Consumption tax

“ An indirect tax, by increasing from time to time the price of the objects of general consumption, when the members of the community have contracted the habit of this consumption, renders these objects a little more costly, and thus gives birth to that increase of labour and industry which is now required to obtain them. ”

“ But the usual effect of an enhanced price is to lessen demand, and if the article is dispensable, or its consumption can be lessened, or it can be obtained elsewhere, the market will be sluggish under the tax, and producers or dealers will be likely to tempt it by lowering prices, in other words, by sharing the tax with consumers, and paying that share out of profits. This is the principle. Producers and dealers would rather the tax were off. Consumers generally, but do not always, pay the whole of it. ”

“ But by the ingenious plan of taxing articles on which incomes are expended, rather than openly demanding a portion of the income itself, the amount of taxation is concealed from the mass of taxpayers, and its payment is made to appear in some measure voluntary. The indirect tax being generally advanced rather than paid, as has been already shown, in the first instance by the importers, the ultimate purchasers for consumption confound the tax with the natural price of the commodity. ”

“ When a high duty is laid on cotton, the production of all those goods, of which cotton is the basis, is diminished. If the total value added to cotton in its various manufactures, in a particular country, amounted to 100 millions of francs per annum, and the effect of the tax was, to diminish the consumption one half, then the tax would deprive that country every year of 50 millions of francs, in addition to the sum received by government. ”

“ Many States, for instance, impose taxe on the consumption of goods and such taxes have been sustained regardless of the extra-State origin of the goods, or whether a tax on their sale had been imposed by the seller State. Such potential taxation by consumer States is but one factor pointing to the deterrent effect on commerce by a superimposed gross receipts tax. ”

“ Taxes upon luxuries have no tendency to raise the price of any other commodities, except that of the commodities taxed. Taxes upon necessaries, by raising the wages of labour, necessarily tend to raise the price of all manufactures, and consequently to diminish the extent of their sale and consumption. Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution. They fall indifferently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land. ”

“ Among luxuries of general consumption, taxation should by preference attach itself to stimulants, because these, though in themselves as legitimate indulgences as any others, are more liable than most others to be used in excess, so that the check to consumption, naturally arising from taxation, is on the whole better applied to them than to other things. ”

“ Effects of a merciless Tax upon all the Articles of the most general Consumption.
Instead of laying a tax on men, from whom, without rushing with open eyes into the perpetration of a thousand injuries, it is impossible to require any thing more than a personal service, when it is necessary and possible withal; instead of taxing the land, from which nothing can be expected but food, and the rough materials to which industry can give from one to many hundred degrees of value ”

“ A Tax on all commodities would fall on Profits. By taxes on commodities are commonly meant those which are levied either on the producers, or on the carriers or dealers who intervene between them and the final purchasers for consumption ”

“ Consumable commodities, whether necessaries or luxuries, may be taxed in two different ways. The consumer may either pay an annual sum on account of his using or consuming goods of a certain kind; or the goods may be taxed while they remain in the hands of the dealer, and before they are delivered to the consumer. The consumable goods which last a considerable time before they are consumed altogether, are most properly taxed in the one way; those of which the consumption is either immediate or more speedy, in the other. The coach-tax and plate-tax are examples of the former method of imposing ”

“ No separate demand being made upon them for the tax, it escapes their consideration, and the article which they receive seems the fair equivalent of the sacrifice made in acquiring it. Indirect taxes have also the advantage of being paid by degrees, in small portions, and at a time when the commodities are wanted for consumption, or when it is most convenient for the consumer to pay them. ”

“ It is a matter of common knowledge that the product is not ready to be marketed for consumption when it is drawn from the still. It must undergo an aging process, and for this purpose it is kept in store for several years. In laying the tax, Congress has taken this necessity into consideration, permitting a long postponement of the required payment, the spirits meanwhile being held in charge of the government's representative. ”

“ Under the new government, fines became rarer; seizures, executions and sales of personal property still rarer, while the costs of collection, reduced by increasing consumption, are not to exceed one-twentieth in-stead of one-fifth of the receipts.3242—In the second place, the consumer becomes free again, in law as in fact, not to purchase taxed goods. He is no longer constrained, as formerly, in the provinces subject to high salt-tax, to accept, consume, and pay for duty-salt, 7 pounds per head at 13 sous the pound. ”

“ The derecho de consumo (the internal or consumption duty) is an impost averaging nearly twenty per cent. on the United States cost of {69} the bill. It supplies the place of a direct tax for the support of the departmental government, and is decidedly the most troublesome, if not the most oppressive revenue system that ever was devised for internal purposes. It operates at once as a drawback upon the commercial prosperity of the country, and as a potent incentive to fraudulent practices. ”

“ For instance, should a legislator, wishing to impose a new tax, choose that which would be theoretically the most just? By no means. In practice the most unjust may be the best for the masses. Should it at the same time be the least obvious, and apparently the least burdensome, it will be the most easily tolerated. It is for this reason that an indirect tax, however exorbitant it be, will always be accepted by the crowd, because, being paid daily in fractions of a farthing on objects of consumption, it will not interfere with the habits of the crowd, and will pass unperceived. ”

“ In these several modes, taxes on commodities often cost to the consumer, through the increased price of the article, much more than they bring into the treasury of the state. There is still another consideration: the higher price necessitated by the tax almost always checks the demand for the commodity; and, since there are many improvements in production which, to make them practicable, require a certain extent of demand, such improvements are obstructed, and many of them prevented altogether. ”

“ In the first place, by shutting out the former commodity, the price of the domestic manufacture would be raised. The consumer, therefore, must pay more for it, and insomuch as government will have lost the duty on the imported article, a tax equal to that duty must be paid to the government. ”

“ We are invited to believe that with all that subtle process of calculation made from almost minute to minute throughout the year, the imposition of a duty or demand for £1,000,000 or £2,000,000 for this or that Government, placed suddenly upon the commodity in question as a tax, makes no difference whatever to the cost to the consumer ”

“ We shall import as much, and export as much; the whole of the tax will be paid out of our own pockets.
“But the imposition of a tax on a commodity almost always diminishes the demand more or less; and it can never, or scarcely ever, increase the demand. ”

“ In the first place, they prevent the taxpayer from knowing what he pays, by mixing up the price of an article with the tax, as has been already noticed. Secondly, they enhance the cost of a commodity to the consumer to a degree (often largely) in excess of the original burden of the tax. ”

“ Taking the most favourable, but extremely improbable supposition, that the importation is not at all checked, nor the home production enlarged, the state gains a revenue of only half a million, while the consumers are taxed ten millions and a half; the ten millions being a contribution to the home growers, who are forced by competition to resign it all to the landlords. The consumer thus pays to the owners of land an additional tax, equal to twenty times that which he pays to the state. Let us now suppose that the tax really checks importation. ”

“ It is spread over so vast a surface among consumers, that its weight is not felt; being mixed up with the price of the article sold, its weight is not perceived. We pay in this way half the taxes of America, Germany, and all the countries to whom we chiefly export our manufactures. Let us return them the compliment, and adopt a system which will make them pay the half of ours. The whole, or nearly the whole, of the Income Tax, which now produces L.5,400,000 a-year, would by this change be spent in increased purchases in the home market, and sensibly relieve its sinking state. ”

“ It is in the last case that he pays the greatest price for his cloth, but all his additional payment is gained by the state. In the second case, he pays more than in the first, but all he pays in addition is not received by the state, it is an increased price caused by difficulty of production, which is incurred, because the easiest means of production are taken away from us, by being fettered with a tax. ”

“ Taxes on consumable commodities. Taxes on Commodities.—The general principles applicable in this case are that, where production takes place under free competition, the tax will, owing to the tendency of profits to equality, be transferred to the consumer, but that, when the article is practically monopolized, a tax must fall on the monopolist, on the assumption that he has already fixed such a price for the article as will, considering the law of demand and the expenses of production, yield him a maximum revenue. ”

“ Producers and dealers and bankers and companies add the tax demanded from them, and sometimes more than the tax under color of it, to the price of their wares. But it is not true that they can always realize the whole of this enhanced price. Generally they can, sometimes they cannot. If the article be one of necessity, or a luxury that has become equivalent to a necessity, and there be no other source of supply than the taxed one, then, as a rule, the tax falls wholly on the consumer, and is a matter of indifference to the producer or dealer. ”

“ There are few cases in which it does not raise them by more than that amount In the first place, there are few taxes on production on account of which it is not found or deemed necessary to impose restrictive regulations on the manufacturers or dealers, in order to check evasions of the tax. These regulations are always sources of trouble and annoyance, and generally of expense, for all of which, being peculiar disadvantages, the producers or dealers must have compensation in the price of their commodity. ”

“ If we impose a tax upon manufactures or imported goods, the manufacturer or importer will charge it in a higher price to the jobber, the jobber to the retailer, and the retailer to the consumer. Now, the consumer, on whom the tax thus ultimately falls, must not only pay the amount of the tax, but also a profit on this amount to every one who has thus advanced it—for profit on the capital he has advanced in paying taxes is as much required by each dealer as profit on the capital he has advanced in paying for goods. ”

“ When the tax upon a commodity is so moderate as not to encourage smuggling, the merchant who deals in it, though he advances, does not properly pay the tax, as he gets it back in the price of the commodity. The tax is finally paid by the last purchaser or consumer. ”

“ We have seen that taxes on raw produce, and on the profits of the farmer, will fall on the consumer of raw produce; since unless he had the power of remunerating himself by an increase of price, the tax would reduce his profits below the general level of profits, and would urge him to remove his capital to some other trade. ”

“ Taxes on particular commodities fall on the consumer. A tax on any one commodity, whether laid on its production, its importation, its carriage from place to place, or its sale, and whether the tax be a fixed sum of money for a given quantity of the commodity, or an ad valorem duty, will, as a general rule, raise the value and price of the commodity by at least the amount of the tax. ”

“ It enables Government to consume as much of the produce of the land and labour of the country, as was before consumed by the individuals who contribute to the tax. If my income is 1000l. per annum, and I am called upon for 100l. per annum for a tax, I shall only be able to demand nine tenths of the quantity of goods, which I before consumed, but I enable Government to demand the other tenth. If the commodity taxed be corn, it is not necessary that my demand for corn should diminish, as I may prefer to pay 100l. ”

“ Since in this instance also the supply and demand remain the same, the rent of farms must also remain the same. The example of the manufacturer of salt, who can only make the consumers pay a portion of the tax, and that of the landlord who cannot reimburse himself in the smallest degree, prove the error of those who maintain, in opposition to the economists, that all taxes fall ultimately on the consumer."—Vol. ”