revenue, but something more than in that proportion.

The rent of houses, though it in some respects resembles the rent
of land, is in one respect essentially different from it. The
rent of land is paid for the use of a productive subject. The
land which pays it produces it. The rent of houses is paid for
the use of an unproductive subject. Neither the house, nor the
ground which it stands upon, produce anything. The person who
pays the rent, therefore, must draw it from some other source of
revenue, distinct from and independent of this subject. A tax
upon the rent of houses, so far as it falls upon the inhabitants,
must be drawn from the same source as the rent itself, and must
be paid from their revenue, whether derived from the wages of
labour, the profits of stock, or the rent of land. So far as it
falls upon the inhabitants, it is one of those taxes which fall,
not upon one only, but indifferently upon all the three different
sources of revenue ; and is, in every respect, of the same nature
as a tax upon any other sort of consumable commodities. In
general, there is not perhaps, any one article of expense or
consumption by which the liberality or narrowness of a man's
whole expense can be better judged of than by his house-rent. A
proportional tax upon this particular article of expense might,
perhaps, produce a more considerable revenue than any which has
hitherto been drawn from it in any part of Europe. If the tax,
indeed, was very high, the greater part of people would endeavour
to evade it as much as they could, by contenting themselves with
smaller houses, and by turning the greater part of their expense
into some other channel.

The rent of houses might easily be ascertained with sufficient
accuracy, by a policy of the same kind with that which would be
necesary for ascertaining the ordinary rent of land. Houses not
inhabited ought to pay no tax. A tax upon them would fall
altogether upon the proprietor, who would thus be taxed for a
subject which afforded him neither conveniency nor revenue.
Houses inhabited by the proprietor ought to be rated, not
according to the expense which they might have cost in building,
but according to the rent which an equitable arbitration might
judge them likely to bring if leased to a tenant. If rated
according to the expense which they might have cost in building,
a tax of three or four shillings in the pound, joined with other
taxes, would ruin almost all the rich and great families of this,
and, I believe, of every other civilized country. Whoever will
examine with attention the different town and country houses of
some of the richest and greatest families in this country, will
find that, at the rate of only six and a-half, or seven per cent.
upon the original expense of building, their house-rent is nearly
equal to the whole neat rent of their estates. It is the
accumulated expense of several successive generations, laid out
upon objects of great beauty and magnificence, indeed, but, in
proportion to what they cost, of very small exchangeable value.{
Since the first publication of this book, a tax nearly upon the
above-mentioned principles thas been imposed.}

Ground-rents are a still more proper subject of taxation than the
rent of houses. A tax upon ground-rents would not raise the rent
of houses; it would fall altogether upon the owner of the
ground-rent, who acts always as a monopolist, and exacts the
greatest rent which can be got for the use of his ground. More or
less can be got for it, according as the competitors happen to be
richer or poorer, or can afford to gratify their fancy for a
particular spot of ground at a greater or smaller expense.
In every country, the greatest number of rich competitors is in
the capital, and it is there accordingly that the highest
ground-rents are always to be found. As the wealth of those
competitors would in no respect be increased by a tax upon
ground-rents, they would not probably be disposed to pay more for
the use of the ground. Whether the tax was to be advanced by the
inhabitant or by the owner of the ground, would be of little
importance. The more the inhabitant was obliged to pay for the
tax, the less he would incline to pay for the ground ; so that
the final payment of the tax would fall altogether upon the owner
of the ground-rent. The ground-rents of uninhabited houses ought
to pay no tax.

Both ground-rents, and the ordinary rent of land, are a species
of revenue which the owner, in many cases, enjoys without any
care or attention of his own. Though a part of this revenue
should be taken from him in order to defray the expenses of the
state, no discouragement will thereby be given to any sort of
iudustry. The annual produce of the land and labour of the
society, the real wealth and revenue of the great body of the
people, might be the same after such a tax as before.
Ground-rents, and the ordinary rent of land, are therefore,
perhaps, the species of revenue which can best bear to have a
peculiar tax imposed upon them.

Ground-rents seem, in this respect, a more proper subject of
peculiar taxation, than even the ordinary rent of land. The
ordinary rent of land is, in many cases, owing partly, at least,
to the attention and good management of the landlord. A very
heavy tax might discourage, too much, this attention and good
management. Ground-rents, so far as they exceed the ordinary rent
of land, are altogether owing to the good government of the
sovereign, which, by protecting the industry either of the whole
people or of the inhabitants of some particular place, enables
them to pay so much more than its real value for the ground which
they build their houses upon; or to make to its owner so much
more than compensation for the loss which he might sustain by
this use of it. Nothing can be more reasonable, than that a fund,
which owes its existence to the good government of the state,
should be taxed peculiarly, or should contribute something more
than the greater part of other funds, towards the support of that
government.

Though, in many different countries of Europe, taxes have been
imposed upon the rent of houses, I do not know of any in which
ground-rents have been considered as a separate subject of
taxation. The contrivers of taxes have, probably, found some
difficulty in ascertaining what part of the rent ought to be
considered as ground-rent, and what part ought to be considered
as building-rent. It should not, however, seem very difficult to
distinguish those two parts of the rent from one another.

In Great Britain the rent of houses is supposed to be taxed in
the same proportion as the rent of land, by what is called the
annual land tax. The valuation, according to which each different
parish and district is assessed to this tax, is always the same.
It was originally extremely unequal, and it still continues to be
so. Through the greater part of the kingdom this tax falls still
more lightly upon the rent of houses than upon that of land.
In some few districts only, which were originally rated high, and
in which the rents of houses have fallen considerably, the land
tax of three or four shillings in the pound is said to amount to
an equal proportion of the real rent of houses. Untenanted
houses, though by law subject to the tax, are, in most districts,
exempted from it by the favour of the assessors; and this
exemption sometimes occasions some little variation in the rate
of particular houses, though that of the district is always the
same. Improvements of rent, by new buildings, repairs, etc. go to
the discharge of the district, which occasions still further
variations in the rate of particular houses.

In the province of Holland,{ Memoires concernant les Droits, etc.
p. 223.} every house is taxed at two and a-half per cent. of its
value, without any regard, either to the rent which it actually
pays, or to the circumstance of its being tenanted or untenanted.
There seems to be a hardship in obliging the proprietor to pay a
tax for an untenanted house, from which he can derive no revenue,
especially so very heavy a tax. In Holland, where the market rate
of interest does not exceed three per cent., two and a-half per
cent. upon the whole value of the house must, in most cases,
amount to more than a third of the building-rent, perhaps of the
whole rent. The valuation, indeed, according to which the houses
are rated, though very unequal, is said to be always below the
real value. When a house is rebuilt, improved, or enlarged, there
is a new valuation, and the tax is rated accordingly.

The contrivers of the several taxes which in England have, at
different times, been imposed upon houses, seem to have imagined
that there was some great difficulty in ascertaining, with
tolerable exactness, what was the real rent of every house. They
have regulated their taxes, therefore, according to some more
obvious circumstance, such as they had probably imagined would,
in most cases, bear some proportion to the rent.

The first tax of this kind was hearth-money; or a tax of two
shillings upon every hearth. In order to ascertain how many
hearths were in the house, it was necessary that the tax-gatherer
should enter every room in it. This odious visit rendered the tax
odious. Soon after the Revolution, therefore, it was abolished as
a badge of slavery.

The next tax of this kind was a tax of two shillings upon every
dwelling-house inhabited. A house with ten windows to pay four
shillings more. A house with twenty windows and upwards to pay
eight shillings. This tax was afterwards so far altered, that
houses with twenty windows, and with less than thirty, were
ordered to pay ten shillings, and those with thirty windows and
upwards to pay twenty shillings. The number of windows can, in
most cases, be counted from the outside, and, in all cases,
without entering every room in the house. The visit of the
tax-gatherer, therefore, was less offensive in this tax than in
the hearth-money.

This tax was afterwards repealed, and in the room of it was
established the window-tax, which has undergone two several
alterations and augmentations. The window tax, as it stands at
present (January 1775), over and above the duty of three
shillings upon every house in England, and of one shilling upon
every house in Scotland, lays a duty upon every window, which in
England augments gradually from twopence, the lowest rate upon
houses with not more than seven windows, to two shillings, the
highest rate upon houses with twenty-five windows and upwards.

The principal objection to all such taxes is their inequality; an
inequality of the worst kind, as they must frequently fall much
heavier upon the poor than upon the rich. A house of ten pounds
rent in a country town, may sometimes have more windows than a
house of five hundred pounds rent in London ; and though the
inhabitant of the former is likely to be a much poorer man than
that of the latter, yet, so far as his contribution is regulated
by the window tax, he must contribute more to the support of the
state. Such taxes are, therefore, directly contrary to the first
of the four maxims above mentioned. They do not seem to offend
much against any of the other three.

The natural tendency of the window tax, and of all other taxes
upon houses, is to lower rents. The more a man pays for the tax,
the less, it is evident, he can afford to pay for the rent. Since
the imposition of the window tax, however, the rents of houses
have, upon the whole, risen more or less, in almost every town
and village of Great Britain, with which I am acquainted.
Such has been, almost everywhere, the increase of the demand for
houses, that it has raised the rents more than the window tax
could sink them ; one of the many proofs of the great prosperity
of the country, and of the increasing revenue of its inhabitants.
Had it not been for the tax, rents would probably have risen
still higher.

ARTICLE II. ˜ Taxes upon Profit, or upon the Revenue arising
from Stock.

The revenue or profit arising from stock naturally divides itself
into two parts; that which pays the interest, and which belongs
to the owner of the stock ; and that surplus part which is over
and above what is necessary for paying the interest.

This latter part of profit is evidently a subject not taxable
directly. It is the compensation, and, in most cases, it is no
more than a very moderate compensation for the risk and trouble
of employing the stock. The employer must have this compensation,
otherwise he cannot, consistently with his own interest, continue
the employment. If he was taxed directly, therefore, in
proportion to the whole profit, he would be obliged either to
raise the rate of his profit, or to charge the tax upon the
interest of money ; that is, to pay less interest. If he raised
the rate of his profit in proportion to the tax, the whole tax,
though it might be advanced by him, would be finally paid by one
or other of two different sets of people, according to the
different ways in which he might employ the stock of which he had
the management. If he employed it as a farming stock, in the
cultivation of land, he could raise the rate of his profit only
by retaining a greater portion, or, what comes to the same thing,
the price of a greater portion, of the produce of the land; and
as this could be done only by a reduction of rent, the final
payment of the tax would fall upon the landlord. If he employed
it as a mercantile or manufacturing stock, he could raise the
rate of his profit only by raising the price of his goods; in
which case, the final payment of the tax would fall altogether
upon the consumers of those goods. If he did not raise the rate
of his profit, he would be obliged to charge the whole tax upon
that part of it which was allotted for the interest of money. He
could afford less interest for whatever stock he borrowed, and
the whole weight of the tax would, in this case, fall ultimately
upon the interest of money. So far as he could not relieve
himself from the tax in the one way, he would be obliged to
relieve himself in the other.

The interest of money seems, at first sight, a subject equally
capable of being taxed directly as the rent of land. Like the
rent of land, it is a neat produce, which remains, after
completely compensating the whole risk and trouble of employing
the stock. As a tax upon the rent of land cannot raise rents,
because the neat produce which remains, after replacing the stock
of the farmer, together with his reasonable profit, cannot be
greater after the tax than before it, so, for the same reason, a
tax upon the interest of money could not raise the rate of
interest; the quantity of stock or money in the country, like the
quantity of land, being supposed to remain the same after the tax
as before it. The ordinary rate of profit, it has been shewn, in
the first book, is everywhere regulated by the quantity of stock
to be employed, in proportion to the quantity of the employment,
or of the business which must be done by it. But the quantity
of the employment, or of the business to be done by stock, could
neither be increased nor diminished by any tax upon the interest
of money. If the quantity of the stock to be employed, therefore,
was neither increased nor diminished by it, the ordinary rate of
profit would necessarily remain the same. But the portion of this
profit, necessary for compensating the risk and trouble of the
employer, would likewise remain the same ; that risk and trouble
being in no respect altered. The residue, therefore, that portion
which belongs to the owner of the stock, and which pays the
interest of money, would necessarily remain the same too. At
first sight, therefore, the interest of money seems to be a
subject as fit to be taxed directly as the rent of land.

There are, however, two different circumstances, which render the
interest of money a much less proper subject of direct taxation
than the rent of land.

First, the quantity and value of the land which any man
possesses, can never be a secret, and can always be ascertained
with great exactness. But the whole amount of the capital stock
which he possesses is almost always a secret, and can scarce ever
be ascertained with tolerable exactness. It is liable, besides,
to almost continual variations. A year seldom passes away,
frequently not a month, sometimes scarce a single day, in which
it does not rise or fall more or less. An inquisition into every
man's private circumstances, and an inquisition which, in order
to accommodate the tax to them, watched over all the fluctuations
of his fortune, would be a source of such continual and endless
vexation as no person could support.

Secondly, land is a subject which cannot be removed; whereas
stock easily may. The proprietor of land is necessarily a citizen
of the particular country in which his estate lies. The
proprietor of stock is properly a citizen of the world, and is
not necessarily attached to any particular country. He would be
apt to abandon the country in which he was exposed to a vexatious
inquisition, in order to be assessed to a burdensome tax ; and
would remove his stock to some other country, where he could
either carry on his business, or enjoy his fortune more at his
ease. By removing his stock, he would put an end to all the
industry which it had maintained in the country which he left.
Stock cultivates land ; stock employs labour. A tax which tended
to drive away stock from any particular country, would so far
tend to dry up every source of revenue, both to the sovereign and
to the society. Not only the profits of stock, but the rent of
land, and the wages of labour, would necessarily be more or less
diminished by its removal.

The nations, accordingly, who have attempted to tax the revenue
arising from stock, instead of any severe inquisition of this
kind, have been obliged to content themselves with some very
loose, and, therefore, more or less arbitrary estimation. The
extreme inequality and uncertainty of a tax assessed in this
manner, can be compensated only by its extreme moderation; in
consequence of which, every man finds himself rated so very much
below his real revenue, that he gives himself little disturbance
though his neighbour should be rated somewhat lower.

By what is called the land tax in England, it was intended that
the stock should be taxed in the same proportion as land. When
the tax upon land was at four shillings in the pound, or at
one-fifth of the supposed rent, it was intended that stock should
be taxed at one-fifth of the supposed interest. When the present
annual land tax was first imposed, the legal rate of interest was
six per cent. Every hundred pounds stock, accordingly, was
supposed to be taxed at twenty-four shillings, the fifth part of
six pounds. Since the legal rate of interest has been reduced to
five per cent. every hundred pounds stock is supposed to be taxed
at twenty shillings only. The sum to be raised, by what is called
the land tax, was divided between the country and the principal
towns. The greater part of it was laid upon the country; and of
what was laid upon the towns, the greater part was assessed upon
the houses. What remained to be assessed upon the stock or trade
of the towns (for the stock upon the land was not meant to be
taxed) was very much below the real value of that stock or trade.
Whatever inequalities, therefore, there might be in the original
assessment, gave little disturbance. Every parish and district
still continues to be rated for its land, its houses, and its
stock, according to the original assessment; and the almost
universal prosperity of the country, which, in most places, has
raised very much the value of all these, has rendered those
inequalities of still less importance now. The rate, too, upon
each district, continuing always the same, the uncertainty of
this tax, so far as it might he assessed upon the stock of any
individual, has been very much diminished, as well as rendered of
much less consequence. If the greater part of the lands of
England are not rated to the land tax at half their actual value,
the greater part of the stock of England is, perhaps, scarce
rated at the fiftieth part of its actual value. In some towns,
the whole land tax is assessed upon houses; as in Westminster,
where stock and trade are free. It is otherwise in London.

In all countries, a severe inquisition into the circumstances of
private persons has been carefully avoided.

At Hamburg, {Memoires concernant les Droits, tom. i, p.74} every
inhabitant is obliged to pay to the state one fourth per cent. of
all that he possesses; and as the wealth of the people of Hamburg
consists principally in stock, this tax maybe considered as a tax
upon stock. Every man assesses himself, and, in the presence
of the magiatrate, puts annually into the public coffer a certain
sum of money, which he declares upon oath, to be one fourth per
cent. of all that he possesses, but without declaring what it
amounts to, or being liable to any examination upon that subject.
This tax is generally suppused to be paid with great fidelity. In
a small republic, where the people have entire confidence in
their magistrates, are convinced of the necessity of the tax for
the support of the state, and believe that it will be faithfully
applied to that purpose, such conscientious and voluntary payment
may sometimes be expected. It is not peculiar to the people of
Hamburg.

The canton of Underwald, in Switzerland, is frequently ravaged by
storms and inundations, and it is thereby exposed to
extraordinary expenses. Upon such occasions the people
assemble, and every one is said to declare with the greatest
frankness what he is worth, in order to be taxed accordingly. At
Zurich, the law orders, that in cases of necessity, every one
should be taxed in proportion to his revenue; the amount of which
he is obliged to declare upon oath. They have no suspicion, it is
said, that any of their fellow citizens will deceive them.
At Basil, the principal revenue of the state arises from a small
custom upon goods exported. All the citizens make oath, that
they will pay every three months all the taxes imposed by law.
All merchants, and even all inn-keepers, are trusted with keeping
themselves the account of the goods which they sell, either
within or without the territory. At the end of every three
months, they send this account to the treasurer, with the amount
of the tax computed at the bottom of it. It is not suspected
that the revenue suffers by this confidence.{ Memoires concernant
les Droits, tom. i p. 163, 167,171.}

To oblige every citizen to declare publicly upon oath, the amount
of his fortune, must not, it seems, in those Swiss cantons, be
reckoned a hardship. At Hamburg it would be reckoned the
greatest. Merchants engaged in the hazardous projects of trade,
all tremble at the thoughts of being obliged, at all times, to
expose the real state of their circumstances. The ruin of their
credit, and the miscarriage of their projects, they foresee,
would too often be the consequence. A sober and parsimonious
people, who are strangers to all such projects, do not feel that
they have occasion for any such concealment.

In Holland, soon after the exaltation of the late prince of
Orange to the stadtholdership, a tax of two per cent. or the
fiftieth penny, as it was called, was imposed upon the whole
substance of every citizen. Every citizen assesed himself, and
paid his tax, in the same manner as at Hamburg, and it was in
general supposed to have been paid with great fidelity. The
people had at that time the greatest affection for their new
government, which they had just established by a general
insurrection. The tax was to be paid but once, in order to
relieve the state in a particular exigency. It was, indeed, too
heavy to be permanent. In a country where the market rate of
interest seldom exceeds three per cent., a tax of two per cent.
amounts to thirteen shillings and four pence in the pound, upon
the highest neat revenue which is commonly drawn from stock. It
is a tax which very few people could pay, without encroaching
more or less upon their capitals. In a particular exigency, the
people may, from great public zeal, make a great effort, and give
up even a part of their capital, in order to relieve the state.
But it is impossible that they should continue to do so for any
considerable time; and if they did, the tax would soon ruin them
so completely, as to render them altogether incapable of
supporting the state.

The tax upon stock, imposed by the land tax bill in England,
though it is proportioned to the capital, is not intended to
diminish or, take away any part of that capital. It is meant
only to be a tax upon the interest of money, proportioned to that
upon the rent of land; so that when the latter is at four
shillings in the pound, the former may be at four shillings in
the pound too. The tax at Hamburg, and the still more moderate
taxes of Underwald and Zurich, are meant, in the same manner, to
be taxes, not upon the capital, but upon the interest or neat
revenue of stock. That of Holland was meant to be a tax upon the
capital.

Taxes upon the Profit of particular Employments.

In some countries, extraordinary taxes are imposed upon the
profits of stock ; sometimes when employed in particular branches
of trade, and sometimes when employed in agriculture.

Of the former kind, are in England, the tax upon hawkers and
pedlars, that upon hackney-coaches and chairs, and that which the
keepers of ale-houses pay for a licence to retail ale and
spiritous liquors. During the late war, another tax of the same
kind was proposed upon shops. The war having been undertaken, it
was said, in defence of the trade of the country, the merchants,
who were to profit by it, ought to contribute towards the support
of it.

A tax, however, upon the profits of stock employed in any
particular branch of trade, can never fall finally upon the
dealers (who must in all ordinary cases have their reasonable
profit, and, where the competition is free, can seldom have more
than that profit), but always upon the consumers, who must be
obliged to pay in the price of the goods the tax which the dealer
advances ; and generally with some overcharge.

A tax of this kind, when it is proportioned to the trade of the
dealer, is finally paid by the consumer, and occasions no
oppression to the dealer. When it is not so proportioned, but is
the same upon all dealers, though in this case, too, it is
finally paid by the consumer, yet it favours the great, and
occasions some oppression to the small dealer. The tax of
five shillings a-week upon every hackney coach, and that of ten
shillings a-year upon every hackney chair, so far as it is
advanced by the different keepers of such coaches and chairs, is
exactly enough proportioned to the extent of their respective
dealings. It neither favours the great, nor oppresses the smaller
dealer. The tax of twenty shillings a-year for a licence to
sell ale; of forty shillings for a licence to sell spiritous
liquors ; and of forty shillings more for a licence to sell wine,
being the same upon all retailers, must necessarily give some
advantage to the great, and occasion some oppression to the small
dealers. The former must find it more easy to get back the tax in
the price of their goods than the latter. The moderation of the
tax, however, renders this inequality of less importance; and it
may to many people appear not improper to give some
discouragement to the multiplication of little ale-houses.
The tax upon shops, it was intended, should be the same upon all
shops. It could not well have been otherwise. It would have been
impossible to proportion, with tolerable exactness, the tax upon
a shop to the extent of the trade carried on in it, without such
an inquisition as would have been altogether insupportable in a
free country. If the tax had been considerable, it would have
oppressed the small, and forced almost the whole retail trade
into the hands of the great dealers. The competition of the
former being taken away, the latter would have enjoyed a monopoly
of the trade ; and, like all other monopolists, would soon have
combined to raise their profits much beyond what was necessary
for the payment of the tax. The final payment, instead of falling
upon the shop-keeper, would have fallen upon the consumer, with a
considerable overcharge to the profit of the shop-keeper. For
these reasons, the project of a tax upon shops was laid aside,
and in the room of it was substituted the subsidy, 1759.

What in France is called the personal taille, is perhaps, the
most important tax upon the profits of stock employed in
agriculture, that is levied in any part of Europe.

In the disorderly state of Europe, during the prevalence of the
feudal government, the sovereign was obliged to content himself
with taxing those who were too weak to refuse to pay taxes. The
great lords, though willing to assist him upon particular
emergencies, refused to subject themselves to any constant tax,
and he was not strong enough to force them. The occupiers of land
all over Europe were, the greater part of them, originally
bond-men. Through the greater part of Europe, they were gradually
emancipated. Some of them acquired the property of landed
estates, which they held by some base or ignoble tenure,
sometimes under the king, and sometimes under some other great
lord, like the ancient copy-holders of England. Others, without
acquiring the property, obtained leases for terms of years, of
the lands which they occupied under their lord, and thus became
less dependent upon him. The great lords seem to have beheld the
degree of prosperity and independency, which this inferior order
of men had thus come to enjoy, with a malignant and contemptuous
indignation, and willingly consented that the sovereign should
tax them. In some countries, this tax was confined to the lands
which were held in property by an ignoble tenure ; and, in this
case, the taille was said to be real. The land tax established by
the late king of Sardinia, and the taille in the provinces of
Languedoc, Provence, Dauphine, and Britanny ; in the generality
of Montauban, and in the elections of Agen and Condom, as well as
in some other districts of France; are taxes upon lands held in
property by an ignoble tenure. In other countries, the tax
was laid upon the supposed profits of all those who held, in farm
or lease, lands belonging to other people, whatever might be the
tenure by which the proprietor held them ; and in this case, the
taille was said to be personal. In the greater part of those
provinces of France, which are called the countries of elections,
the taille is of this kind. The real taille, as it is imposed
only upon a part of the lands of the country, is necessarily an
unequal, but it is not always an arbitrary tax, though it is so
upon some occasions. The personal taille, as it is intended to be
proportioned to the profits of a certain class of people, which
can only be guessed at, is necessarily both arbitrary and
unequal.

In France, the personal taille at present (1775) annually imposed
upon the twenty generalities, called the countries of elections,
amounts to 40,107,239 livres, 16 sous. {Memoires concernant les
Droits, etc tom. ii, p.17.} the proportion in which this sum is
assessed upon those different provinces, varies from year to
year, according to the reports which are made to the king's
council concerning the goodness or badness of the crops, as well
as other circumstances, which may either increase or diminish
their respective abilities to pay. Each generality is divided
into a certain number of elections; and the proportion in which
the sum imposed upon the whole generatlity is divided among those
different elections, varies likewise from year to year, according
to the reports made to the council concerning their respective
abilities. It seems impossible, that the council, with the
best intentions, can ever proportion, with tolerable exactness,
either of these two assessments to the real abilities of the
province or district upon which they are respectively laid.
Ignorance and misinformation must always, more or less. mislead
the most upright council. The proportion which each parish ought
to support of what is assessed upon the whole election, and that
which each individual ought to support of what is assessed upon
his particular parish, are both in the same manner varied from
year to year, according as circumstances are supposed to require.
These circumstances are judged of, in the one case, by the
officers of the election, in the other, by those of the parish;
and both the one and the other are, more or less, under the
direction and influence of the intendant. Not only ignorance
and misinformation, but friendship, party animosity, and private
resentment, are said frequently to mislead such assessors. No man
subject to such a tax, it is evident, can ever be certain, before
he is assessed, of what he is to pay. He cannot even be certain
after he is assessed. If any person has been taxed who ought to
have been exempted, or if any person has been taxed beyond his
proportion, though both must pay in the mean time, yet if they
complain, and make good their complaints, the whole parish is
reimposed next year, in order to reimburse them. If any of
the contributors become bankrupt or insolvent, the collector is
obliged to advance his tax ; and the whole parish is reimposed
next year, in order to reimburse the collector. If the collector
himself should become bankrupt, the parish which elects him must
answer for his conduct to the receiver-general of the election.
But, as it might be troublesome for the receiver to prosecute the
whole parish, he takes at his choice five or six of the richest
contributors, and obliges them to make good what had been lost by
the insolvency of the collector. The parish is afterwards
reimposed, in order to reimburse those five or six. Such
reimpositions are always over and above the taille of the
particular year in which they are laid on.

When a tax is imposed upon the profits of stock in a particular
branch of trade, the traders are all careful to bring no more
goods to market than what they can sell at a price sufficient to
reimburse them from advancing the tax. Some of them withdraw a
part of their stocks from the trade, and the market is more
sparingly supplied than before. The price of the goods rises, and
the final payment of the tax falls upon the consumer. But when a
tax is imposed upon the profits of stock employed in agriculture,
it is not the interest of the farmers to withdraw any part of
their stock from that employment. Each farmer occupies a certain
quantity of land, for which he pays rent. For the proper
cultivation of this land, a certain quantity of stock is
necessary; and by withdrawing any part of this necessary
quantity, the farmer is not likely to be more able to pay either
the rent or the tax. In order to pay the tax, it can never be his
interest to diminish the quantity of his produce, nor
consequently to supply the market more sparingly than before. The
tax, therefore, will never enable him to raise the price of his
produce, so as to reimburse himself, by throwing the final
payment upon the consumer. The farmer, however, must have his
reasonable profit as well as every other dealer, otherwise he
must give up the trade. After the imposition of a tax of this
kind, he can get this reasonable profit only by paying less rent
to the landlord. The more he is obliged to pay in the way of tax,
the less he can afford to pay in the way of rent. A tax of this
kind, imposed during the currency of a lease, may, no doubt,
distress or ruin the farmer. Upon the renewal of the lease, it
must always fall upon the landlord.

In the countries where the personal taille takes place, the
farmer is commonly assessed in proportion to the stock which he
appears to employ in cultivation. He is, upon this account,
frequently afraid to have a good team of horses or oxen, but
endeavours to cultivate with the meanest and most wretched
instrutnents of husbandry that he can. Such is his distrust in
the justice of his assessors, that he counterfeits poverty, and
wishes to appear scarce able to pay anything, for fear of being
obliged to pay too much. By this miserable policy, he does not,
perhaps, always consult his own interest in the most effectual
manner ; and he probably loses more by the diminution of his
produce, than he saves by that of his tax. Though, in consequence
of this wretched cultivation, the market is, no doubt, somewhat
worse supplied; yet the small rise of price which this may
occasion, as it is not likely even to indemnify the farmer for
the diminution of his produce, it is still less likely to enable
him to pay more rent to the landlord. The public, the farmer, the
landlord, all suffer more or less by this degraded cultivation.
That the personal taille tends, in many different ways, to
discourage cultivation, and consequently to dry up the principal
source of the wealth of every great country, I have already had
occasion to observe in the third book of this Inquiry.

What are called poll-taxes in the southern provinces of North
America, and the West India islands, annual taxes of so much
a-head upon every negro, are properly taxes upon the profits of a
certain species of stock employed in agriculture. As the
planters, are the greater part of them, both farmers and
landlords, the final payment of the tax falls upon them in their
quality of landlords, without any retribution.

Taxes of so much a head upon the bondmen employed in cultivation,
seem anciently to have been common all over Europe. There
subsists at present a tax of this kind in the empire of Russia.
It is probably upon this account that poll-taxes of all kinds
have often been represented as badges of slavery. Every tax,
however, is, to the person who pays it, a badge, not of slavery,
but of liberty. It denotes that he is subject to government,
indeed ; but that, as he has some property, he cannot himself be
the property of a master. A poll tax upon slaves is altogether
different from a poll-tax upon freemen. The latter is paid by the
persons upon whom it is imposed; the former, by a different set
of persons. The latter is either altogether arbitrary, or
altogether unequal, and, in most cases, is both the one and the
other; the former, though in some respects unequal, different
slaves being of different values, is in no respect arbitrary.
Every master, who knows the number of his own slaves, knows
exactly what he has to pay. Those different taxes, however, being
called by the same name, have been considered as of the same
nature.

The taxes which in Holland are imposed upon men and maid
servants, are taxes, not upon stock, but upon expense; and so far
resemble the taxes upon consumable commodities. The tax of a
guinea a-head for every man-servant, which has lately been
imposed in Great Britain, is of the same kind. It falls heaviest
upon the middling rank. A man of two hundred a-year may keep a
single man-servant. A man of ten thousand a-year will not keep
fifty. It does not affect the poor.

Taxes upon the profits of stock, in particular employments, can
never affect the interest of money. Nobody will lend his money
for less interest to those who exercise the taxed, than to those
who exercise the untaxed employments. Taxes upon the revenue
arising from stock in all employments, where the government
attempts to levy them with any degree of exactness, will, in many
cases, fall upon the interest of money. The vingtieme, or
twentieth penny, in France, is a tax of the same kind with what
is called the land tax in England, and is assessed, in the same
manner, upon the revenue arising upon land, houses, and stock. So
far as it affects stock, it is assessed, though not with great
rigour, yet with much more exactness than that part of the land
tax in England which is imposed upon the same fund. It, in many
cases, falls altogether upon the interest of money. Money is
frequently sunk in France, upon what are called contracts for the
constitution of a rent ; that is, perpetual annuities, redeemable
at any time by the debtor, upon payment of the sum originally
advanced, but of which this redemption is not exigible by the
creditor except in particular cases. The vingtieme seems not
to have raised the rate of those annuities, though it is exactly
levied upon them all.

APPENDIX TO ARTICLES I. AND II. ˜ Taxes upon the Capital Value of
Lands, Houses, and Stock.

While property remains in the possession of the same person,
whatever permanent taxes may have been imposed upon it, they have
never been intended to diminish or take away any part of its
capital value, but only some part of the revenue arising from it.
But when property changes hands, when it is transmitted either
from the dead to the living, or from the living to the living,
such taxes have frequently been imposed upon it as necessarily
take away some part of its capital value.

The transference of all sorts of property from the dead to the
living, and that of immoveable property of land and houses from
the living to the living, are transactions which are in their
nature either public and notorious, or such as cannot be long
concealed. Such transactions, therefore, may be taxed directly.
The transference of stock or moveable property, from the living
to the living, by the lending of money, is frequently a secret
transaction, and may always be made so. It cannot easily,
therefore, be taxed directly. It has been taxed indirectly in two
different ways; first, by requiring that the deed, containing the
obligation to repay, should be written upon paper or parchment
which had paid a certain stamp duty, otherwise not to be valid ;
secondly, by requiring, under the like penalty of invalidity,
that it should be recorded either in a public or secret register,
and by imposing certain duties upon such registration. Stamp
duties, and duties of registration, have frequently been imposed
likewise upon the deeds transferring property of all kinds from
the dead to the living, and upon those transferring immoveable
property from the living to the living ; transactions which might
easily have been taxed directly.

The vicesima hereditatum, or the twentieth penny of inheritances,
imposed by Augustus upon the ancient Romans, was a tax upon the
transference of property from the dead to the living. Dion
Cassius, { Lib. 55. See also Burman. de Vectigalibus Pop. Rom.
cap. xi. and Bouchaud de l'impot du vingtieme sur les
successions.} the author who writes concerning it the least
indistinctly, says, that it was imposed upon all successions,
legacies and donations, in case of death, except upon those to
the nearest relations, and to the poor.

Of the same kind is the Dutch tax upon successions. { See
Memoires concernant les Droits, etc. tom i, p. 225.} Collateral
successions are taxed according to the degree of relation, from
five to thirty per cent. upon the whole value of the succession.
Testamentary donations, or legacies to collaterals, are subject
to the like duties. Those from husband to wife, or from wife to
husband, to the fiftieth penny. The luctuosa hereditas, the
mournful succession of ascendants to descendants, to the
twentieth penny only. Direct successions, or those of
descendants to ascendants, pay no tax. The death of a father, to
such of his children as live in the same house with him, is
seldom attended with any increase, and frequently with a
considerable diminution of revenue ; by the loss of his industry,
of his office, or of some life-rent estate, of which he may have
been in possession. That tax would be cruel and oppressive,
which aggravated their loss, by taking from them any part of his
succession. It may, however, sometimes be otherwise with
those children, who, in the language of the Roman law, are said
to be emancipated; in that of the Scotch law, to be
foris-familiated ; that is, who have received their portion, have
got families of their own, and are supported by funds separate
and independent of those of their father. Whatever part of his
succession might come to such children, would be a real addition
to their fortune, and might, therefore, perhaps, without more
inconveniency than what attends all duties of this kind, be
liable to some tax.

The casualties of the feudal law were taxes upon the transference
of land, both from the dead to the living, and from the living to
the living. In ancient times, they constituted, in every part
of Europe, one of the principal branches of the revenue of the
crown.

The heir of every immediate vassal of the crown paid a certain
duty, generally a year's rent, upon receiving the investiture of
the estate. If the heir was a minor, the whole rents of the
estate. during the continuance of the minority, devolved to the
superior, without any other charge besides the maintenance of the
minor, and the payment of the widow's dower, when there happened
to be a dowager upon the land. When the minor came to de of age,
another tax, called relief, was still due to the superior, which
generally amounted likewise to a year's rent. A long minority,
which, in the present times, so frequently disburdens a great
estate of all its incumbrances. and restores the family to their
ancient splendour, could in those times have no such effect. The
waste, and not the disincumbrance of the estate, was the common
effect of a long minority.

By a feudal law, the vassal could not alienate without the
consent of his superior, who generally extorted a fine or
composition on granting it. This fine, which was at first
arbitrary, came, in many countries, to be regulated at a certain
portion of the price of the land. In some countries, where the
greater part of the other feudal customs have gone into disuse,
this tax upon the alienation of land still continues to make a
very considerable branch of the revenue of the sovereign. In the
canton of Berne it is so high as a sixth part of the price of all
noble fiefs, and a tenth part of that of all ignoble
ones.{Memoires concernant les Droits, etc, tom.i p.154} In the
canton of Lucern, the tax upon the sale of land is not universal,
and takes place only in certain districts. But if any person
sells his land in order to remove out of the territory, he pays
ten per cent. upon the whole price of the sale. { id. p.157.}
Taxes of the same kind, upon the sale either of all lands, or of
lands held by certain tenures, take place in many other
countries, and make a more or less considerable branch of the
revenue of the sovereign.

Such transactions may be taxed indirectly, by means either of
stamp duties, or of duties upon registration; and those duties
either may, or may not, be proportioned to the value of the
subject which is transferred.

In Great Britain, the stamp duties are higher or lower, not so
much according to the value of the property transferred (an
eighteen-penny or half-crown stamp being sufficient upon a bond
for the largest sum of money), as according to the nature of the
deed. The highest do not exceed six pounds upon every sheet of
paper, or skin of parchment ; and these high duties fall chiefly
upon grants from the crown, and upon certain law proceedings,
without any regard to the value of the subject. There are, in
Great Britain, no duties on the registration of deeds or
writings, except the fees of the officers who keep the register ;
and these are seldom more than a reasonable recompence for their
labour. The crown derives no revenue from them.

In Holland {Memoires concernant les Droits, etc. tom. i. p 223,
224, 225.} there are both stamp duties and duties upon
registration ; which in some cases are, and in some are not,
proportioned to the value of the property transferred. All
testaments must be written upon stamped paper, of which the price
is proportioned to the property disposed of ; so that there are
stamps which cost from three pence or three stivers a-sheet, to
three hundred florins, equal to about twenty-seven pounds ten
shillings of our money. If the stamp is of an inferior price to
what the testator ought to have made use of, his succession is
confiscated. This is over and above all their other taxes on
succession. Except bills of exchange, and some other mercantile
bills, all other deeds, bonds, and contracts, are subject to a
stamp duty. This duty, however, does not rise in proportion to
the value of the subject. All sales of land and of houses, and
all mortgages upon either, must be registered, and, upon
registration, pay a duty to the state of two and a-half per cent.
upon the amount of the price or of the mortgage. This duty is
extended to the sale of all ships and vessels of more than two
tons burden, whether decked or undecked. These, it seems, are
considered as a sort of houses upon the water. The sale of
moveables, when it is ordered by a court of justice, is subject
to the like duty of two and a-half per cent.

In France, there are both stamp duties and duties upon
registration. The former are considered as a branch of the
aids of excise, and, in the provinces where those duties take
place, are levied by the excise officers. The latter are
considered as a branch of the domain of the crown and are levied
by a different set of officers.

Those modes of taxation by stamp duties and by duties upon
registration, are of very modern invention. In the course of
little more than a century, however, stamp duties have, in
Europe, become almost universal, and duties upon registration
extremely common. There is no art which one government sooner
learns of another, than that of draining money from the pockets
of the people.

Taxes upon the transference of property from the dead to the
living, fall finally, as well as immediately, upon the persons to
whom the property is transferred. Taxes upon the sale of
land fall altogether upon the seller. The seller is almost
always under the necessity of selling, and must, therefore, take
such a price as he can get. The buyer is scarce ever under the
necessity of buying, and will, therefore, only give such a price
as he likes. He considers what the land will cost him, in tax and
price together. The more he is obliged to pay in the way of tax,
the less he will be disposed to give in the way of price. Such
taxes, therefore, fall almost always upon a necessitous person,
and must, therefore, be frequently very cruel and oppressive.
Taxes upon the sale of new-built houses, where the building is
sold without the ground, fall generally upon the buyer, because
the builder must generally have his profit ; otherwise he must
give up the trade. If he advances the tax, therefore, the buyer
must generally repay it to him. Taxes upon the sale of old
houses, for the same reason as those upon the sale of land, fall
generally upon the seller ; whom, in most cases, either
conveniency or necessity obliges to sell. The number of new-built
houses that are annually brought to market, is more or less
regulated by the demand. Unless the demand is such as to afford
the builder his profit, after paying all expenses, he will build
no more houses. The number of old houses which happen at any time
to come to market, is regulated by accidents, of which the
greater part have no relation to the demand. Two or three great
bankruptcies in a mercantile town, will bring many houses to
sale, which must be sold for what can be got for them. Taxes upon
the sale of ground-rents fall altogether upon the seller, for the
same reason as those upon the sale of lands. Stamp duties, and
duties upon the registration of bonds and contracts for borrowed
money, fall altogether upon the borrower, and, in fact, are
always paid by him. Duties of the same kind upon law proceedings
fall upon the suitors. They reduce to both the capital value of
the subject in dispute. The more it costs to acquire any
property, the less must be the neat value of it when acquired.

All taxes upon the transference of property of every kind, so far
as they diminish the capital value of that property, tend to
diminish the funds destined for the maintenance of productive
labour. They are all more or less unthrifty taxes that
increase the revenue of the sovereign, which seldom maintains any
but unproductive labourers, at the expense of the capital of the
people, which maintains none but productive.


Such taxes, even when they are proportioned to the value of the
property transferred, are still unequal; the frequency of
transference not being always equal in property of equal value.
When they are not proportioned to this value, which is the case
with the greater part of the stamp duties and duties of
registration, they are still more so. They are in no respect
arbitrary, but are, or may be, in all cases, perfectly clear and
certain. Though they sometimes fall upon the person who is not
very able to pay, the time of payment is, in most cases,
sufficiently convenient for h