The revenue which must defray, not only the expense of defending the society and of supporting the dignity of the chief magistrate, but all the other necessary expenses of government, for which the constitution of the state has not provided any particular revenue may be drawn, either, first, from some fund which peculiarly belongs to the sovereign or commonwealth, and which is independent of the revenue of the people;

or, secondly, from the revenue of the people.

 PART I. Of the Funds, or Sources, of Revenue, which may peculiarly belong to the Sovereign or Commonwealth.

 The funds, or sources, of revenue, which may peculiarly belong to the sovereign or commonwealth, must consist, either in stock, or in land.

 The sovereign, like, any other owner of stock, may derive a revenue from it, either by employing it himself, or by lending it.

His revenue is, in the one case, profit, in the other interest.

 The revenue of a Tartar or Arabian chief consists in profit.

It arises principally from the milk and increase of his own herds and flocks, of which he himself superintends the management, and is the principal shepherd or herdsman of his own horde or tribe.

It is, however, in this earliest and rudest state of civil government only, that profit has ever made the principal part of the public revenue of a monarchical state.

 Small republics have sometimes derived a considerable revenue from the profit of mercantile projects.

The republic of Hamburgh is said to do so from the profits of a public wine-cellar and apothecary’s shop. {See Memoires concernant les Droits et Impositions en Europe, tome i. page 73.

This work was compiled by the order of the court, for the use of a commission employed for some years past in considering the proper means for reforming the finances of France.

The account of the French taxes, which takes up three volumes in quarto, may be regarded as perfectly authentic.

That of those of other European nations was compiled from such information as the French ministers at the different courts could procure.

It is much shorter, and probably not quite so exact as that of the French taxes.}

That state cannot be very great, of which the sovereign has leisure to carry on the trade of a wine-merchant or an apothecary.

The profit of a public bank has been a source of revenue to more considerable states.

It has been so, not only to Hamburgh, but to Venice and Amsterdam.

A revenue of this kind has even by some people been thought not below the attention of so great an empire as that of Great Britain.

Reckoning the ordinary dividend of the bank of England at five and a-half per cent., and its capital at ten millions seven hundred and eighty thousand pounds, the neat annual profit, after paying the expense of management, must amount, it is said, to five hundred and ninety-two thousand nine hundred pounds.

Government, it is pretended, could borrow this capital at three per cent.

interest, and, by taking the management of the bank into its own hands, might make a clear profit of two hundred and sixty-nine thousand five hundred pounds a-year.

The orderly, vigilant, and parsimonious administration of such aristocracies as those of Venice and Amsterdam, is extremely proper, it appears from experience, for the management of a mercantile project of this kind.

But whether such a government as that of England, which, whatever may be its virtues, has never been famous for good economy;

which, in time of peace, has generally conducted itself with the slothful and negligent profusion that is, perhaps, natural to monarchies;

and, in time of war, has constantly acted with all the thoughtless extravagance that democracies are apt to fall into, could be safely trusted with the management of such a project, must at least be a good deal more doubtful.

 The post-office is properly a mercantile project.

The government advances the expense of establishing the different offices, and of buying or hiring the necessary horses or carriages, and is repaid, with a large profit, by the duties upon what is carried.

It is, perhaps, the only mercantile project which has been successfully managed by, I believe, every sort of government.

The capital to be advanced is not very considerable.

There is no mystery in the business.

The returns are not only certain but immediate.

 Princes, however, have frequently engaged in many other mercantile projects, and have been willing, like private persons, to mend their fortunes, by becoming adventurers in the common branches of trade.

They have scarce ever succeeded.

The profusion with which the affairs of princes are always managed, renders it almost impossible that they should.

The agents of a prince regard the wealth of their master as inexhaustible;

are careless at what price they buy, are careless at what price they sell, are careless at what expense they transport his goods from one place to another.

Those agents frequently live with the profusion of princes;

and sometimes, too, in spite of that profusion, and by a proper method of making up their accounts, acquire the fortunes of princes.

It was thus, as we are told by Machiavel, that the agents of Lorenzo of Medicis, not a prince of mean abilities, carried on his trade.

The republic of Florence was several times obliged to pay the debt into which their extravagance had involved him.

He found it convenient, accordingly to give up the business of merchant, the business to which his family had originally owed their fortune, and, in the latter part of his life, to employ both what remained of that fortune, and the revenue of the state, of which he had the disposal, in projects and expenses more suitable to his station.

 No two characters seem more inconsistent than those of trader and sovereign.

If the trading spirit of the English East India company renders them very bad sovereigns, the spirit of sovereignty seems to have rendered them equally bad traders.

While they were traders only, they managed their trade successfully, and were able to pay from their profits a moderate dividend to the proprietors of their stock.

Since they became sovereigns, with a revenue which, it is said, was originally more than three millions sterling, they have been obliged to beg the ordinary assistance of government, in order to avoid immediate bankruptcy.

In their former situation, their servants in India considered themselves as the clerks of merchants;

in their present situation, those servants consider themselves as the ministers of sovereigns.

 A state may sometimes derive some part of its public revenue from the interest of money, as well as from the profits of stock.

If it has amassed a treasure, it may lend a part of that treasure, either to foreign states, or to its own subjects.

 The canton of Berne derives a considerable revenue by lending a part of its treasure to foreign states, that is, by placing it in the public funds of the different indebted nations of Europe, chiefly in those of France and England.

The security of this revenue must depend, first, upon the security of the funds in which it is placed, or upon the good faith of the government which has the management of them;

and, secondly, upon the certainty or probability of the continuance of peace with the debtor nation.

In the case of a war, the very first act of hostility on the part of the debtor nation might be the forfeiture of the funds of its credit.

This policy of lending money to foreign states is, so far as I know peculiar to the canton of Berne.

 The city of Hamburgh {See Memoire concernant les Droites et Impositions en Europe tome i p. 73.}has established a sort of public pawn-shop, which lends money to the subjects of the state, upon pledges, at six per cent.

interest.

This pawn-shop, or lombard, as it is called, affords a revenue, it is pretended, to the state, of a hundred and fifty thousand crowns, which, at four and sixpence the crown, amounts to £33,750 sterling.

 The government of Pennsylvania, without amassing any treasure, invented a method of lending, not money, indeed, but what is equivalent to money, to its subjects.

By advancing to private people, at interest, and upon land security to double the value, paper bills of credit, to be redeemed fifteen years after their date;

and, in the mean time, made transferable from hand to hand, like banknotes, and declared by act of assembly to be a legal tender in all payments from one inhabitant of the province to another, it raised a moderate revenue, which went a considerable way towards defraying an annual expense of about £4,500, the whole ordinary expense of that frugal and orderly government.

The success of an expedient of this kind must have depended upon three different circumstances: first, upon the demand for some other instrument of commerce, besides gold and silver money, or upon the demand for such a quantity of consumable stock as could not be had without sending abroad the greater part of their gold and silver money, in order to purchase it;

secondly, upon the good credit of the government which made use of this expedient;

and, thirdly, upon the moderation with which it was used, the whole value of the paper bills of credit never exceeding that of the gold and silver money which would have been necessary for carrying on their circulation, had there been no paper bills of credit.

The same expedient was, upon different occasions, adopted by several other American colonies;

but, from want of this moderation, it produced, in the greater part of them, much more disorder than conveniency.

 The unstable and perishable nature of stock and credit, however, renders them unfit to be trusted to as the principal funds of that sure, steady, and permanent revenue, which can alone give security and dignity to government.

The government of no great nation, that was advanced beyond the shepherd state, seems ever to have derived the greater part of its public revenue from such sources.

 Land is a fund of more stable and permanent nature;

and the rent of public lands, accordingly, has been the principal source of the public revenue of many a great nation that was much advanced beyond the shepherd state.

From the produce or rent of the public lands, the ancient republics of Greece and Italy derived for a long time the greater part of that revenue which defrayed the necessary expenses of the commonwealth.

The rent of the crown lands constituted for a long time the greater part of the revenue of the ancient sovereigns of Europe.

 War, and the preparation for war, are the two circumstances which, in modern times, occasion the greater part of the necessary expense or all great states.

But in the ancient republics of Greece and Italy, every citizen was a soldier, and both served, and prepared himself for service, at his own expense.

Neither of those two circumstances, therefore, could occasion any very considerable expense to the state.

The rent of a very moderate landed estate might be fully sufficient for defraying all the other necessary expenses of government.

 In the ancient monarchies of Europe, the manners and customs of the time sufficiently prepared the great body of the people for war;

and when they took the field, they were, by the condition of their feudal tenures, to be maintained either at their own expense, or at that of their immediate lords, without bringing any new charge upon the sovereign.

The other expenses of government were, the greater part of them, very moderate.

The administration of justice, it has been shewn, instead of being a cause of expense was a source of revenue.

The labour of the country people, for three days before, and for three days after, harvest, was thought a fund sufficient for making and maintaining all the bridges, highways, and other public works, which the commerce of the country was supposed to require.

In those days the principal expense of the sovereign seems to have consisted in the maintenance of his own family and household.

The officers of his household, accordingly, were then the great officers of state.

The lord treasurer received his rents.

The lord steward and lord chamberlain looked after the expense of his family.

The care of his stables was committed to the lord constable and the lord marshal.

His houses were all built in the form of castles, and seem to have been the principal fortresses which he possessed.

The keepers of those houses or castles might be considered as a sort of military governors.

They seem to have been the only military officers whom it was necessary to maintain in time of peace.

In these circumstances, the rent of a great landed estate might, upon ordinary occasions, very well defray all the necessary expenses of government.

 In the present state of the greater part of the civilized monarchies of Europe, the rent of all the lands in the country, managed as they probably would be, if they all belonged to one proprietor, would scarce, perhaps, amount to the ordinary revenue which they levy upon the people even in peaceable times.

The ordinary revenue of Great Britain, for example, including not only what is necessary for defraying the current expense of the year, but for paying the interest of the public debts, and for sinking a part of the capital of those debts, amounts to upwards of ten millions a-year.

But the land tax, at four shillings in the pound, falls short of two millions a-year.

This land tax, as it is called however, is supposed to be one-fifth, not only of the rent of all the land, but of that of all the houses, and of the interest of all the capital stock of Great Britain, that part of it only excepted which is either lent to the public, or employed as farming stock in the cultivation of land.

A very considerable part of the produce of this tax arises from the rent of houses and the interest of capital stock.

The land tax of the city of London, for example, at four shillings in the pound, amounts to £123,399: 6: 7; that of the city of Westminster to £63,092: 1: 5; that of the palaces of Whitehall and St. James’s, to £30,754: 6: 3.

A certain proportion of the land tax is, in the same manner, assessed upon all the other cities and towns corporate in the kingdom;

and arises almost altogether, either from the rent of houses, or from what is supposed to be the interest of trading and capital stock.

According to the estimation, therefore, by which Great Britain is rated to the land tax, the whole mass of revenue arising from the rent of all the lands, from that of all the houses, and from the interest of all the capital stock, that part of it only excepted which is either lent to the public, or employed in the cultivation of land, does not exceed ten millions sterling a-year, the ordinary revenue which government levies upon the people, even in peaceable times.

The estimation by which Great Britain is rated to the land tax is, no doubt, taking the whole kingdom at an average, very much below the real value;

though in several particular counties and districts it is said to be nearly equal to that value.

The rent of the lands alone, exclusive of that of houses and of the interest of stock, has by many people been estimated at twenty millions;

an estimation made in a great measure at random, and which, I apprehend, is as likely to be above as below the truth.

But if the lands of Great Britain, in the present state of their cultivation, do not afford a rent of more than twenty millions a-year, they could not well afford the half, most probably not the fourth part of that rent, if they all belonged to a single proprietor, and were put under the negligent, expensive, and oppressive management of his factors and agents.

The crown lands of Great Britain do not at present afford the fourth part of the rent which could probably be drawn from them if they were the property of private persons.

If the crown lands were more extensive, it is probable, they would be still worse managed.

 The revenue which the great body of the people derives from land is, in proportion, not to the rent, but to the produce of the land.

The whole annual produce of the land of every country, if we except what is reserved for seed, is either annually consumed by the great body of the people, or exchanged for something else that is consumed by them.

Whatever keeps down the produce of the land below what it would otherwise rise to, keeps down the revenue of the great body of the people, still more than it does that of the proprietors of land.

The rent of land, that portion of the produce which belongs to the proprietors, is scarce anywhere in Great Britain supposed to be more than a third part of the whole produce.

If the land which, in one state of cultivation, affords a revenue of ten millions sterling a-year, would in another afford a rent of twenty millions;

the rent being, in both cases, supposed a third part of the produce, the revenue of the proprietors would be less than it otherwise might be, by ten millions a-year only;

but the revenue of the great body of the people would be less than it otherwise might be, by thirty millions a-year, deducting only what would be necessary for seed.

The population of the country would be less by the number of people which thirty millions a-year, deducting always the seed, could maintain, according to the particular mode of living, and expense which might take place in the different ranks of men, among whom the remainder was distributed.

 Though there is not at present in Europe, any civilized state of any kind which derives the greater part of its public revenue from the rent of lands which are the property of the state;

yet, in all the great monarchies of Europe, there are still many large tracts of land which belong to the crown.

They are generally forest, and sometimes forests where, after travelling several miles, you will scarce find a single tree;

a mere waste and loss of country, in respect both of produce and population.

In every great monarchy of Europe, the sale of the crown lands would produce a very large sum of money, which, if applied to the payment of the public debts, would deliver from mortgage a much greater revenue than any which those lands have ever afforded to the crown.

In countries where lands, improved and cultivated very highly, and yielding, at the time of sale, as great a rent as can easily be got from them, commonly sell at thirty years purchase;

the unimproved, uncultivated, and low-rented crown lands, might well be expected to sell at forty, fifty, or sixty years purchase.

The crown might immediately enjoy the revenue which this great price would redeem from mortgage.

In the course of a few years, it would probably enjoy another revenue.

When the crown lands had become private property, they would, in the course of a few years, become well improved and well cultivated.

The increase of their produce would increase the population of the country, by augmenting the revenue and consumption of the people.

But the revenue which the crown derives from the duties or custom and excise, would necessarily increase with the revenue and consumption of the people.

 The revenue which, in any civilized monarchy, the crown derives from the crown lands, though it appears to cost nothing to individuals, in reality costs more to the society than perhaps any other equal revenue which the crown enjoys.

It would, in all cases, be for the interest of the society, to replace this revenue to the crown by some other equal revenue, and to divide the lands among the people, which could not well be done better, perhaps, than by exposing them to public sale.

 Lands, for the purposes of pleasure and magnificence, parks, gardens, public walks, etc.

possessions which are everywhere considered as causes of expense, not as sources of revenue, seem to be the only lands which, in a great and civilized monarchy, ought to belong to the crown.

 Public stock and public lands, therefore, the two sources of revenue which may peculiarly belong to the sovereign or commonwealth, being both improper and insufficient funds for defraying the necessary expense of any great and civilized state;

it remains that this expense must, the greater part of it, be defrayed by taxes of one kind or another;

the people contributing a part of their own private revenue, in order to make up a public revenue to the sovereign or commonwealth.

 PART II.

Of Taxes.

 The private revenue of individuals, it has been shown in the first book of this Inquiry, arises, ultimately from three different sources;

rent, profit, and wages.

Every tax must finally be paid from some one or other of those three different sources of revenue, or from all of them indifferently.

I shall endeavour to give the best account I can, first, of those taxes which, it is intended should fall upon rent;

secondly, of those which, it is intended should fall upon profit;

thirdly, of those which, it is intended should fall upon wages;

and fourthly, of those which, it is intended should fall indifferently upon all those three different sources of private revenue.

The particular consideration of each of these four different sorts of taxes will divide the second part of the present chapter into four articles, three of which will require several other subdivisions.

Many of these taxes, it will appear from the following review, are not finally paid from the fund, or source of revenue, upon which it is intended they should fall.

 Before I enter upon the examination of particular taxes, it is necessary to premise the four following maxims with regard to taxes in general.

 1. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities;

that is, in proportion to the revenue which they respectively enjoy under the protection of the state.

The expense of government to the individuals of a great nation, is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate.

In the observation or neglect of this maxim, consists what is called the equality or inequality of taxation.

Every tax, it must be observed once for all, which falls finally upon one only of the three sorts of revenue above mentioned, is necessarily unequal, in so far as it does not affect the other two.

In the following examination of different taxes, I shall seldom take much farther notice of this sort of inequality;

but shall, in most cases, confine my observations to that inequality which is occasioned by a particular tax falling unequally upon that particular sort of private revenue which is affected by it.

 2. The tax which each individual is bound to pay, ought to be certain and not arbitrary.

The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person.

Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself.

The uncertainty of taxation encourages the insolence, and favours the corruption, of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt.

The certainty of what each individual ought to pay is, in taxation, a matter of so great importance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty.

 3. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it.

A tax upon the rent of land or of houses, payable at the same term at which such rents are usually paid, is levied at the time when it is most likely to be convenient for the contributor to pay;

or when he is most likely to have wherewithall to pay.

Taxes upon such consumable goods as are articles of luxury, are all finally paid by the consumer, and generally in a manner that is very convenient for him.

He pays them by little and little, as he has occasion to buy the goods.

As he is at liberty too, either to buy or not to buy, as he pleases, it must be his own fault if he ever suffers any considerable inconveniency from such taxes.

 4. 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.

A tax may either take out or keep out of the pockets of the people a great deal more than it brings into the public treasury, in the four following ways.

First, the levying of it may require a great number of officers, whose salaries may eat up the greater part of the produce of the tax, and whose perquisites may impose another additional tax upon the people.

Secondly, it may obstruct the industry of the people, and discourage them from applying to certain branches of business which might give maintenance and employment to great multitudes.

While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to do so.

Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur, who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals.

An injudicious tax offers a great temptation to smuggling.

But the penalties of smuggling must arise in proportion to the temptation.

The law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it;

and it commonly enhances the punishment, too, in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime. {See Sketches of the History of Man page 474, and Seq.}

Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble, vexation, and oppression;

and though vexation is not, strictly speaking, expense, it is certainly equivalent to the expense at which every man would be willing to redeem himself from it.

It is in some one or other of these four different ways, that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign.

 The evident justice and utility of the foregoing maxims have recommended them, more or less, to the attention of all nations.

All nations have endeavoured, to the best of their judgment, to render their taxes as equal as they could contrive;

as certain, as convenient to the contributor, both the time and the mode of payment, and in proportion to the revenue which they brought to the prince, as little burdensome to the people.

The following short review of some of the principal taxes which have taken place in different ages and countries, will show, that the endeavours of all nations have not in this respect been equally successful.

 ARTICLE I.—Taxes upon Rent—Taxes upon the Rent of Land.

 A tax upon the rent of land may either be imposed according to a certain canon, every district being valued at a curtain rent, which valuation is not afterwards to be altered;

or it may be imposed in such a manner, as to vary with every variation in the real rent of the land, and to rise or fall with the improvement or declension of its cultivation.

 A land tax which, like that of Great Britain, is assessed upon each district according to a certain invariable canon, though it should be equal at the time of its first establishment, necessarily becomes unequal in process of time, according to the unequal degrees of improvement or neglect in the cultivation of the different parts of the country.

In England, the valuation, according to which the different counties and parishes were assessed to the land tax by the 4th of William and Mary, was very unequal even at its first establishment.

This tax, therefore, so far offends against the first of the four maxims above mentioned.

It is perfectly agreeable to the other three.

It is perfectly certain.

The time of payment for the tax, being the same as that for the rent, is as convenient as it can be to the contributor.

Though the landlord is, in all cases, the real contributor, the tax is commonly advanced by the tenant, to whom the landlord is obliged to allow it in the payment of the rent.

This tax is levied by a much smaller number of officers than any other which affords nearly the same revenue.

As the tax upon each district does not rise with the rise of the rent, the sovereign does not share in the profits of the landlord’s improvements.

Those improvements sometimes contribute, indeed, to the discharge of the other landlords of the district.

But the aggravation of the tax, which this may sometimes occasion upon a particular estate, is always so very small, that it never can discourage those improvements, nor keep down the produce of the land below what it would otherwise rise to.

As it has no tendency to diminish the quantity, it can have none to raise the price of that produce.

It does not obstruct the industry of the people;

it subjects the landlord to no other inconveniency besides the unavoidable one of paying the tax.

The advantage, however, which the land-lord has derived from the invariable constancy of the valuation, by which all the lands of Great Britain are rated to the land-tax, has been principally owing to some circumstances altogether extraneous to the nature of the tax.

 It has been owing in part, to the great prosperity of almost every part of the country, the rents of almost all the estates of Great Britain having, since the time when this valuation was first established, been continually rising, and scarce any of them having fallen.

The landlords, therefore, have almost all gained the difference between the tax which they would have paid, according to the present rent of their estates, and that which they actually pay according to the ancient valuation.

Had the state of the country been different, had rents been gradually falling in consequence of the declension of cultivation, the landlords would almost all have lost this difference.

In the state of things which has happened to take place since the revolution, the constancy of the valuation has been advantageous to the landlord and hurtful to the sovereign.

In a different state of things it might have been advantageous to the sovereign and hurtful to the landlord.

 As the tax is made payable in money, so the valuation of the land is expressed in money.

Since the establishment of this valuation, the value of silver has been pretty uniform, and there has been no alteration in the standard of the coin, either as to weight or fineness.

Had silver risen considerably in its value, as it seems to have done in the course of the two centuries which preceded the discovery of the mines of America, the constancy of the valuation might have proved very oppressive to the landlord.

Had silver fallen considerably in its value, as it certainly did for about a century at least after the discovery of those mines, the same constancy of valuation would have reduced very much this branch of the revenue of the sovereign.

Had any considerable alteration been made in the standard of the money, either by sinking the same quantity of silver to a lower denomination, or by raising it to a higher;

had an ounce of silver, for example, instead of being coined into five shillings and two pence, been coined either into pieces which bore so low a denomination as two shillings and seven pence, or into pieces which bore so high a one as ten shillings and four pence, it would, in the one case, have hurt the revenue of the proprietor, in the other that of the sovereign.

 In circumstances, therefore, somewhat different from those which have actually taken place, this constancy of valuation might have been a very great inconveniency, either to the contributors or to the commonwealth.

In the course of ages, such circumstances, however, must at some time or other happen.

But though empires, like all the other works of men, have all hitherto proved mortal, yet every empire aims at immortality.

Every constitution, therefore, which it is meant should be as permanent as the empire itself, ought to be convenient, not in certain circumstances only, but in all circumstances;

or ought to be suited, not to those circumstances which are transitory, occasional, or accidental, but to those which are necessary, and therefore always the same.

 A tax upon the rent of land, which varies with every variation of the rent, or which rises and falls according to the improvement or neglect of cultivation, is recommended by that sect of men of letters in France, who call themselves the economists, as the most equitable of all taxes.

All taxes, they pretend, fall ultimately upon the rent of land, and ought, therefore, to be imposed equally upon the fund which must finally pay them.

That all taxes ought to fall as equally as possible upon the fund which must finally pay them, is certainly true.

But without entering into the disagreeable discussion of the metaphysical arguments by which they support their very ingenious theory, it will sufficiently appear, from the following review, what are the taxes which fall finally upon the rent of the land, and what are those which fall finally upon some other fund.

 In the Venetian territory, all the arable lands which are given in lease to farmers are taxed at a tenth of the rent. {Memoires concernant les Droits, p. 240, 241.}

The leases are recorded in a public register, which is kept by the officers of revenue in each province or district.

When the proprietor cultivates his own lands, they are valued according to an equitable estimation, and he is allowed a deduction of one-fifth of the tax;

so that for such land he pays only eight instead of ten per cent.

of the supposed rent.

 A land-tax of this kind is certainly more equal than the land-tax of England.

It might not, perhaps, be altogether so certain, and the assessment of the tax might frequently occasion a good deal more trouble to the landlord.

It might, too, be a good deal more expensive in the levying.

 Such a system of administration, however, might, perhaps, be contrived, as would in a great measure both prevent this uncertainty, and moderate this expense.

 The landlord and tenant, for example, might jointly be obliged to record their lease in a public register.

Proper penalties might be enacted against concealing or misrepresenting any of the conditions;

and if part of those penalties were to be paid to either of the two parties who informed against and convicted the other of such concealment or misrepresentation, it would effectually deter them from combining together in order to defraud the public revenue.

All the conditions of the lease might be sufficiently known from such a record.

 Some landlords, instead of raising the rent, take a fine for the renewal of the lease.

This practice is, in most cases, the expedient of a spendthrift, who, for a sum of ready money sells a future revenue of much greater value.

It is, in most cases, therefore, hurtful to the landlord;

it is frequently hurtful to the tenant;

and it is always hurtful to the community.

It frequently takes from the tenant so great a part of his capital, and thereby diminishes so much his ability to cultivate the land, that he finds it more difficult to pay a small rent than it would otherwise have been to pay a great one.

Whatever diminishes his ability to cultivate, necessarily keeps down, below what it would otherwise have been, the most important part of the revenue of the community.

By rendering the tax upon such fines a good deal heavier than upon the ordinary rent, this hurtful practice might be discouraged, to the no small advantage of all the different parties concerned, of the landlord, of the tenant, of the sovereign, and of the whole community.

 Some leases prescribe to the tenant a certain mode of cultivation, and a certain succession of crops, during the whole continuance of the lease.

This condition, which is generally the effect of the landlord’s conceit of his own superior knowledge (a conceit in most cases very ill-founded), ought always to be considered as an additional rent, as a rent in service, instead of a rent in money.

In order to discourage the practice, which is generally a foolish one, this species of rent might be valued rather high, and consequently taxed somewhat higher than common money-rents.

 Some landlords, instead of a rent in money, require a rent in kind, in corn, cattle, poultry, wine, oil, etc.; others, again, require a rent in service.

Such rents are always more hurtful to the tenant than beneficial to the landlord.

They either take more, or keep more out of the pocket of the former, than they put into that of the latter.

In every country where they take place, the tenants are poor and beggarly, pretty much according to the degree in which they take place.

By valuing, in the same manner, such rents rather high, and consequently taxing them somewhat higher than common money-rents, a practice which is hurtful to the whole community, might, perhaps, be sufficiently discouraged.

 When the landlord chose to occupy himself a part of his own lands, the rent might be valued according to an equitable arbitration of the farmers and landlords in the neighbourhood, and a moderate abatement of the tax might be granted to him, in the same manner as in the Venetian territory, provided the rent of the lands which he occupied did not exceed a certain sum.

It is of importance that the landlord should be encouraged to cultivate a part of his own land.

His capital is generally greater than that of the tenant, and, with less skill, he can frequently raise a greater produce.

The landlord can afford to try experiments, and is generally disposed to do so.

His unsuccessful experiments occasion only a moderate loss to himself.

His successful ones contribute to the improvement and better cultivation of the whole country.

It might be of importance, however, that the abatement of the tax should encourage him to cultivate to a certain extent only.

If the landlords should, the greater part of them, be tempted to farm the whole of their own lands, the country (instead of sober and industrious tenants, who are bound by their own interest to cultivate as well as their capital and skill will allow them) would be filled with idle and profligate bailiffs, whose abusive management would soon degrade the cultivation, and reduce the annual produce of the land, to the diminution, not only of the revenue of their masters, but of the most important part of that of the whole society.

 Such a system of administration might, perhaps, free a tax of this kind from any degree of uncertainty, which could occasion either oppression or inconveniency to the contributor;

and might, at the same time, serve to introduce into the common management of land such a plan of policy as might contribute a good deal to the general improvement and good cultivation of the country.

 The expense of levying a land-tax, which varied with every variation of the rent, would, no doubt, be somewhat greater than that of levying one which was always rated according to a fixed valuation.

Some additional expense would necessarily be incurred, both by the different register-offices which it would be proper to establish in the different districts of the country, and by the different valuations which might occasionally be made of the lands which the proprietor chose to occupy himself.

The expense of all this, however, might be very moderate, and much below what is incurred in the levying of many other taxes, which afford a very inconsiderable revenue in comparison of what might easily be drawn from a tax of this kind.

 The discouragement which a variable land-tax of this kind might give to the improvement of land, seems to be the most important objection which can be made to it.

The landlord would certainly be less disposed to improve, when the sovereign, who contributed nothing to the expense, was to share in the profit of the improvement.

Even this objection might, perhaps, be obviated, by allowing the landlord, before he began his improvement, to ascertain, in conjunction with the officers of revenue, the actual value of his lands, according to the equitable arbitration of a certain number of landlords and farmers in the neighbourhood, equally chosen by both parties: and by rating him, according to this valuation, for such a number of years as might be fully sufficient for his complete indemnification.

To draw the attention of the sovereign towards the improvement of the land, from a regard to the increase of his own revenue, is one or the principal advantages proposed by this species of land-tax.

The term, therefore, allowed, for the indemnification of the landlord, ought not to be a great deal longer than what was necessary for that purpose, lest the remoteness of the interest should discourage too much this attention.

It had better, however, be somewhat too long, than in any respect too short.

No incitement to the attention of the sovereign can ever counterbalance the smallest discouragement to that of the landlord.

The attention of the sovereign can be, at best, but a very general and vague consideration of what is likely to contribute to the better cultivation of the greater part of his dominions.

The attention of the landlord is a particular and minute consideration of what is likely to be the most advantageous application of every inch of ground upon his estate.

The principal attention of the sovereign ought to be, to encourage, by every means in his power, the attention both of the landlord and of the farmer, by allowing both to pursue their own interest in their own way, and according to their own judgment;

by giving to both the most perfect security that they shall enjoy the full recompence of their own industry;

and by procuring to both the most extensive market for every part of their produce, in consequence of establishing the easiest and safest communications, both by land and by water, through every part of his own dominions, as well as the most unbounded freedom of exportation to the dominions of all other princes.

 If, by such a system of administration, a tax of this kind could be so managed as to give, not only no discouragement, but, on the contrary, some encouragement to the improvement or land, it does not appear likely to occasion any other inconveniency to the landlord, except always the unavoidable one of being obliged to pay the tax.

In all the variations of the state of the society, in the improvement and in the declension of agriculture;

in all the variations in the value of silver, and in all those in the standard of the coin, a tax of this kind would, of its own accord, and without any attention of government, readily suit itself to the actual situation of things, and would be equally just and equitable in all those different changes.

It would, therefore, be much more proper to be established as a perpetual and unalterable regulation, or as what is called a fundamental law of the commonwealth, than any tax which was always to be levied according to a certain valuation.

 Some states, instead of the simple and obvious expedient of a register of leases, have had recourse to the laborious and expensive one of an actual survey and valuation of all the lands in the country.

They have suspected, probably, that the lessor and lessee, in order to defraud the public revenue, might combine to conceal the real terms of the lease.

Doomsday-book seems to have been the result of a very accurate survey of this kind.

 In the ancient dominions of the king of Prussia, the land-tax is assessed according to an actual survey and valuation, which is reviewed and altered from time to time. {Memoires concernant les Droits, etc.

tom, i. p. 114, 115, 116, etc.}

According to that valuation, the lay proprietors pay from twenty to twenty-five per cent.

of their revenue; ecclesiastics from forty to forty-five per cent.

The survey and valuation of Silesia was made by order of the present king, it is said, with great accuracy.

According to that valuation, the lands belonging to the bishop of Breslaw are taxed at twenty-five per cent.

of their rent.

The other revenues of the ecclesiastics of both religions at fifty per cent.

The commanderies of the Teutonic order, and of that of Malta, at forty per cent.

Lands held by a noble tenure, at thirty-eight and one-third per cent.

Lands held by a base tenure, at thirty-five and one-third per cent.

 The survey and valuation of Bohemia is said to have been the work of more than a hundred years.

It was not perfected till after the peace of 1748, by the orders of the present empress queen. {Id. tom i. p.85, 84.}

The survey of the duchy of Milan, which was begun in the time of Charles VI., was not perfected till after 1760. It is esteemed one of the most accurate that has ever been made.

The survey of Savoy and Piedmont was executed under the orders of the late king of Sardinia. {Id. p. 280, etc.; also p, 287. etc. to 316.}

 In the dominions of the king of Prussia, the revenue of the church is taxed much higher than that of lay proprietors.

The revenue of the church is, the greater part of it, a burden upon the rent of land.

It seldom happens that any part of it is applied towards the improvement of land;

or is so employed as to contribute, in any respect, towards increasing the revenue of the great body of the people.

His Prussian majesty had probably, upon that account, thought it reasonable that it should contribute a good deal more towards relieving the exigencies of the state.

In some countries, the lands of the church are exempted from all taxes.

In others, they are taxed more lightly than other lands.

In the duchy of Milan, the lands which the church possessed before 1575, are rated to the tax at a third only or their value.

 In Silesia, lands held by a noble tenure are taxed three per cent.

higher than those held by a base tenure.

The honours and privileges of different kinds annexed to the former, his Prussian majesty had probably imagined, would sufficiently compensate to the proprietor a small aggravation of the tax;

while, at the same time, the humiliating inferiority of the latter would be in some measure alleviated, by being taxed somewhat more lightly.

In other countries, the system of taxation, instead of alleviating, aggravates this inequality.

In the dominions of the king of Sardinia, and in those provinces of France which are subject to what is called the real or predial taille, the tax falls altogether upon the lands held by a base tenure.

Those held by a noble one are exempted.

 A land tax assessed according to a general survey and valuation, how equal soever it may be at first, must, in the course of a very moderate period of time, become unequal.

To prevent its becoming so would require the continual and painful attention of government to all the variations in the state and produce of every different farm in the country.

The governments of Prussia, of Bohemia, of Sardinia, and of the duchy of Milan, actually exert an attention of this kind;

an attention so unsuitable to the nature of government, that it is not likely to be of long continuance, and which, if it is continued, will probably, in the long-run, occasion much more trouble and vexation than it can possibly bring relief to the contributors.

 In 1666, the generality of Montauban was assessed to the real or predial taille, according, it is said, to a very exact survey and valuation. {Memoires concernant les Droits, etc.

tom. ii p. 139, etc.}

By 1727, this assessment had become altogether unequal.

In order to remedy this inconveniency, government has found no better expedient, than to impose upon the whole generality an additional tax of a hundred and twenty thousand livres.

This additional tax is rated upon all the different districts subject to the taille according to the old assessment.

But it is levied only upon those which, in the actual state of things, are by that assessment under-taxed; and it is applied to the relief of those which, by the same assessment, are over-taxed.

Two districts, for example, one of which ought, in the actual state of things, to be taxed at nine hundred, the other at eleven hundred livres, are, by the old assessment, both taxed at a thousand livres.

Both these districts are, by the additional tax, rated at eleven hundred livres each.

But this additional tax is levied only upon the district under-charged, and it is applied altogether to the relief of that overcharged, which consequently pays only nine hundred livres.

The government neither gains nor loses by the additional tax, which is applied altogether to remedy the inequalities arising from the old assessment.

The application is pretty much regulated according to the discretion of the intendant of the generality, and must, therefore, be in a great measure arbitrary.

 Taxes which are proportioned, not in the Rent, but to the Produce of Land.

 Taxes upon the produce of land are, In reality, taxes upon the rent;

and though they may be originally advanced by the farmer, are finally paid by the landlord.

When a certain portion of the produce is to be paid away for a tax, the farmer computes as well as he can, what the value of this portion is, one year with another, likely to amount to, and he makes a proportionable abatement in the rent which he agrees to pay to the landlord.

There is no farmer who does not compute beforehand what the church tythe, which is a land tax of this kind, is, one year with another, likely to amount to.

 The tythe, and every other land tax of this kind, under the appearance of perfect equality, are very unequal taxes;

a certain portion of the produce being in different situations, equivalent to a very different portion of the rent.

In some very rich lands, the produce is so great, that the one half of it is fully sufficient to replace to the farmer his capital employed in cultivation, together with the ordinary profits of farming stock in the neighbourhood.

The other half, or, what comes to the same thing, the value of the other half, he could afford to pay as rent to the landlord, if there was no tythe.

But if a tenth of the produce is taken from him in the way of tythe, he must require an abatement of the fifth part of his rent, otherwise he cannot get back his capital with the ordinary profit.

In this case, the rent of the landlord, instead of amounting to a half, or five-tenths of the whole produce, will amount only to four-tenths of it.

In poorer lands, on the contrary, the produce is sometimes so small, and the expense of cultivation so great, that it requires four-fifths of the whole produce, to replace to the farmer his capital with the ordinary profit.

In this case, though there was no tythe, the rent of the landlord could amount to no more than one-fifth or two-tenths of the whole produce.

But if the farmer pays one-tenth of the produce in the way of tythe, he must require an equal abatement of the rent of the landlord, which will thus be reduced to one-tenth only of the whole produce.

Upon the rent of rich lands the tythe may sometimes be a tax of no more than one-fifth part, or four shillings in the pound;

whereas upon that of poorer lands, it may sometimes be a tax of one half, or of ten shillings in the pound.

 The tythe, as it is frequently a very unequal tax upon the rent, so it is always a great discouragement, both to the improvements of the landlord, and to the cultivation of the farmer.

The one cannot venture to make the most important, which are generally the most expensive improvements;

nor the other to raise the most valuable, which are generally, too, the most expensive crops;

when the church, which lays out no part of the expense, is to share so very largely in the profit.

The cultivation of madder was, for a long time, confined by the tythe to the United Provinces, which, being presbyterian countries, and upon that account exempted from this destructive tax, enjoyed a sort of monopoly of that useful dyeing drug against the rest of Europe.

The late attempts to introduce the culture of this plant into England, have been made only in consequence of the statute, which enacted that five shillings an acre should be received in lieu of all manner of tythe upon madder.

 As through the greater part of Europe, the church, so in many different countries of Asia, the state, is principally supported by a land tax, proportioned not to the rent, but to the produce of the land.

In China, the principal revenue of the sovereign consists in a tenth part of the produce of all the lands of the empire.

This tenth part, however, is estimated so very moderately, that, in many provinces, it is said not to exceed a thirtieth part of the ordinary produce.

The land tax or land rent which used to be paid to the Mahometan government of Bengal, before that country fell into the hands of the English East India company, is said to have amounted to about a fifth part of the produce.

The land tax of ancient Egypt is said likewise to have amounted to a fifth part.

 In Asia, this sort of land tax is said to interest the sovereign in the improvement and cultivation of land.

The sovereigns of China, those of Bengal while under the Mahometan govermnent, and those of ancient Egypt, are said, accordingly, to have been extremely attentive to the making and maintaining of good roads and navigable canals, in order to increase, as much as possible, both the quantity and value of every part of the produce of the land, by procuring to every part of it the most extensive market which their own dominions could afford.

The tythe of the church is divided into such small portions that no one of its proprietors can have any interest of this kind.

The parson of a parish could never find his account, in making a road or canal to a distant part of the country, in order to extend the market for the produce of his own particular parish.

Such taxes, when destined for the maintenance of the state, have some advantages, which may serve in some measure to balance their inconveniency.

When destined for the maintenance of the church, they are attended with nothing but inconveniency.

 Taxes upon the produce of land may be levied, either in kind, or, according to a certain valuation in money.

 The parson of a parish, or a gentleman of small fortune who lives upon his estate, may sometimes, perhaps find some advantage in receiving, the one his tythe, and the other his rent, in kind.

The quantity to be collected, and the district within which it is to be collected, are so small, that they both can oversee, with their own eyes, the collection and disposal of every part of what is due to them.

A gentleman of great fortune, who lived in the capital, would be in danger of suffering much by the neglect, and more by the fraud, of his factors and agents, if the rents of an estate in a distant province were to be paid to him in this manner.

The loss of the sovereign, from the abuse and depredation of his tax-gatherers, would necessarily be much greater.

The servants of the most careless private person are, perhaps, more under the eye of their master than those of the most careful prince;

and a public revenue, which was paid in kind, would suffer so much from the mismanagement of the collectors, that a very small part of what was levied upon the people would ever arrive at the treasury of the prince.

Some part of the public revenue of China, however, is said to be paid in this manner.

The mandarins and other tax-gatherers will, no doubt, find their advantage in continuing the practice of a payment, which is so much more liable to abuse than any payment in money.

 A tax upon the produce of land, which is levied in money, may be levied, either according to a valuation, which varies with all the variations of the market price;

or according to a fixed valuation, a bushel of wheat, for example, being always valued at one and the same money price, whatever may be the state of the market.

The produce of a tax levied in the former way will vary only according to the variations in the real produce of the land, according to the improvement or neglect of cultivation.

The produce of a tax levied in the latter way will vary, not only according to the variations in the produce of the land, but according both to those in the value of the precious metals, and those in the quantity of those metals which is at different times contained in coin of the same denomination.

The produce of the former will always bear the same proportion to the value of the real produce of the land.

The produce of the latter may, at different times, bear very different proportions to that value.

 When, instead either of a certain portion of the produce of land, or of the price of a certain portion, a certain sum of money is to be paid in full compensation for all tax or tythe;

the tax becomes, in this case, exactly of the same nature with the land tax of England.

It neither rises nor falls with the rent of the land.

It neither encourages nor discourages improvement.

The tythe in the greater part of those parishes which pay what is called a modus, in lieu of all other tythe is a tax of this kind.

During the Mahometan government of Bengal, instead of the payment in kind of the fifth part of the produce, a modus, and, it is said, a very moderate one, was established in the greater part of the districts or zemindaries of the country.

Some of the servants of the East India company, under pretence of restoring the public revenue to its proper value, have, in some provinces, exchanged this modus for a payment in kind.

Under their management, this change is likely both to discourage cultivation, and to give new opportunities for abuse in the collection of the public revenue, which has fallen very much below what it was said to have been when it first fell under the management of the company.

The servants of the company may, perhaps, have profited by the change, but at the expense, it is probable, both of their masters and of the country.

 Taxes upon the Rent of Houses.

 The rent of a house may be distinguished into two parts, of which the one may very properly be called the building-rent;

the other is commonly called the ground-rent.

 The building-rent is the interest or profit of the capital expended in building the house.

In order to put the trade of a builder upon a level with other trades, it is necessary that this rent should be sufficient, first, to pay him the same interest which he would have got for his capital, if he had lent it upon good security;

and, secondly, to keep the house in constant repair, or, what comes to the same thing, to replace, within a certain term of years, the capital which had been employed in building it.

The building-rent, or the ordinary profit of building, is, therefore, everywhere regulated by the ordinary interest of money.

Where the market rate of interest is four per cent.

the rent of a house, which, over and above paying the ground-rent, affords six or six and a-half per cent.

upon the whole expense of building, may, perhaps, afford a sufficient profit to the builder.

Where the market rate of interest is five per cent.

it may perhaps require seven or seven and a half per cent.

If, in proportion to the interest of money, the trade of the builders affords at any time much greater profit than this, it will soon draw so much capital from other trades as will reduce the profit to its proper level.

If it affords at any time much less than this, other trades will soon draw so much capital from it as will again raise that profit.

 Whatever part of the whole rent of a house is over and above what is sufficient for affording this reasonable profit, naturally goes to the ground-rent; and, where the owner of the ground and the owner of the building are two different persons, is, in most cases, completely paid to the former.

This surplus rent is the price which the inhabitant of the house pays for some real or supposed advantage of the situation.

In country houses, at a distance from any great town, where there is plenty of ground to chuse upon, the ground-rent is scarce anything, or no more than what the ground which the house stands upon would pay, if employed in agriculture.

In country villas, in the neighbourhood of some great town, it is sometimes a good deal higher;

and the peculiar conveniency or beauty of situation is there frequently very well paid for.

Ground-rents are generally highest in the capital, and in those particular parts of it where there happens to be the greatest demand for houses, whatever be the reason of that demand, whether for trade and business, for pleasure and society, or for mere vanity and fashion.

 A tax upon house-rent, payable by the tenant, and proportioned to the whole rent of each house, could not, for any considerable time at least, affect the building-rent.

If the builder did not get his reasonable profit, he would be obliged to quit the trade;

which, by raising the demand for building, would, in a short time, bring back his profit to its proper level with that of other trades.

Neither would such a tax fall altogether upon the ground-rent; but it would divide itself in such a manner, as to fall partly upon the inhabitant of the house, and partly upon the owner of the ground.

 Let us suppose, for example, that a particular person judges that he can afford for house-rent all expense of sixty pounds a-year; and let us suppose, too, that a tax of four shillings in the pound, or of one-fifth, payable by the inhabitant, is laid upon house-rent.

A house of sixty pounds rent will, in that case, cost him seventy-two pounds a-year, which is twelve pounds more than he thinks he can afford.

He will, therefore, content himself with a worse house, or a house of fifty pounds rent, which, with the additional ten pounds that he must pay for the tax, will make up the sum of sixty pounds a-year, the expense which he judges he can afford, and, in order to pay the tax, he will give up a part of the additional conveniency which he might have had from a house of ten pounds a-year more rent.

He will give up, I say, a part of this additional conveniency;

for he will seldom be obliged to give up the whole, but will, in consequence of the tax, get a better house for fifty pounds a-year, than he could have got if there had been no tax for as a tax of this kind, by taking away this particular competitor, must diminish the competition for houses of sixty pounds rent, so it must likewise diminish it for those of fifty pounds rent, and in the same manner for those of all other rents, except the lowest rent, for which it would for some time increase the competition.

But the rents of every class of houses for which the competition was diminished, would necessarily be more or less reduced.

As no part of this reduction, however, could for any considerable time at least, affect the building-rent, the whole of it must, in the long-run, necessarily fall upon the ground-rent.

The final payment of this tax, therefore, would fall partly upon the inhabitant of the house, who, in order to pay his share, would be obliged to give up a part of his conveniency;

and partly upon the owner of the ground, who, in order to pay his share, would be obliged to give up a part of his revenue.

In what proportion this final payment would be divided between them, it is not, perhaps, very easy to ascertain.

The division would probably be very different in different circumstances, and a tax of this kind might, according to those different circumstances, affect very unequally, both the inhabitant of the house and the owner of the ground.

 The inequality with which a tax of this kind might fall upon the owners of different ground-rents, would arise altogether from the accidental inequality of this division.

But the inequality with which it might fall upon the inhabitants of different houses, would arise, not only from this, but from another cause.

The proportion of the expense of house-rent to the whole expense of living, is different in the different degrees of fortune.

It is, perhaps, highest in the highest degree, and it diminishes gradually through the inferior degrees, so as in general to be lowest in the lowest degree.

The necessaries of life occasion the great expense of the poor.

They find it difficult to get food, and the greater part of their little revenue is spent in getting it.

The luxuries and vanities of life occasion the principal expense of the rich;

and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess.

A tax upon house-rents, therefore, would in general fall heaviest upon the rich;

and in this sort of inequality there would not, perhaps, be any thing very unreasonable.

It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

 The rent of houses, though it in some respects resembles the rent of land, is in one respect essentially different from it.

The rent of land is paid for the use of a productive subject.

The land which pays it produces it.

The rent of houses is paid for the use of an unproductive subject.

Neither the house, nor the ground which it stands upon, produce anything.

The person who pays the rent, therefore, must draw it from some other source of revenue, distinct from and independent of this subject.

A tax upon the rent of houses, so far as it falls upon the inhabitants, must be drawn from the same source as the rent itself, and must be paid from their revenue, whether derived from the wages of labour, the profits of stock, or the rent of land.

So far as it falls upon the inhabitants, it is one of those taxes which fall, not upon one only, but indifferently upon all the three different sources of revenue;

and is, in every respect, of the same nature as a tax upon any other sort of consumable commodities.

In general, there is not perhaps, any one article of expense or consumption by which the liberality or narrowness of a man’s whole expense can be better judged of than by his house-rent.

A proportional tax upon this particular article of expense might, perhaps, produce a more considerable revenue than any which has hitherto been drawn from it in any part of Europe.

If the tax, indeed, was very high, the greater part of people would endeavour to evade it as much as they could, by contenting themselves with smaller houses, and by turning the greater part of their expense into some other channel.

 The rent of houses might easily be ascertained with sufficient accuracy, by a policy of the same kind with that which would be necessary for ascertaining the ordinary rent of land.

Houses not inhabited ought to pay no tax.

A tax upon them would fall altogether upon the proprietor, who would thus be taxed for a subject which afforded him neither conveniency nor revenue.

Houses inhabited by the proprietor ought to be rated, not according to the expense which they might have cost in building, but according to the rent which an equitable arbitration might judge them likely to bring if leased to a tenant.

If rated according to the expense which they might have cost in building, a tax of three or four shillings in the pound, joined with other taxes, would ruin almost all the rich and great families of this, and, I believe, of every other civilized country.

Whoever will examine with attention the different town and country houses of some of the richest and greatest families in this country, will find that, at the rate of only six and a-half, or seven per cent.

upon the original expense of building, their house-rent is nearly equal to the whole neat rent of their estates.

It is the accumulated expense of several successive generations, laid out upon objects of great beauty and magnificence, indeed, but, in proportion to what they cost, of very small exchangeable value.

{Since the first publication of this book, a tax nearly upon the above-mentioned principles has been imposed.}

 Ground-rents are a still more proper subject of taxation than the rent of houses.

A tax upon ground-rents would not raise the rent of houses;

it would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.

More or less can be got for it, according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense.

In every country, the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found.

As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground.

Whether the tax was to be advanced by the inhabitant or by the owner of the ground, would be of little importance.

The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground;

so that the final payment of the tax would fall altogether upon the owner of the ground-rent.

The ground-rents of uninhabited houses ought to pay no tax.

Both ground-rents, and the ordinary rent of land, are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own.

Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry.

The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before.

Ground-rents, and the ordinary rent of land, are therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them.

 Ground-rents seem, in this respect, a more proper subject of peculiar taxation, than even the ordinary rent of land.

The ordinary rent of land is, in many cases, owing partly, at least, to the attention and good management of the landlord.

A very heavy tax might discourage, too much, this attention and good management.

Ground-rents, so far as they exceed the ordinary rent of land, are altogether owing to the good government of the sovereign, which, by protecting the industry either of the whole people or of the inhabitants of some particular place, enables them to pay so much more than its real value for the ground which they build their houses upon;

or to make to its owner so much more than compensation for the loss which he might sustain by this use of it.

Nothing can be more reasonable, than that a fund, which owes its existence to the good government of the state, should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that government.

 Though, in many different countries of Europe, taxes have been imposed upon the rent of houses, I do not know of any in which ground-rents have been considered as a separate subject of taxation.

The contrivers of taxes have, probably, found some difficulty in ascertaining what part of the rent ought to be considered as ground-rent, and what part ought to be considered as building-rent.

It should not, however, seem very difficult to distinguish those two parts of the rent from one another.

 In Great Britain the rent of houses is supposed to be taxed in the same proportion as the rent of land, by what is called the annual land tax.

The valuation, according to which each different parish and district is assessed to this tax, is always the same.

It was originally extremely unequal, and it still continues to be so.

Through the greater part of the kingdom this tax falls still more lightly upon the rent of houses than upon that of land.

In some few districts only, which were originally rated high, and in which the rents of houses have fallen considerably, the land tax of three or four shillings in the pound is said to amount to an equal proportion of the real rent of houses.

Untenanted houses, though by law subject to the tax, are, in most districts, exempted from it by the favour of the assessors;

and this exemption sometimes occasions some little variation in the rate of particular houses, though that of the district is always the same.

Improvements of rent, by new buildings, repairs, etc.

go to the discharge of the district, which occasions still further variations in the rate of particular houses.

 In the province of Holland, {Memoires concernant les Droits, etc.

p. 223.} every house is taxed at two and a-half per cent.

of its value, without any regard, either to the rent which it actually pays, or to the circumstance of its being tenanted or untenanted.

There seems to be a hardship in obliging the proprietor to pay a tax for an untenanted house, from which he can derive no revenue, especially so very heavy a tax.

In Holland, where the market rate of interest does not exceed three per cent., two and a-half per cent.

upon the whole value of the house must, in most cases, amount to more than a third of the building-rent, perhaps of the whole rent.

The valuation, indeed, according to which the houses are rated, though very unequal, is said to be always below the real value.

When a house is rebuilt, improved, or enlarged, there is a new valuation, and the tax is rated accordingly.

 The contrivers of the several taxes which in England have, at different times, been imposed upon houses, seem to have imagined that there was some great difficulty in ascertaining, with tolerable exactness, what was the real rent of every house.

They have regulated their taxes, therefore, according to some more obvious circumstance, such as they had probably imagined would, in most cases, bear some proportion to the rent.

 The first tax of this kind was hearth-money; or a tax of two shillings upon every hearth.

In order to ascertain how many hearths were in the house, it was necessary that the tax-gatherer should enter every room in it.

This odious visit rendered the tax odious.

Soon after the Revolution, therefore, it was abolished as a badge of slavery.

 The next tax of this kind was a tax of two shillings upon every dwelling-house inhabited.

A house with ten windows to pay four shillings more.

A house with twenty windows and upwards to pay eight shillings.

This tax was afterwards so far altered, that houses with twenty windows, and with less than thirty, were ordered to pay ten shillings, and those with thirty windows and upwards to pay twenty shillings.

The number of windows can, in most cases, be counted from the outside, and, in all cases, without entering every room in the house.

The visit of the tax-gatherer, therefore, was less offensive in this tax than in the hearth-money.

 This tax was afterwards repealed, and in the room of it was established the window-tax, which has undergone two several alterations and augmentations.

The window tax, as it stands at present (January 1775), over and above the duty of three shillings upon every house in England, and of one shilling upon every house in Scotland, lays a duty upon every window, which in England augments gradually from twopence, the lowest rate upon houses with not more than seven windows, to two shillings, the highest rate upon houses with twenty-five windows and upwards.

 The principal objection to all such taxes is their inequality;

an inequality of the worst kind, as they must frequently fall much heavier upon the poor than upon the rich.

A house of ten pounds rent in a country town, may sometimes have more windows than a house of five hundred pounds rent in London; and though the inhabitant of the former is likely to be a much poorer man than that of the latter, yet, so far as his contribution is regulated by the window tax, he must contribute more to the support of the state.

Such taxes are, therefore, directly contrary to the first of the four maxims above mentioned.

They do not seem to offend much against any of the other three.

 The natural tendency of the window tax, and of all other taxes upon houses, is to lower rents.

The more a man pays for the tax, the less, it is evident, he can afford to pay for the rent.

Since the imposition of the window tax, however, the rents of houses have, upon the whole, risen more or less, in almost every town and village of Great Britain, with which I am acquainted.

Such has been, almost everywhere, the increase of the demand for houses, that it has raised the rents more than the window tax could sink them;

one of the many proofs of the great prosperity of the country, and of the increasing revenue of its inhabitants.

Had it not been for the tax, rents would probably have risen still higher.

 ARTICLE II.—Taxes upon Profit, or upon the Revenue arising from Stock.

 The revenue or profit arising from stock naturally divides itself into two parts;

that which pays the interest, and which belongs to the owner of the stock;

and that surplus part which is over and above what is necessary for paying the interest.

 This latter part of profit is evidently a subject not taxable directly.

It is the compensation, and, in most cases, it is no more than a very moderate compensation for the risk and trouble of employing the stock.

The employer must have this compensation, otherwise he cannot, consistently with his own interest, continue the employment.

If he was taxed directly, therefore, in proportion to the whole profit, he would be obliged either to raise the rate of his profit, or to charge the tax upon the interest of money;

that is, to pay less interest.

If he raised the rate of his profit in proportion to the tax, the whole tax, though it might be advanced by him, would be finally paid by one or other of two different sets of people, according to the different ways in which he might employ the stock of which he had the management.

If he employed it as a farming stock, in the cultivation of land, he could raise the rate of his profit only by retaining a greater portion, or, what comes to the same thing, the price of a greater portion, of the produce of the land;

and as this could be done only by a reduction of rent, the final payment of the tax would fall upon the landlord.

If he employed it as a mercantile or manufacturing stock, he could raise the rate of his 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 twenty-four 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 magistrate, 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 supposed 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 be a tax upon the interest of money, proportioned to that upon the rent of land;

so that when the latter is at four shillings in the pound, the former may be at four shillings in the pound too.

The tax at Hamburg, and the still more moderate taxes of Underwald and Zurich, are meant, in the same manner, to be taxes, not upon the capital, but upon the interest or neat revenue of stock.

That of Holland was meant to be a tax upon the capital.

 Taxes upon the Profit of particular Employments.

 In some countries, extraordinary taxes are imposed upon the profits of stock;

sometimes when employed in particular branches of trade, and sometimes when employed in agriculture.

 Of the former kind, are in England, the tax upon hawkers and pedlars, that upon hackney-coaches and chairs, and that which the keepers of ale-houses pay for a licence to retail ale and spiritous liquors.

During the late war, another tax of the same kind was proposed upon shops.

The war having been undertaken, it was said, in defence of the trade of the country, the merchants, who were to profit by it, ought to contribute towards the support of it.

 A tax, however, upon the profits of stock employed in any particular branch of trade, can never fall finally upon the dealers (who must in all ordinary cases have their reasonable profit, and, where the competition is free, can seldom have more than that profit), but always upon the consumers, who must be obliged to pay in the price of the goods the tax which the dealer advances;

and generally with some overcharge.

 A tax of this kind, when it is proportioned to the trade of the dealer, is finally paid by the consumer, and occasions no oppression to the dealer.

When it is not so proportioned, but is the same upon all dealers, though in this case, too, it is finally paid by the consumer, yet it favours the great, and occasions some oppression to the small dealer.

The tax of five shillings a-week upon every hackney coach, and that of ten shillings a-year upon every hackney chair, so far as it is advanced by the different keepers of such coaches and chairs, is exactly enough proportioned to the extent of their respective dealings.

It neither favours the great, nor oppresses the smaller dealer.

The tax of twenty shillings a-year for a licence to sell ale;

of forty shillings for a licence to sell spiritous liquors;

and of forty shillings more for a licence to sell wine, being the same upon all retailers, must necessarily give some advantage to the great, and occasion some oppression to the small dealers.

The former must find it more easy to get back the tax in the price of their goods than the latter.

The moderation of the tax, however, renders this inequality of less importance;

and it may to many people appear not improper to give some discouragement to the multiplication of little ale-houses.

The tax upon shops, it was intended, should be the same upon all shops.

It could not well have been otherwise.

It would have been impossible to proportion, with tolerable exactness, the tax upon a shop to the extent of the trade carried on in it, without such an inquisition as would have been altogether insupportable in a free country.

If the tax had been considerable, it would have oppressed the small, and forced almost the whole retail trade into the hands of the great dealers.

The competition of the former being taken away, the latter would have enjoyed a monopoly of the trade;

and, like all other monopolists, would soon have combined to raise their profits much beyond what was necessary for the payment of the tax.

The final payment, instead of falling upon the shop-keeper, would have fallen upon the consumer, with a considerable overcharge to the profit of the shop-keeper.

For these reasons, the project of a tax upon shops was laid aside, and in the room of it was substituted the subsidy, 1759.

 What in France is called the personal taille, is perhaps, the most important tax upon the profits of stock employed in agriculture, that is levied in any part of Europe.

 In the disorderly state of Europe, during the prevalence of the feudal government, the sovereign was obliged to content himself with taxing those who were too weak to refuse to pay taxes.

The great lords, though willing to assist him upon particular emergencies, refused to subject themselves to any constant tax, and he was not strong enough to force them.

The occupiers of land all over Europe were, the greater part of them, originally bond-men.

Through the greater part of Europe, they were gradually emancipated.

Some of them acquired the property of landed estates, which they held by some base or ignoble tenure, sometimes under the king, and sometimes under some other great lord, like the ancient copy-holders of England.

Others, without acquiring the property, obtained leases for terms of years, of the lands which they occupied under their lord, and thus became less dependent upon him.

The great lords seem to have beheld the degree of prosperity and independency, which this inferior order of men had thus come to enjoy, with a malignant and contemptuous indignation, and willingly consented that the sovereign should tax them.

In some countries, this tax was confined to the lands which were held in property by an ignoble tenure;

and, in this case, the taille was said to be real.

The land tax established by the late king of Sardinia, and the taille in the provinces of Languedoc, Provence, Dauphine, and Britanny; in the generality of Montauban, and in the elections of Agen and Condom, as well as in some other districts of France; are taxes upon lands held in property by an ignoble tenure.

In other countries, the tax was laid upon the supposed profits of all those who held, in farm or lease, lands belonging to other people, whatever might be the tenure by which the proprietor held them;

and in this case, the taille was said to be personal.

In the greater part of those provinces of France, which are called the countries of elections, the taille is of this kind.

The real taille, as it is imposed only upon a part of the lands of the country, is necessarily an unequal, but it is not always an arbitrary tax, though it is so upon some occasions.

The personal taille, as it is intended to be proportioned to the profits of a certain class of people, which can only be guessed at, is necessarily both arbitrary and unequal.

 In France, the personal taille at present (1775) annually imposed upon the twenty generalities, called the countries of elections, amounts to 40,107,239 livres, 16 sous. {Memoires concernant les Droits, etc tom.

ii, p.17.}

the proportion in which this sum is assessed upon those different provinces, varies from year to year, according to the reports which are made to the king’s council concerning the goodness or badness of the crops, as well as other circumstances, which may either increase or diminish their respective abilities to pay.

Each generality is divided into a certain number of elections;

and the proportion in which the sum imposed upon the whole generality is divided among those different elections, varies likewise from year to year, according to the reports made to the council concerning their respective abilities.

It seems impossible, that the council, with the best intentions, can ever proportion, with tolerable exactness, either of these two assessments to the real abilities of the province or district upon which they are respectively laid.

Ignorance and misinformation must always, more or less, mislead the most upright council.

The proportion which each parish ought to support of what is assessed upon the whole election, and that which each individual ought to support of what is assessed upon his particular parish, are both in the same manner varied from year to year, according as circumstances are supposed to require.

These circumstances are judged of, in the one case, by the officers of the election, in the other, by those of the parish;

and both the one and the other are, more or less, under the direction and influence of the intendant.

Not only ignorance and misinformation, but friendship, party animosity, and private resentment, are said frequently to mislead such assessors.

No man subject to such a tax, it is evident, can ever be certain, before he is assessed, of what he is to pay.

He cannot even be certain after he is assessed.

If any person has been taxed who ought to have been exempted, or if any person has been taxed beyond his proportion, though both must pay in the mean time, yet if they complain, and make good their complaints, the whole parish is reimposed next year, in order to reimburse them.

If any of the contributors become bankrupt or insolvent, the collector is obliged to advance his tax;

and the whole parish is reimposed next year, in order to reimburse the collector.

If the collector himself should become bankrupt, the parish which elects him must answer for his conduct to the receiver-general of the election.

But, as it might be troublesome for the receiver to prosecute the whole parish, he takes at his choice five or six of the richest contributors, and obliges them to make good what had been lost by the insolvency of the collector.

The parish is afterwards reimposed, in order to reimburse those five or six.

Such reimpositions are always over and above the taille of the particular year in which they are laid on.

 When a tax is imposed upon the profits of stock in a particular branch of trade, the traders are all careful to bring no more goods to market than what they can sell at a price sufficient to reimburse them from advancing the tax.

Some of them withdraw a part of their stocks from the trade, and the market is more sparingly supplied than before.

The price of the goods rises, and the final payment of the tax falls upon the consumer.

But when a tax is imposed upon the profits of stock employed in agriculture, it is not the interest of the farmers to withdraw any part of their stock from that employment.

Each farmer occupies a certain quantity of land, for which he pays rent.

For the proper cultivation of this land, a certain quantity of stock is necessary;

and by withdrawing any part of this necessary quantity, the farmer is not likely to be more able to pay either the rent or the tax.

In order to pay the tax, it can never be his interest to diminish the quantity of his produce, nor consequently to supply the market more sparingly than before.

The tax, therefore, will never enable him to raise the price of his produce, so as to reimburse himself, by throwing the final payment upon the consumer.

The farmer, however, must have his reasonable profit as well as every other dealer, otherwise he must give up the trade.

After the imposition of a tax of this kind, he can get this reasonable profit only by paying less rent to the landlord.

The more he is obliged to pay in the way of tax, the less he can afford to pay in the way of rent.

A tax of this kind, imposed during the currency of a lease, may, no doubt, distress or ruin the farmer.

Upon the renewal of the lease, it must always fall upon the landlord.

 In the countries where the personal taille takes place, the farmer is commonly assessed in proportion to the stock which he appears to employ in cultivation.

He is, upon this account, frequently afraid to have a good team of horses or oxen, but endeavours to cultivate with the meanest and most wretched instruments of husbandry that he can.

Such is his distrust in the justice of his assessors, that he counterfeits poverty, and wishes to appear scarce able to pay anything, for fear of being obliged to pay too much.

By this miserable policy, he does not, perhaps, always consult his own interest in the most effectual manner;

and he probably loses more by the diminution of his produce, than he saves by that of his tax.

Though, in consequence of this wretched cultivation, the market is, no doubt, somewhat worse supplied;

yet the small rise of price which this may occasion, as it is not likely even to indemnify the farmer for the diminution of his produce, it is still less likely to enable him to pay more rent to the landlord.

The public, the farmer, the landlord, all suffer more or less by this degraded cultivation.

That the personal taille tends, in many different ways, to discourage cultivation, and consequently to dry up the principal source of the wealth of every great country, I have already had occasion to observe in the third book of this Inquiry.

 What are called poll-taxes in the southern provinces of North America, and the West India islands, annual taxes of so much a-head upon every negro, are properly taxes upon the profits of a certain species of stock employed in agriculture.

As the planters, are the greater part of them, both farmers and landlords, the final payment of the tax falls upon them in their quality of landlords, without any retribution.

 Taxes of so much a head upon the bondmen employed in cultivation, seem anciently to have been common all over Europe.

There subsists at present a tax of this kind in the empire of Russia.

It is probably upon this account that poll-taxes of all kinds have often been represented as badges of slavery.

Every tax, however, is, to the person who pays it, a badge, not of slavery, but of liberty.

It denotes that he is subject to government, indeed;

but that, as he has some property, he cannot himself be the property of a master.

A poll tax upon slaves is altogether different from a poll-tax upon freemen.

The latter is paid by the persons upon whom it is imposed;

the former, by a different set of persons.

The latter is either altogether arbitrary, or altogether unequal, and, in most cases, is both the one and the other;

the former, though in some respects unequal, different slaves being of different values, is in no respect arbitrary.

Every master, who knows the number of his own slaves, knows exactly what he has to pay.

Those different taxes, however, being called by the same name, have been considered as of the same nature.

 The taxes which in Holland are imposed upon men and maid servants, are taxes, not upon stock, but upon expense;

and so far resemble the taxes upon consumable commodities.

The tax of a guinea a-head for every man-servant, which has lately been imposed in Great Britain, is of the same kind.

It falls heaviest upon the middling rank.

A man of two hundred a-year may keep a single man-servant.

A man of ten thousand a-year will not keep fifty.

It does not affect the poor.

 Taxes upon the profits of stock, in particular employments, can never affect the interest of money.

Nobody will lend his money for less interest to those who exercise the taxed, than to those who exercise the untaxed employments.

Taxes upon the revenue arising from stock in all employments, where the government attempts to levy them with any degree of exactness, will, in many cases, fall upon the interest of money.

The vingtieme, or twentieth penny, in France, is a tax of the same kind with what is called the land tax in England, and is assessed, in the same manner, upon the revenue arising upon land, houses, and stock.

So far as it affects stock, it is assessed, though not with great rigour, yet with much more exactness than that part of the land tax in England which is imposed upon the same fund.

It, in many cases, falls altogether upon the interest of money.

Money is frequently sunk in France, upon what are called contracts for the constitution of a rent;

that is, perpetual annuities, redeemable at any time by the debtor, upon payment of the sum originally advanced, but of which this redemption is not exigible by the creditor except in particular cases.

The vingtieme seems not to have raised the rate of those annuities, though it is exactly levied upon them all.