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Exchequer bills of about twenty-two millions sterling, creating thirty-two or thirty-three millions stock; of which the Sinking Fund, now reduced to about twelve millions and three quarters sterling, will buy up about twenty millions of stock at the same rate, leaving the annual increase of funded debt at somewhere about twelve millions.

When I state the income to remain as before, it is founded, of course, on the supposition that as the expenses of a state of warfare have returned upon us again, the war taxes are to be replaced on their former footing, and the property tax to be continued as it stood during the late war. And upon all great emergencies, when correspondent pecuniary sacrifices are to be demanded by the government, I know not where so fair an estimate of the contributive power of the subject can be found as the property tax; or rather as it ought to be called the income tax, (for I know not why the title was ever changed) which, improved by certain modifications, with respect to the scale of taxable income, I look upon as the most efficient, the most equitable, and as little burthensome as any other, mode of raising the same quantum of income.

That certain modifications with respect to the scale of taxable income should be introduced, I perfectly agree with those who have arraigned the practical details of the act. I would, therefore, exempt all below one hundred pounds per annum, and, beginning at that point with a tax of one fiftieth part of the whole income, make small gradual progressions till it arose to four thousand per annum and upwards, from whence the full proportion of one tenth should be paid. Thus, £

100, and under 110, to pay one Fiftieth part.


Forty-eighth 120


Forty-sixth. 130


Forty-fourth. 140


Forty-second. 150





Thirty-sixth. 180


Thirty-fourth. 190


Thirty-second. 200





Twenty-sixth. 260


Twenty-fourth. 280


NO. X.


2 L







4000 and upwards

Tenth. And taking the above ' ratio as the scale of the tax at ten per cent, diminish or increase the product by one fourth or one half, accordingly as it may be necessary either to lower the rate to seven and a half or five per cent, or to raise it to twelve and a half or fifteen per cent.

The great error in the present scale appears to me to be in fixing the point of full taxation so low as £200 per annum ; because it is quite clear that a person with so moderate an income as that, cannot possibly spare one tenth of his whole subsistence so easily as a man with an annual receipt of £4000; neither do I think, considering the taxes already paid on articles of unavoidable consumption, that an income of less than £100 per annum ought to contribute any thing more in the shape of a direct tax on property; and because, also, almost all income below that point may, probably, be considered as the wages of labor; which, being estimated on the rate of absolute necessaries at the time's price, will not ade mit of any direct diminution. I am, nevertheless, perfectly aware that, in order to raise a productive revenue, it is impossible to depend entirely on luxuries; the decreased consumption of which, being purely optional, will generally counteract the increased rate of impost; yet, in the present case, the income being absolute, and not so much a matter of choice, and therefore equally productive as an object of taxation, it seems but fair towards the


classes to lay the weight of the tax on those who are best able to support the burthen. I have, therefore, after mature deliberation, laid down the foregoing scale of income tax as the most equitable proportion I can devise. But though I have ventured to suggest considerable modifications to relieve the lower incomes by transferring the heavier part of the burthen to the higher ones, I cannot possibly admit, or even pass over in silence, the wretched reasoning which has attempted to make a distinction, and to establish a rate of taxation for income arising from landed or monied property, (or as it has been called productive capital) different from that on annual emolument accruing from profession, trade, or personal industry of any

kind. It has been said that “the great problem is in exacting the tax, to preserve the relative proportion between the members

See Principles of Taxation, by William Frend, Esq. published in 1798.

of the state.” And in another passage of the same work, the same principle is laid down in rather plainer language, and better adapted to common apprehension, by saying, “If the taxes are made proportional, the relative situation of the persons taxed is preserved, and they are, after the payment of the tax, in the same proportion to each other as they were before.” Nothing can be more correct, or more equitably laid down than this first principle, which certainly ought to be the foundation of all impost; for all, or nearly all, taxes on consumption are ultimately incurred by the consumer when he purchases the commodity on which the duty is placed.

The author of the foregoing passages continues in the right path so far as to say “ contribution according to means should be the standing toast as well as the law of the country." I confess that I am not so enthusiastic an approver of popular discriinination, as to think that they who legislate by acclamation over à bumper of liquor, would make the most discreet of all possible law-givers, or the most cool and clear-headed financiers : nevertheless the principle of contribution according to means is not the less just in itself for coming badly accompanied ; the grand mistake appears to be in the application, by which the supporters of this fancifully assumed distinction, between different sorts of income, would render this principle totally inconsistent with the fundamental one already established by the unanimous consent of all parties, of leaving all the members of the state in the same relative proportion after taxation as before it.

Why the name of property tax was substituted for the original, and much more correct one, of-tax on income, I am yet to learn, but I feel, very assuredly, that it has been the means of at least confirming, if'it did not originate, the error of those who contend that capital and not income is the intended object of taxation.

The author of the Principles of Taxation says, (in his preface,) « The debate in the House of Commons on Dec. 14th, 1798, gave me the clue to all Mr. Pitt's mistakes; the following paragraph is an extract from the Morning Chronicle of that day ; " (I suppose he means of the day following) " and the same sentiments are ap- . propriated to Mr. Pitt, though in less elegant language, in the Times. • The honorable gentleman says, that if two persons have each £500. a year, one of which derives his income from land, the other from industry, they ought not to be both equally taxed at £50. He assumes that each having £450. a year left, the impost is unequal. What does the new tax do ? are they not left in relation to each other precisely as they were before? The tax creates no new inequality. The justice or injustice remain precisely as they were. To complain of this inequality is to complain of the distribution of property; it is to complain of the constitution of society.'


On this the author proceeds to remark, “It is asserted that the two persons are left in relation to each other precisely as they were before ; now I say that this is not true, and I proceed to prove it thus.-Let an estate of £500. a year be valued at 15, 20, 25, 30,

any number of years' purchase : then on each supposition this assertion shall be examined.

“ Let the estate be worth 15 years purchase : then the estate is worth £7500; the year's income is £500; the landholder therefore is to pay his tax from £8000, the industrious man is to pay his tax out of £500. We will call the landholder A, the industrious man B. Then, as A's means to B's means, so is 8000 to 500, or as 16 to l; and a tax of £50 being taken from each, A’s remainder is £7950 and B's £450. Therefore, after the tax, A's remainder to B's remainder is as 7950 to 450, or as 17,64 to l. He then takes the estate at 20, 25, and 30 years' purchase, and makes the difference upon each, progressively greater in proportion to the increased value of the purchase of the land, not regarding the material circumstance that the landholder does not derive a sixpence of additional income from the increased value of the fee-simple; and indeed, on the contrary, if the estate is recently purchased at the higher rate, is receiving a smaller income from the quantum of capital sunk. But yet the writer asserts that this is all correct, and capable of mathematical demonstration. And so it would be, as an example of the Rule of Three in a new edition of Cocker's Arithmetic, where the data are allowed on assumption, provided only that the operation be conducted according to rule ; but as a political arithmetician, arguing on false principles, and erroneous data, nothing can be more fallacious than his positions, or more mischievous than his conclusions; for instance, what could be devised more flagrantly unjust, or at the same time more ludicrously absurd, than the following paragraph in the same book ? “ Let us then try some proportion between an income arising from personal industry, and the same from productive capital. If one per cent is required from the superfluities arising from personal industry, surely ten per cent may be required from him who enjoys the same income without any exertion. Consequently, when two per cent is required from the former, then the whole income from the latter.” He then goes on to say, “ Here the landholder will start in amazement.” And well he may, for the author continues, “ If ten per cent should be required by the state from the superfluities of personal industry, then men of fortune must indeed give up their incomes to the state, and live upon their capitals.” It would require a volume to follow such a writer through all the labyrinth of folly and error by which he attempts to support his absurd theory, which has been sufficiently refuted

by the passage already quoted by the author of the work alluded to (and copied into this letter) from Mr. Pitt's speech, where he says that “the tax creates no new inequality, and that to complain of that which previously existed, would be to complain of the constitution of society. Nothing would be easier than to show from Mr. Frend's own data the extreme injustice of his principles, and the fallaciousness of his arguments. It is his proposition alone that would create a new inequality; for it is quite evident that if the landholder is to resort to capital for subsistence, in ever so small a proportion, by so much as the amount of the interest of the capital sunk in any one year, will his income be lessened in that which follows, whilst the person deriving his subsistence from trade, &c. cæteris paribus, will be in possession of the same income as before; and this inequality must be increased every year during the existence of the tax. The relative situation of the parties will, therefore, be altered by Mr. Frend's proposition, and not by Mr. Pitt’s. After this, it is rather too much for a writer who has shown himself so deficient in accuracy, to accuse the great and luminous mind of Mr. Pitt, of insolence, ignorance, and presumption. If it shall be said, that the commercial or professional man has to save that fortune for his family, of which the landed proprietor is already in possession, let me ask how many owners of entailed estates are there, who are equally called upon to save for their daughters and younger sons, with the additional difficulty of keeping up, from their first setting out in life, a certain station in society, into which the man of business may gradually slide, according to the progressive acquisition of his wealth. Let us, therefore, hear no more of such an injustice as the establishment of a different rate of taxation for incomes of the same amount, though arising from different sources.

Neither, though I have admitted a considerable modification with respect to the rate on different amounts of income, can I acquiesce in any abolition of what has been idly called the inquisitorial powers of the assessors, because I am clearly convinced that such a concession would

such a door for evading the tax on commercial profits, as must in a great measure destroy the general productiveness of the impost; on which so much of our expected success in the approaching contest must depend. Whilst Russia pours forth her myriads from the Don, the Tanais, and the Wolga, whilst Prussia arms her warlike population, and Austria marches numerous legions to assist in exterminating the Corsican rebel and his perjured bandits; Britain, induced by her insular situation and inferior numbers to fight rather with money than with men, must necessarily contribute more by subsidy than what would at


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