Joseph Shield Nicholson

“ It is, however, obvious that the confiscation of rent would, seeing that land has for generations been in the circle of exchangeable commodities, strike at the roots of the institution of private property. ”

“ A good system of taxation ought to provide for a self-acting increase in the revenue in proportion as the population and the consequent demands for governmental expenditure increase. It has been found by experience that an old tax causes less inconvenience than a new tax of smaller amount, a fact which is so striking in some cases as to have given rise to the saying that an old tax is no tax. ”

“ If it is just to tax A, it is just to tax B under precisely similar circumstances. Thus stated, the principle seems almost formal, but for practical purposes small differences in circumstances may be neglected, and it is clear that in any great nation the taxpayers may be arranged in a limited number of groups, within each of which the constituent individuals may be regarded as similarly situated. A tax on rent, or wages, or profits would be obviously unequal if those in one place or employment were taxed while those in another were left free. ”

“ But in our own times taxes on capital are levied principally when property changes hands, and may be divided, as they are by Adam Smith, according as they are levied when property passes (a) from the dead to the living, (6) from the living to the living.
It is obvious, as regards incidence, that taxes of the first class (a) are the most direct of all taxes, in the sense that they cannot be transferred to other persons by the beneficiaries. The principal difficulties connected with the “death duties,” as they are often called, arise in connexion with the canon of equality of taxation. ”

“ There seems, however, to be no sufficient reason why a tax on labour should be transferred to the employer, except in the case where the wages are really at a minimum below which the supply of efficient labour could not be kept up. Even in this case, as Prof. Walker shows, there would probably be a degradation of labour before the rise in wages was effected. Certainly no practical statesman at the present time would venture to propose a direct tax on wages, under the idea that it would be transferred to the employer. ”

“ Theoretically it seems that, just as the farmer who takes land on rent offers more or less rent according to the burdens imposed on the land by rates, &c., so the purchaser of land will consider any expenses connected with its acquisition as part of the capital value, and thus any taxes on transfer will really fall on the sellers. If, however, the taxes are imposed in such a way as to fall less heavily on land when sold in larger than in small quantities, it is clear that the tendency will be for the differential portion of the tax at least to fall on the purchaser of a small amount ”

“ The income tax as at present levied is in reality not a single uniform tax, as might at first sight appear, but a tax on the various species of rent, interest, profits, and wages. The anomalies which arise from practically taking income as uniform have often been pointed out and acknowledged, but the authority of Mr Gladstone may be quoted in support of the view that the practical difficulties in the way of a readjustment more in accordance with theoretical principles are insuperable. ”

“ On smuggling Adam Smith elsewhere remarks that “to pretend to have any scruple about buying smuggled goods would in most countries be regarded as one of those pedantic pieces of hypocrisy which serve only to expose the person who affects to practise them to the suspicion of being a greater knave than his neighbours.” It may be observed that in practical politics it is generally taken for granted that a tax which can be evaded will be evaded, and indirect methods of taxation are to a great extent devices by which possibilities of evasion are restricted. ”

“ Economic rent arises from the superiority of advantage of any source in the production of a certain amount of utility over the least productive source which the conditions of demand and supply (including transmission to market) render it possible to employ. Thus, in the production of food, some lands have an advantage in fertility or situation ”

“ The Americans opposed to this absolute doctrine the maxim that taxation ought to be coincident with representation,—that only those who shared in the powers should have the burdens of government. If the latter opinion is strictly construed it would follow that all taxes on articles of universal consumption are unjust except in a country where all who have the natural have also the legal capacity of voting. ”

“ Some taxes are justified on the grounds of their convenience to the sovereign power, and others are increased or diminished in certain cases in accordance with the principle of equality of sacrifice; some are regarded as payments for services rendered by the state, others partake of the nature of sumptuary regulations or are approved on various social or moral grounds ; and sometimes the imposition of one productive tax involves, on the ground of simple equality, the adoption of similar taxes which are hardly worth collecting. ”

“ So far as the political existence of a state is concerned, this view seems to meet with general acquiescence even in modern times, when patriotism is often classed amongst the doubtful virtues, but no ideal of a perfect state has yet met with such acceptance in any nation as to render popular a complete neglect of private interests. ”

“ It is clear, however, that any taxes on commodities in general use must infringe this canon, whilst the distinction between "necessaries" and "luxuries," as Adam Smith pointed out, is difficult to draw in communities advancing in civilization; and certainly a considerable portion of the taxes on stimulants is, as a matter of fact, derived from persons whose incomes are below what is generally considered a reasonable minimum for the standard of comfort, and such persons would probably consider enforced abstinence a greater sacrifice than the payment of a direct tax. ”

“ In conclusion, it may be pointed out that a thorough investigation of the general principles of taxation must presuppose the principles of political philosophy, whilst a full inquiry into the incidence of particular species of taxes must presuppose the principles of political economy. ”

“ The interest on capital in any industrial area, lent on the same security, tends to equality. If, then, a tax is imposed on interest in every form, the incidence in the first place will be on the owners of capital. But two indirect consequences will follow. (1) As Adam Smith remarks, “ the proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country. ”

“ The object of taxation is in general to provide the state with an adequate revenue, but in all cases the indirect effects are important, and sometimes provision of revenue is considered of secondary importance. ”

“ It has been found possible to raise a considerable revenue by taxes on commodities, the payments of which by the consumers are made in insensible portions, when it would have been impossible to collect the same amount by direct taxation at comparatively long intervals. ”

“ Just as a general looks to the efficiency of his army as a whole, and is prepared to sacrifice any portion if necessary, so, it may be said, the state should not regard the particular interests of individuals, but should rather consider the nation as an organism, or, to adopt older phraseology, a leviathan. ”

“ A given amount of revenue is, as a rule, both from the point of view of the Government and its subjects, more conveniently raised from a small number of very productive taxes than from a larger number with smaller returns per unit. This was one of the principal financial reforms advocated by Adam Smith with reference to the customs duties, and has been carried out in the United Kingdom by Sir Eobert Peel and his successors. ”

“ Taxes on economic rent of various kinds, so heavy as to absorb the whole amount, have been advocated by some theorists on grounds noticed under Adam Smith’s first canon. It is said they would impose no burden on the state as a whole, that they would not affect production or accumulation, and even that the substitution of the state for private owners — who are simply nati consumere fruges — would really increase the wealth and power of the nation by compelling these unproductive consumers to work, and hy^ lightening the pressure of taxation on industry. ”

“ It is easy to show, as Mill does, that, if protection is taken in its narrowest signification, as a matter of fact the poor need more protection than the rich, but the argument becomes more plausible, and more consonant with the general teaching of Mill, if stress is laid on the protection and assistance afforded by the state in the process of acquisition of individual fortunes—a view of taxation sometimes called the mcial dividend theory {cf. ”

“ The principal objections urged against such taxation are, that a stimulus would be given to personal extravagance and a check placed on accumulation, and that in consequence indirect production would be lessened, partly by want of capital and partly by the check placed on production on a large scale. As regards the want of capital, apart from the check placed on saving, there would be a tendency to send it abroad. A heavy tax on large capitals at home will place a premium on investments abroad, in which evasion would be easy. ”

“ Economy.The fourth rule — the canon of economy — states as its general principle that “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.” Taxes may, according to Adam Smith, break this rule by requiring a large number of officials for their collection, by restraint of trade and production, by encouraging smuggling, and by causing unnecessary vexation ”

“ We are able to employ machinery where the foreigner, working on a smaller scale, is obliged to use manual labour. There can be little doubt that graduated taxation, even on the modified form proposed by Mill, would tend to check production on a large scale. ”

“ Those taxes are best which in case of need can be most conveniently increased in amount. It is this characteristic of the income tax which renders it so popular with chancellors of the exchequer, and it was partly on this ground that Mr Gladstone substituted a tax on beer for the tax on malt, (e) Regard must always be paid to the real incidence of taxation, and care taken that the real burden of the tax falls on those aimed at by the legislature. ”

“ No part of the theory or practice of taxation has given rise to so much controversy as the incidence of particular taxes, a subject indeed of so much difl&culty and importance as to occupy the greater portion of the treatment by systematic writers. ”

“ Many nations again have imposed duties on imports with the view of protecting and encouraging home industries, and most of the import duties levied in England before the great reforms of Peel were of this nature. ”