and condition that every one should have left a sufficiency for his subsistence, or the means of procuring it; and as no fixed laws for the regulation of property can be so contrived as to provide for the relief of every case and distress which may arise, these cases and distresses, when their right and share in the common stock was given up or taken from them, were supposed to be left to the voluntary bounty of those who might be acquainted with the exigencies of their situation, and in the way of affording assistance. And, therefore, when the partition of property is rigidly maintained against the claims of indigence and distress, it is maintained in opposition to the intention of those who made it, and to his, who is the Supreme Proprietor of every thing, and who has filled the world with plenteousness for the sustentation and comfort of all whom he sends into it."*

Indeed the only ground (as has been before observed) on which the right of the poor to support has been or can be denied, is the alleged one of the impossibility of maintaining all who may be in want under a legal provision, and under a full knowledge on their part of their right, and a full acknowledgment of it on the part of those who are to support them. This ground being removed, however, and the allegation by which it is attempted to be maintained being shown (as I trust it has been) to rest on no solid arguments, and to have been already, in effect, abandoned by its ablest and most anxious defenders, the other consequence naturally and necessarily follows, namely, that the poor ought to be provided for by a legal assessment.

I shall conclude this chapter, therefore, by stating it as a theorem which has been demonstrated, that the right of the poor to support, and the right of the rich to engross and accumulate, are correlative and reciprocal privileges, the former being the condition on which the latter is enjoyed.

• Moral Philosophy, book iii. part 2, chap. 5.

CHAPTER X.

OF TAXES AND PUBLIC DEBTS.

SECTION I.

TAXES DEFINED THAT ALL THREE DISTINCT SORTS OF REVENUE AFFORD TAXES, WAGES AS WELL AS PROFIT

AND RENT

TAXES are general contributions of wealth, taken compulsatively, or by authority of law, (commonly in money, though sometimes in other sorts of goods,) for the purpose of being applied to pay expenses of a public nature; in particular to pay the expenses of government, that is, the expenses of justice and of defence, &c., as well as every other charge which governments or societies may be called upon or may deem it expedient to incur for the general good.

Taxes, therefore, are the items which make up the public revenue, and must all be paid out of the private revenue of individuals, namely, out of rent, profit, and wages.*

The old French Economists, who still have a few followers, maintain, that all taxes fall wholly upon the land, or upon rent, denying that either profit or wages afford any; the Ricardo economists again contend that taxes fall entirely upon rent and profit, denying in like manner that wages afford any. It is hoped, however, that what has been advanced in some of the former chapters of this inquiry will have been sufficient to demonstrate the fallacy of both these opinions, and to establish the

• Taxes may indeed be paid out of capital as well as out of revenue; but they can only be paid permanently out of the latter.

soundness of that which is laid down by Mr Hume and Dr Smith on this subject; namely, that all three distinct sorts of revenue afford taxes, wages as well as profit and rent.

It will be sufficient in this place, therefore, simply to reassert the doctrines maintained by the two authors just mentioned in regard to taxes, under the three different heads or denominations of revenue, and to refer to the fifth book of the Wealth of Nations for the fullest and most perfect account of the incidence and effect of particular imposts that has ever yet been given to the public.

I. Taxes on Rent.-Every land-tax ought to be laid on the rent of land; that is, it ought to be constituted a proportion, not of the gross, but of what is sometimes called the neat produce; or of that free surplus above the ordinary charges of production which has been already defined as forming the rent. A land-tax which, like tithes, is made a proportion of the gross produce of the land, forms an obstacle to its improvement and to the extension of cultivation,-it prevents the whole produce from increasing to that extent which it otherwise would do, and limits the wealth and population and resources of a country to a less ample development than they would otherwise attain to; whereas a tax proportioned to the rent, if confined within any moderate bounds, would be free from these or any other ill effects.

A direct tax upon rent falls wholly upon that particular description of revenue, and presents, as was before explained,* an expedient whereby a part at least of the produce of the land may be conveniently enjoyed in common, although the land itself cannot. Such a tax, if it were confined within moderate bounds, and never allowed to exceed one-eighth,

* See book i. chap. 9, sec. 2, p. 108, et seq.

or twelve and a half per cent. would not diminish the desirableness of land-property, or operate in any sensible degree as an obstacle to improvement; and as it cannot be denied that that portion of the value of the land, (namely, rent,) which arises from the mere progress of society, should be applied and enjoyed as a common good, in as far as such a thing may be practicable, without too much diminishing the desirableness of the land, such a tax upon rent ought to be made a fundamental law in all countries, and in highly-improved ones would go a great way towards defraying the whole expense of government under all ordinary circumstances, and consequently towards preventing the necessity of all other taxes, if it did not do so altogether.

It must be admitted, however, that if such a tax were allowed to rise much higher than an eighth, it would diminish too sensibly the value and desirableness of properties in land, and, by rendering the proprietors less interested, even operate as an obstruction to improvement of another sort; but kept at or under the rate just mentioned it could not possibly do either.

II. Taxes on Profit.-A direct tax on profit* falls wholly on profit, as one on rent falls wholly on rent; but yet profit is not so proper a subject of direct taxation as rent is ;first, because the amount or value of the capital from which the former arises is not like that of the land from which the latter arises, so open to inspection, or so easily ascertained; and to ascertain it with any degree of exactness would require too rigorous and vexatious an inquisition into men's private affairs; and, secondly, because capital can be removed from one country to another, and if it were directly

• It will probably be superfluous to remind the reader here that the term profit is used as synonymous with interest.

and heavily taxed, it would be very likely to be removed to the great detriment and disadvantage of the whole community.

"The interest of money," says Dr Smith, 66 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 shown 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 ascertain