Chapter Of Taxes.

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 grou

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