An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

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.