Robert Giffen

“ To effect what they intend, the agitators must not merely seize on the property of a few, they must confiscate what are as much earnings as those of a mechanic or a laborer, and the wages of the most skilled mechanics and artisans themselves. The agitation is, in fact, to level down, to diminish the reward of laborers who receive a large wage because they can do the work the community requires, the proof being that in a market without favor they get the wage, and to increase the reward of other laborers beyond what in the same free market the community would freely give them. ”

“ The land tax is quite unimportant, being an ancient tax upon an old assessment which has long become obsolete, and it interests economists most of all by the illustration it furnishes of what may be called a rent charge tax—a tax, that is, which has been so long in existence and so fixed in its basis that it becomes in reality a charge upon the property, and not a direct burden upon the person who pays it, as the income tax is upon the person who pays it or for whom it is paid. ”

“ The United Kingdom is a conspicuous instance of a country which has a great excess of imports over exports in consequence of its large lending abroad in former times; while its accounts are specially affected by the magnitude of its services as a trading nation carrying passengers and goods all over the world, which do not result, however, in so-called “exports.” The United States, on the other hand, is a conspicuous instance of an indebted nation, which has or had until lately few or no sums to its credit in foreign trade except the visible exports. ”

“ Again a proof, I think, of the greater diffusion of wealth so far as the assessment of income to income-tax under Schedule D may be taken as a sign of the person assessed having wealth of some kind, which I fear is not always the case. If the owners of this income, at least of the smaller incomes, are to be considered as not among the capitalists, but among the working-classes—a very arguable proposition—then the increase of the number of incomes from £150 up to say £1,000 a year is a sign of the increased earnings of working-classes, which are not usually thought of by that name. ”

“ To test the question as to whether there has been any disproportionate increase of capital, and of the income from it, in yet another way, I have endeavored to make an analysis of the income-tax returns themselves, distinguishing in them what appears to be the income of idle capital from income which is derived not so much from the capital itself as from the labor bestowed in using the capital. ”

“ In studying equality, moreover, local taxation must be brought into view, with even more impracticable differences of opinion as to the real incidence of the taxation. The moment rates are brought into question it is seen at once how impossible it would be to establish equality among tax-payers, when owners on one side and occupiers on the other claim that they each bear the burden of the same taxes, and economists favour the opinion that much of the burden is in the nature of a rent charge on the property, and in any case is equally diffused over the whole community. ”

“ Now the poor-relief and other old burdens are much the same, but the total is swollen by a vast expenditure for sanitary, educational, and similar purposes, of all of which the masses of the population get the benefit. To a great deal of this expenditure we may attach the highest value. It does not give bread or clothing to the working-man, but it all helps to make life sweeter and better, and to open out careers even to the poorest. The value of the free library, for instance, in a large city, is simply incalculable. ”

“ Generally, then, it may be affirmed that taxation in its essential nature cannot be thought of as a good instrument for promoting trade and the advancement of a country. So far as it operates at all, it operates by diverting trade from the channels in which it would naturally flow into other channels, and this diversion of industry, so far as it goes, must involve loss. People are induced to do things they would otherwise leave alone, or to leave alone what they would otherwise do, because money is given to them out of the pockets of the tax-payers to make it worth their while to do so ”

“ It is something to know that whether a better regime is conceivable or not, human nature being what it is now (and I am one of those who think that the régime is the best, the general result of a vast community living as the British nation does, with all the means of healthy life and civilization at command, being little short of a marvel if we only consider for a moment what vices of anarchy and misrule in society have had to be rooted out to make this marvel) ; still, whether best or not, it is something to know that vast improvement has been possible with this régime. ”

“ In a question of taxation, however, for the purpose of meeting the expenses of the government, all such duties must be ruled out. Taxes, as instruments for advancing the prosperity of a country, are things unknown to the study of “ taxation ” in the proper sense of the word. The only proper object of taxation is to meet the expenses of the state, and when taxes are used primarily or mainly for some other object they can only be justified by political and economic reasons of a different order from anything that has been under discussion. ”

“ The children of the masses are, in fact, now obtaining a good education all round, while fifty years ago the masses had either no education at all or a comparatively poor one. Dropping statistics for the moment, I should like to give my own testimony to an observed fact of social life—that there is nothing so striking or so satisfactory to those who can carry their memories back nearly forty years, as to observe the superiority of the education of the masses at the present time to what it was then. ”

“ The frank recognition that local income taxes are impossible, and that taxation on property for local purposes can only be applied to real property, where it becomes, usually or frequently, in the nature of a rent-charge, would have saved the legislature and the public an infinity of laborious discussion. ”

“ One is, that, apart from all objections of principle to schemes of confiscating capital—land nationalization, or collectivism, or whatever they may be called—the masses could not hope to have much to divide by any such schemes. Taking the income from capital at £400,000,000, we must not suppose that the whole of that would be divisible among the masses if capital were confiscated. What the capitalist classes spend is a very different thing from what they make. The annual savings of the country now exceed £200,000,000, being made as a rule, though not exclusively, by the capitalist classes. ”

“ They are both books of observation and description. The English constitution is described, not from law books and as a lawyer would describe it, but from the actual working, as Bagehot himself had witnessed it, in his contact with ministers and the heads of government departments, and with the life of the society in which the politicians moved. The true springs and method of action are consequently described with a vivid freshness which gives the book a wonderful charm, and makes it really a new departure in the study of politics. ”

“ The question is not one which would naturally excite much interest among those who would answer the primary question as to whether the working-classes have gained or not, as I have done, in the affirmative. Where all are getting on, it does not seem very practical in those who are getting on slowly to grudge the quicker advance of others. Usually those who put the question have some vague idea that the capitalist classes, as they are called, secure for themselves all the benefits of the modern advance in wealth; the rich, it is said, are becoming richer, and the poor are becoming poorer. ”

“ The phrase “balance of trade,” then, appears to be an application of a trader’s language in his own business to the larger affairs of nations or rather of the aggregate of individuals in a nation engaged in foreign trade. A trader in his own books sets his sales against his purchases, and the amount by which the former exceed the latter is his trade balance or profit. What is true of the individual, it is assumed, must be true of a nation or of the aggregate of individual traders in a nation engaged in the foreign trade. ”

“ No one can contemplate the condition of the masses of the people without desiring something like a revolution for the better. Still, the fact of progress in the last fifty years—progress which is really enormous when a comparison is made with the former state of things—must be recognized. Discontent with the present must not make us forget that things have been so much worse.
But the question is raised. Have the working-classes gained in proportion with others by the development of material wealth during the last fifty years? ”

“ It is contended, for instance, that the revenue from land obtained by the government of India is in reality of the nature of a land rent—a species of property owned by the government. But the fact of a government levying so general a charge may be held ipso facto to convert the charge into a tax, having much the same economic effects and consequences as a tax. When, moreover, a state receives a revenue from property, some of the economic consequences may be the same as if it received the money by means of a tax. ”

“ The system under which large capitals are in a few hands may, in fact, have its good side in this, that the Jay Goulds, Vanderbilts, and Rothschilds can not spend their income. The consequent accumulation of capital is, in fact, one of the reasons why the reward for labor is so high, and the masses get nearly all the benefit of the great increase of production. The other remark I have to make is that, if the object really aimed at by those who talk of land nationalization and the like is carried out, the people who will suffer are those who receive large wages. ”

“ Recent discussion, however, has gone rather to the point which Adam Smith neglected, that of inequality generally, not merely as between different sorts of income, but as between individuals and classes. The whole burden of taxation, it is maintained, should fall equally upon classes and individuals as far as possible, and, if necessary, taxes falling equally upon special sources of private revenue should be balanced against each other in order to obtain the desired result. ”

“ The whole of Schedule A is thus assigned to capital, although it is well known that not even in Schedule A is the income obtained without exertion and care and some risk of loss, which are entitled to remuneration. In Schedule D also I have allowed that all the income from public companies and foreign investments is from idle capital, although here the vigilance necessary and the risks attendant on the business are really most serious, and part of the so-called profit is not really interest on idle capital at all, but strictly the remuneration of labor. ”