Speculations from Political Economy | Page 9

taken from the people was destroyed (much of it) or dissipated in the Crimea. But the sixteen-pence in the pound here suggested would be in lieu of an equal amount of taxes taken off (it would be rather less in amount than the taxes taken off): the nation therefore, would not feel it at all, though individuals would feel it in different ways. A poor man would have eightpence a week deducted from his wages, but he would get his beer at three-fifths the present price, his tea at two-thirds the present price, etc. He would soon feel that he gained by the change. The rich would find that they lost; but that loss would, I believe, be made up to them over and over again.
First, I believe it is impossible to realise the effect on our trade of having London, Liverpool, etc., free ports. We possess at present half the ocean trade of the world: with our ports free, we should get a yet larger share of the world's trade, and secure it permanently. That is to say, we should certainly keep it until other nations adopted Universal Free Trade.
Secondly, The fall in the price of tea, beer, etc., would be more than the amount of the tax remitted: the freedom of universal manufacture without any Government interference, the liberty to land tea without delay, and put it into the market without having to advance the duty, would cause at once a great activity in the trades, and at the same time a fall in price. By diminishing the need for middle-men the quality of the beer, tea, etc., would be raised, and adulteration diminished.
Thirdly, The fall in the price of tea and beer would bring down the price of all competing drinks: it would at first diminish the consumption of competing drinks. The cheapening the price of some of the prime necessaries of life would be to some extent divided between capital and labour. As in the case of wheat, the labourer would be made better off, while the profits of capital would be raised. A general and permanent improvement in all trades would result, except possibly in those of the tea-dealer and brewer--but I do not think they would lose. I see no end to the developments from Universal Free Trade: we can only gain some idea of what they would be by tracing as far as we may what the results of Free Trade in one article--wheat-- have been; and in doing this we must recollect that before 1846 the quantity of wheat imported was trifling compared with the present importation.
To this scheme of direct taxation Edward Wilson objects, "Taxation should fall on expenditure, not on income." It is true that our object must always be to encourage accumulation, and discourage destruction of capital (expenditure). Practically, it does not appear that a heavy income tax diminishes the taste for accumulation in England: it does increase the tendency of large capitalists to invest their capital out of England, so as to avoid the State charges on capital in England. But the capital in England and the quantity of English capital invested abroad are already so enormous that the "tendency" of an increased income tax may be disregarded. Lastly, it may be objected, Would the sixteen-pence income tax levied as you propose (or nearly so) raise ￡40,000,000? At the time of the Crimean War each penny in the pound income tax brought in a million sterling. At the present time, each penny in the pound income tax brings in nearer two millions sterling, but the productiveness of the tax is much interfered with by the large remissions now allowed, and subtractions which take effect just where the contributors to the tax are most numerous, say from ￡100 to ￡300 a year. I therefore reckon that, without remissions, the tax of sixteen-pence in the pound down to ￡156 a year would produce about ￡30,000,000, and that the tax down to ￡52 a year would about produce the rest. The total income that income tax is now levied on is nearly ￡600,000,000. We need not be surprised at the productiveness of the income tax. A man of ￡10,000 a year pays tax on that. But he has a steward on ￡300 a year, he is worth to his firm of lawyers ￡100 a year, and so on: these pay income tax on the ￡300 and the ￡100 over again. When the income tax is carried down to incomes on ￡1 a week, the tax will be levied on the same income over and over again. Even a spendthrift with ￡10,000 a year usually scatters more than he actually destroys.
Lastly, It has not been overlooked that there is an income tax now: and if the whole proceeds of the sixteen-pence income