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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

abovementioned 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 twentyfive 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

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