governments to encourage a disposition to do this in the people, and never to lay such taxes as will inevitably fall on capital; since, by so doing, they impair the funds for the maintenance of labour, and thereby diminish the future production of the country. In England this policy has been neglected, in taxing the probates of wills, in the legacy duty, and in all taxes affecting the transference of property from the dead to the living. If a legacy of 1000l. be subject to a tax of 100l., the legatee considers his legacy as only 900l. and feels no particular motive to save the 1007. duty from his expenditure, and thus the capital of the country is diminished; but if he had really received 1000l., and had been required to pay 100l. as a tax on income, on wine, on horses, or on servants, he would probably have diminished, or rather not increased his expenditure by that sum, and the capital of the country would have been unimpaired. "Taxes upon the transference of property from the dead to the living," says Adam Smith, "fall finally, as well as immediately, upon the persons to whom the property is transferred. Taxes on the sale of land fall altogether upon the seller. The seller is almost always under the necessity of selling, and must, therefore, take such a price as he can get. The buyer is scarce ever under the necessity of buying, and will, therefore, only give such a price as he likes. He considers what the land will cost him in tax and price together. The more he is obliged to pay in the way of tax, the less he will be disposed to give in the way of price. Such taxes, therefore, fall almost always upon a necessitous person, and must, therefore, be very cruel and oppressive." "Stamp duties, and duties upon the registration of bonds and contracts for borrowed money, fall altogether upon the borrower, and in fact are always paid by him. Duties of the same kind upon law proceedings fall upon the suitors. They reduce to both the capital value of the subject in dispute. The more it costs to acquire any property, the less must be the neat value of it when acquired. All taxes upon the transference of property of every kind, so far as they diminish the capital value of that property, tend to diminish the funds destined for the maintenance of labour. They are all more or less unthrifty taxes, that increase the revenue of the sovereign, which seldom maintains any but unproductive labourers, at the expense of the capital of the people, which maintains none but productive." But this is not the only objection to taxes on the transference of property; they prevent the national capital from being distributed in the way most beneficial to the community. For the general prosperity, there cannot be too much facility given to the conveyance and exchange of all kinds of property, as it is by such means that capital of every species is likely to find its way into the hands of those who will best employ it in increasing the productions of the country. "Why," asks M. Say, "does an individual wish to sell his land? it is because he has another employment in view in which his funds will be more productive. Why does another wish to purchase this same land? it is to employ a capital which brings him in too little, which was unemployed, or the use of which he thinks susceptible of improvement. This exchange will increase the general income, since it increases the income of these parties. But if the charges are so exorbitant as to prevent the exchange, they are an obstacle to this increase of the general income." Those taxes, however, are easily collected; and this by many may be thought to afford some compensation for their injurious effects. CHAPTER IX. TAXES ON RAW PRODUCE. HAVING in a former part of this work established, I hope satisfactorily, the principle, that the price of corn is regulated by the cost of its production on that land exclusively, or rather with that capital exclusively, which pays no rent, it will follow that whatever may increase the cost of production will increase the price; whatever may reduce it will lower the price. The necessity of cultivating poorer land, or of obtaining a less return with a given additional capital on land already in cultivation, will inevitably raise the exchangeable value of raw produce. The discovery of machinery, which will enable the cultivator to obtain his corn at a less cost of production, will necessarily lower its exchangeable value. Any tax which may be imposed on the cultivator, whether in the shape of land-tax, tithes, or a tax on the produce when obtained, will increase the cost of production, and will therefore raise the price of raw produce. If the price of raw produce did not rise so as to compensate the cultivator for the tax, he would naturally quit a trade where his profits were reduced below the general level of profits; this would occasion a diminution of supply, until the unabated demand should have produced such a rise in the price of raw produce, as to make the cultivation of it equally profitable with the investment of capital in any other trade. A rise of price is the only means by which he could pay the tax, and continue to derive the usual and general profits from this employment of his capital. He could not deduct the tax from his rent, and oblige his landlord to pay it, for he pays no rent. He would not deduct it from his profits, for there is no reason why he should continue in an employment which yields small profits, when all other employments are yielding greater. There can then be no question, but that he will have the power of raising the price of raw produce by a sum equal to the tax. A tax on raw produce would not be paid by the landlord; it would not be paid by the farmer; but it would be paid, in an increased price, by the consumer. Rent, it should be remembered, is the difference between the produce obtained by equal portions of labour and capital employed on land of the same or different qualities. It should be remembered, too, that the money rent of land, and the corn rent of land, do not vary in the same proportion. In the case of a tax on raw produce, of a land-tax, or tithes, the corn rent of land will vary, while the money rent will remain as before. If, as we have before supposed, the land in cultivation were of three qualities, and that with an equal amount of capital, 180 qrs. of corn were obtained from land No. 1. 170 160 from from 2. 3. the rent of No. 1 would be 20 quarters, the difference between that of No. 3 and No. 1; and of No. 2, 10 quarters, the difference between that of No. 3 and No. 2; while No. 3 would pay no rent whatever. Now, if the price of corn were 4l. per quarter, the money rent of No. 1 would be 80l., and that of No. 2, 401. Suppose a tax of 8s. per quarter to be imposed on corn; then. the price would rise to 47. 8s.; and if the landlords obtained the same corn rent as before, the rent of No. 1 would be 887. and that of No. 2, 441. But they would not obtain the same corn_rent; the tax would fall heavier on No. 1 than on No. 2, and on No. 2 than on No. 3, because it would be levied on a greater quantity of corn. It is the difficulty of production on No. 3 which regulates price; and corn rises to 47. 8s., that the profits of the capital employed on No. 3 may be on a level with the general profits of stock. The produce and tax on the three qualities of land will be as follows: No. 1, yielding 180 qrs at 47. 8s. per qr. Net corn produce 163.7 No. 2, yielding 170 Net corn produce 154.6 L.792 72 The money rent of No. 1 would continue to be 801., or the difference between 640l. and 7207.; and that of No. 2, 40l., or the difference between 6407. and 6801., precisely the same as before; but the corn rent will be reduced from 20 quarters on No. 1, to 18.2 quarters, the difference between 145.5 and 163.7 quarters, and that on No. 2 from 10 to 9.1 quarters, the difference between 145.5 and 154.6 quarters. A tax on corn, then, would fall on the consumers of corn, and would raise its value, as compared with all other commodities, in a degree proportioned to the tax. In proportion as raw produce entered into the composition of other commodities, would their value also be raised, unless the tax were countervailed by other causes. They would in fact be indirectly taxed, and their value would rise in proportion to the tax. A tax, however, on raw produce, and on the necessaries of the labourer, would have another effect-it would raise wages. From the effect of the principle of population on the increase of mankind, wages of the lowest kind never continue much above that rate which nature and habit demand for the support of the labourers. This class is never able to bear any considerable proportion of taxation ; and, consequently, if they had to pay 8s. per quarter in addition for wheat, and in some smaller proportion for other necessaries, they would not be able to subsist on the same wages as before, and to keep up the race of labourers. Wages would inevitably and necessarily rise; and, in proportion as they rose, profits would fall. Government would receive a tax of 8s. per quarter on all the corn consumed in the country, a part of which would be paid directly by the consumers of corn; the other part would be paid indirectly by those who employed labour, and would affect profits in the same manner as if wages had been raised from the increased demand for labour compared with the supply, or from an increasing difficulty of obtaining the food and necessaries required by the labourer. In as far as the tax might affect consumers, it would be an equal tax, but in as far as it would affect profits, it would be a partial tax; for it would neither operate on the landlord nor on the stockholder, since they would continue to receive, the one the same money rent, the other the same money dividends as before. A tax on the produce of the land then would operate as follows:- 1st, It would raise the price of raw produce by a sum equal to the tax, and would therefore fall on each consumer in proportion to his consumption. 2dly, It would raise the wages of labour, and lower profits. It may then be objected against such a tax, 1st, That by raising the wages of labour, and lowering profits, it is an unequal tax, as affects the income of the farmer, trader, and manufacturer, and leaves untaxed the income. of the landlord, stockholder, and others enjoying fixed incomes. 2dly, That there would be a considerable interval between the rise in the price of corn and the rise of wages, during which much distress would be experienced by the labourer. |