Part 13

Shall he leave industry in possession of one fifth of his former comforts?—Then industry would be debarred from the sale of that fifth part; one fifth of its artificers would be left without any other resource than that which the highway might afford, _and the main object of the taxation would be defeated in the following year_, unless exportation should make up to industry for the want of home-consumption, (_the only one by which a State can prosper_,) and the _deficit_ of the tax laid on the home-consumption, should be compensated by another tax on foreign consumption, that is _on the exports_.

We shall suppose this to be the case, and that industry actually exports that fifth part of the national commodities which the land proprietor is not able any longer to consume, and which, nevertheless, industry is compelled to sell, in order to be reimbursed the tax she has advanced, and be prepared to answer the fresh demand which next year government will have occasion to make.—But if it were to such means that _England_ should stand indebted for part of the increase in her exports, her industry, methinks, would have derived less advantage therefrom, than a home-sale might have procured, even supposing the inconvenience of which I shall speak presently: it appears to me also, that the land proprietors would, in that case, have some reason to complain, and that the rest of the nation would have no cause to boast of the immensity of her exportation.—The draw-backs granted on the very exportation of the taxed commodities, prove that such an expedient never was adopted in _England_.

Will the land proprietor come to a resolution to fly from his native country, in search of another, where good men content themselves with declaiming against luxury, without making any attempt to destroy it? No, he never did, nor ever will take that resolution; he is fast bound to his land by the roots of every plant he has laid on it.—What then is he to do? It behoves the Minister of finance to give him some wholesome advice.

If the Minister be silent, or if he shuffle, because he is closely watched by Opposition, he must equally lose his popularity; for the land proprietor, left to shift for himself, will raise the price of the productions of his land, in proportion as the tax has increased that part of the products of industry that concerns him.—

But his 20 millions revenue, have, as I have said, the same component parts as the 40 millions which he is obliged to give up for the expences of cultivation, and other incumbrances attending property:—he cannot therefore increase them to 25 millions, without raising by one twelfth the total amount of the 60 millions of landed revenue; this will at once carry up the quarter of wheat from 40_s._ to 43_s._ 4_d._: this is therefore an advance of 8⅓ _per cent._ on his commodities:—upon which we must observe, that no increase will take place in the wages of the mechanic, or of the husbandman; for the objects of luxury are the only ones which we suppose to have been taxed: such is the _infernal_ side of this _heavenly_ system.—Yet this is not all.

What is the money-proprietor to do, not having it in his power to raise the price of his money as the landed proprietor can do that of his wheat, but who, on the contrary, is invariably limited to the same nominal revenue, whilst the tax of the other 5 millions, which the _humanity_ of the _taxator_ had levelled at him, has occasioned a rise of 25 _per cent._ in the nominal value of those articles of luxury in which he indulged himself?—He will, he must leave them in the hands of industry, and confine himself to such objects as are not taxed; it is a resource, as it is at the same time a compulsive measure.—_The produce of the tax will then be inadequate to the want_: a second impost must then be thought on, to supply the _deficit_ of the first.—_Fall again upon luxury_, cry the enthusiasts; _this is more necessary than ever, for bread is already 8⅓ per cent. dearer than it was, and the land proprietors have abated nothing of their luxury; they ride still in their chariots, whilst the poor loaded porter constantly trudges on foot_. Enthusiasts will never see further, and those who are not enthusiasts do not yet see far enough; for they only say _that it is expedient for government, that the prices of commodities be kept up, in order to facilitate the payment of the impost_.—Yet, _if it is expedient_ for government, that the prices be _kept up_ to _facilitate_ the payment of the impost, I conclude that it is an _absolute necessity_ for government, that the prices do increase, when there is no other visible means to establish _the possibility_ of paying taxes. I therefore have to answer only to the enthusiasts, and let it be as the enthusiasts will have it:⸺

But the first 5 millions of the _charitable_ tax could not be paid, without an advanced price of 8⅓ _per cent._ on all the productions of the earth, without raising the wheat from 40_s._ to 43_s._ 4_d._—it will then be necessary to increase its price by as much again; it must advance from 43_s._ 4_d._ to 46_s._ 8_d._ in order that the tax be paid _without foreign assistance_. Then all will be settled, regulated, balanced, and paid between the _capitalists_ of land and those of industry; _but as no objects will have been taxed but those of luxury_, how long will it be before the people, the labouring man can see justice done to him?—Ten popular insurrections perhaps will be required to extort it. Yet let us suppose that the very first proves sufficient to procure it complete, that is, that their wages be raised 16⅔ _per cent._ as the tax after all the necessary re-actions has increased the price of the produce of their labour:—in this case, instead of the 20 millions allowed before to each of the two classes of working men, cultivators and mechanics, they will then receive 23,333,333_l._ 13_s._ 4_d._—But how will you wrest from the hands of the land proprietor 3,333,333_l._ 13_s._ 4_d._ out of the portion which he was obliged to lay by, _that the tax might be paid by his consumption_, without his advancing again the price of his commodities in such a proportion as will return him the new sum which he is forced to pay?—And were he not to augment again the price of his commodities, would not then a new tax become necessary to supply the _deficit_ which the rise of wages of the labouring men must occasion in the consumption of their employers?—The land proprietor will then add still to the price of his goods;—but will not this addition, _equally necessary as the two first_, be productive of a further necessity of raising in proportion the price of labour, the wages of the labouring man?—No doubt; and another insurrection would procure justice, if the thought did not occur at last of observing, that _the class of labouring men being, before the tax, in possession of one third of the general revenue, forms, in this respect, a third interest equal to one half of the two other_. Now, the tax having enforced an advance in prices of 16⅔, to shelter the two former from its effect, there must also be, in favour of the third interest, a third increase of 8⅓, which rising at last to 25 _per cent._ more, the price of labour, as that of its produce, both in regard to land and industry, will exactly leave to each of the three interests, under the denomination of _twenty-five_, the same comforts as each of them enjoyed under that of _twenty_ before the tax was laid.

In regard therefore to the effects of the tax on the prices of provisions, there is not the least difference between the system of taxing luxury, and that of a land-tax; 50_s._ in the supposition of an impost of ten millions, would prove in either system the _necessary_ price of wheat; for if ever a price can be termed _necessary_, it is when it cannot be lower without effecting the ruin of the land proprietor, and even _without missing the sole and indispensable end of taxation_, unless recourse be had to one of the following resources:

_Either_

To export such commodities, which, as it might be absurdly supposed, the nation is no longer able to consume,

_Or_,

To steal from the people the proportionable increase _due to them_ in the price of their labour, if they should prove so complaisant as tamely to submit, out of gratitude, for _the tax being laid only upon luxury_.

I shall conclude this article with a reflexion which may give birth to many others.

The impost on _luxury_, which, after a very little time, as we have seen, proves no ways injurious to those who were able to pay for the objects upon which the tax was laid, is besides, under another point of view, really advantageous to those very men who seem the only contributors to it; _because_ it sets entirely above the reach of the people, a number of articles in which they would indulge themselves, _to the great benefit of the tax_, and which, though perhaps intended _by the general provider_, as well for the poor as for the rich, are nevertheless, by the _merciful_ system of taxation, exclusively reserved to the rich.—Is this the intention of the _merciful taxator_?—in my opinion it ought not to be that of an _intelligent one_.

_Effects of a merciless Tax upon all the Articles of the most general Consumption._

Instead of laying a tax _on men_, from whom, without rushing with open eyes into the perpetration of a thousand injuries, it is impossible to require any thing more than a _personal service_, when it is necessary and _possible_ withal; instead of taxing _the land_, from which nothing can be expected but food, and the rough materials to which industry can give from one to many hundred degrees of value; instead of taxing that imaginary monster called _luxury_, which procures so substantial a support to some, and such pleasing comforts to others, lay your tax solely, and without predilection, on _all those products of national and foreign industry which are more generally consumed_; then, in my opinion, you will have reason to flatter yourself that riches are taxed to their very source, and without inconvenience to any one, since you tax it in the hands of those who are, _by the strictest justice_, authorised to a benefit for all the advances made by them to the consumer.

So then, though the tax of 10 millions be fixed on certain parts of industry, nothing will prevent the whole from rising proportionably; and for this, _God alone be thanked_. The whole will be then 70 millions instead of 60;—upon which the least reflexion is sufficient to make us feel the necessity of the re-actions mentioned in the foregoing system, _but with this difference_, that the general consumption having been taxed, the two _capitalists_ cannot, even on the very day when the impost takes place, shut their eyes against the justice of increasing the salary of the labouring man in a due proportion.—Now, _the interest_ of the two capitalists could not, as in the preceding system, be preserved undiminished, but by an increase from 60 to 70 millions, that is to say, 16⅔ _per cent._—Now, _the interest_ of the labouring man is, as has been observed before, equal to one half of the other two classes in the general revenue, or, in other words, equal to either;—it will therefore become necessary, in order to restore the former equilibrium, to introduce a fresh increase of 8⅓ _per cent._ upon every thing;—in consequence of which the price of labour, being raised 25 _per cent._ just as its products, both in cultivation and industry, will leave also the two classes of labourers in the same situation they were in previous to the tax; each of them was then in possession of 20 millions out of 60, each will now get 25 out of 75.

I think also that _then_, a Minister of finance, ever so anxious about his operations, ever so zealous for the establishment of none but _productive_ taxes, could not conceive a single article of consumption that might suffer by this arrangement; it would appear too evidently that every one would _then_ have the very same faculty of consuming, manufacturing, or saving, under the denomination of 25, all that he had before consumed, manufactured, or saved under the denomination of 20.

It would also be seen _then_, that the success of those taxes termed _productive_, is not to be ascribed to the abilities of the _taxator_, but to the abilities of the persons _taxed_, who have taken care to right themselves by so much as the _taxator_ ought to have been afraid of being unjust.

_Then_ also would every one be sensible, that the advance in all the prices could not be only of a 12th part, or 8⅓ _per cent._ as in the _glorious_ system of a poll-tax _established by Divine Justice_, but of 25 _per cent._ neither _more nor less_ than in the system of the _land-tax_, neither _more nor less_ than in the system of an exclusive tax _upon luxury_; that consequently _wheat_, as well as produce of any other sort, as well as _labour_ which gives the whole, _would be indebted to the tax for a fifth part of its new nominal value_, and that 50_s._ would be the _medium_ price of wheat;—its _necessary_ price, but not more _necessary_ in that _merciless_ taxation, than in the _merciful_ one laid on the exclusive consumption of the rich:—and this calls for the attention of every individual; nor can it be too often repeated, because _then_ neither hypocrites, nor enthusiasts, nor good men, nor manufacturers, nor farmers, nor proprietors, could any longer deceive themselves or others, on the price of labour; it would be too self-evident that the said price ought to increase with the taxes, and that no one would be injured by that increase.

Then it would also appear, that some people had very good reason to say, that the burden of all taxes, falls one time or another, on the landed property; but who could refuse to admit besides, that I am tolerably founded in insisting, that when taxes have in fine reached every part of the whole, no one part can feel the weight?

_The money proprietor_, it will be said, the _lender alone_ will be aggrieved; he must lose the fifth part of his usual comforts, he must pay 15 for those articles which he could procure formerly for 12.

I shall confine myself to three answers:

First, _Is it not self-evident, that any financiering operation, which reduces from 5 to 4, the interest of a national debt, deprives as well the lender of the fifth part of his comforts, AS IF THE NATION HAD LOADED HERSELF WITH TEN MILLIONS MORE, TO BE PAID ANNUALLY? (such is the present hypothesis.)_ There stands, therefore, between the two cases no other difference, but the _palpable_ justice and necessity of the one, and I believe we may say, the _unsuspected_ inutility and injustice of the other.

Secondly, We have already seen that the loss of the lender, in all cases, flows essentially from the nature of his capital; that it is inseparable from the advance of prices, whether _that advance_ originates from an accession of wealth, or is produced by taxes, or brought on by monopoly; and that besides, by lending to the State, with the certainty that the State could not pay the interest of the loan without the assistance of an import, he has beforehand submitted to the effects of an impost _indispensable_ to his main object.

Thirdly, If we except a poll-tax, which we should suppose _laid by Divine Justice_, and which, in the present hypothesis, should wrest from the lender only a twelfth part of his enjoyments, where is the system, which, _in the supposition of a tax of ten millions, being now necessary in England_, would not deprive him of a fifth part of those enjoyments?—We shall see presently that a _compound-tax_ would perhaps prove still less favourable; but how much has he to dread, in all cases, from the indirect taxation of the _monopoly_, which it is impossible duly to estimate!

_Effects of Compound Taxation._

The system of taxation, which may be called general, is composed of the four different kinds of taxes which I have just mentioned:—First, some kind of _poll-tax_, under that or any other name;—secondly, a _land-tax_;—thirdly, an impost on the consumption of the rich, or _luxury_;—and fourthly, in fine, the freedom taken with _the consumption of the poor_, or general consumption; for the sun of reason forces its way through the darkness of prejudices; these only serve to retard the progress of nature wherever light first began to shine. It would be easier to stifle truth at first, than entirely to escape its effects.

No country in the world can be guarded against the injustice inseparable from the _two first parts_ of the system of a compound-taxation, whatever may be in that respect the wisdom of the legislature, and its tenderness in the manner of collecting the impost; no country can be free from that other kind of injustice which results from the general prejudice in favour of the tax on luxury, which constitutes the _third part_ of the system under examination; but the _ensemble_—the whole together, does not produce every where the same effects on the prices.

In _France_, from the beginning of the present century down to the time when Mons. _Turgot_ was intrusted with the department of the finances, the sum of what I can collect from the _French_ mode of taxation, is, that without any determined system, without any other rule than the immediate want of money, and the facility of procuring that money by means of a loan, at any interest whatever, they had successively taxed whatever came first to hand, or occurred to the imagination of the comptroller general for the time being; nothing was spared, in order that no one should complain; landed estates, employments, money, individuals, the one because he was industrious, the other because he had no industry and _that he might acquire some_; this man, because he had a _title_; that other, because he had none; a third, on account of what he consumed; a fourth, for that consumption to which he was doomed,—(_an expedient which, together with the galleys, was devised by the farmers general, as an admirable stroke upon smuggling_). No sin more venial, than to take some liberties with a compound of such motley pieces; nothing more severe than the reflexions thrown out against it on the other side of the channel; and nothing can more forcibly prove that _France_ was planning some reform on the subject, than the orders given most minutely to enquire into the principles and effects of the various modes of taxation adopted in other parts of _Europe_. I think, in regard to all those parts of _French_ taxation, which I have alluded to, as every intelligent man does in _France_ and _England_: nevertheless, if one cannot positively affirm, that the result of such a chaos of strange regulations, has been, that every one perceiving the burden to be general, nobody ever thought of easing himself at the expence of others who appeared to have been loaded in the same manner, yet it cannot be contradicted, that, notwithstanding the want of true principles on the part of the _taxator_ in _France_, the price of every thing might have continued to this day, without material alteration, had it not been for an event, of which I shall speak in the sequel; and if it were true, as some very deep politicians will have it, that _the more depreciated commodities are in a country, the quicker that nation advances towards opulence, because, in such a case, the national manufacturer has it in his power to favour the foreigner by underselling all other countries in the world_; if this principle were not at least questionable, as I hope to prove it by and by, every one would admit that the _compound-taxation_, EVEN COMPOUNDED, as I have just described it, does not appear totally destitute of some advantages.

Before I venture to express my thoughts on the subject, I wish the reader would form to himself an idea of what might be the effect of such a system in _England_;—in _England_, where every man is a calculator, and adds without ceremony, on the creditor side of his books, the number of figures necessary to balance those which he thinks too many in the calculation of others. They say in _England_, and there they are more bitterly persuaded than any where else, that taxes take annually out of the pockets of those who pay them, the whole amount of the impost; but _there_ as every where, and _there_ much sooner than in any other part of the world, justice and reason never fail to put into the head of each individual, what he is to do, that the tax be not paid for a long while out of his own pocket. I may therefore boldly say, that nothing more is wanted on the part of _England_, to join perfectly in opinion with me, concerning the most important point (that which concerns the national debt), than to observe, that every one has always done as secretly and as expeditiously as he could, for himself alone, what I insist it would be advantageous to do openly, with equal celerity, for the general good[8]. I now resume my subject.