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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 twentyfour 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

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