general, there is not perhaps, any one article of expense or consumption by which the liberality or narrowness of a man's whole ex

The rent of houses might easily be ascertained with sufficient accuracy, by a policy of the same kind with that which would be necesary for ascertaining the ordinary rent of land. Houses not inhabited ought to pay no

rent, for which it would for some time in- must be drawn from the same source as the crease the competition. But the rents of rent itself, and must be paid from their reevery class of houses for which the competi- venue, whether derived from the wages of tion was diminished, would necessarily be labour, the profits of stock, or the rent of more or less reduced. As no part of this re- land. So far as it falls upon the inhabitants, duction, however, could for any considerable it is one of those taxes which fall, not upon time at least, affect the building-rent, the one only, but indifferently upon all the three whole of it must, in the long-run, necessarily different sources of revenue; and is, in every fall upon the ground-rent. The final pay-respect, of the same nature as a tax upon any ment of this tax, therefore, would fall partly other sort of consumable commodities. In upon the inhabitant of the house, who, in order to pay his share, would be obliged to give up a part of his conveniency; and partly upon the owner of the ground, who, in order to pay pense can be better judged of than by his his share, would be obliged to give up a part house-rent. A proportional tax upon this of his revenue. In what proportion this final particular article of expense might, perhaps, payment would be divided between them, it produce a more considerable revenue than any is not, perhaps, very easy to ascerta n. The which has hitherto been drawn from it in any division would probably be very different in part of Europe. If the tax, indeed, was very different circumstances, and a tax of this kind high, the greater part of people would endeamight, according to those different circum-vour to evade it as much as they could, by stances, affect very unequally, both the inhabi- contenting themselves with smaller houses, tant of the house and the owner of the ground. and by turning the greater part of their exThe inequality with which a tax of this pense into some other channel. kind might fall upon the owners of different ground-rents, would arise altogether from the accidental inequality of this division. But the inequality with which it might fall upon the inhabitants of different houses, would arise, not only from this, but from another cause. tax. A tax upon them would fall altogether The proportion of the expense of house-rent upon the proprietor, who would thus be taxed to the whole expense of living, is different in for a subject which afforded him neither conthe different degrees of fortune. It is, per-veniency nor revenue. Houses inhabited by haps, highest in the highest degree, and it the proprietor ought to be rated, not accorddiminishes gradually through the inferior de-ing to the expense which they might have cost grees, so as in general to be lowest in the in building, ut according to the rent which lowest degree. The necessaries of life occa- an equitable arbitration might judge them sion the great expense of the poor. They likely to bring if leased to a tenant. If rated find it difficult to get food, and the greater according to the expense which they might part of their little revenue is spent in getting have cost in building, a tax of three or four it. The luxuries and vanities of life occasion shillings in the pound, joined with other taxes, the principal expense of the rich; and a magni- would ruin almost all the rich and great famificent house embellishes and sets off to the best lies of this, and, I believe, of every other civiadvantage all the other luxuries and vanities lized country. Whoever will examine with which they possess. A tax upon house-rents, attention the different town and country houses therefore, would in general fall heaviest upon of some of the richest and greatest families in the rich; and in this sort of inequality there this country, will find that, at the rate of only would not, perhaps, be any thing very un-six and a-half, or seven per cent. upon the reasonable It is not very unreasonable that original expense of building, their house-rent the rich should contribute to the public ex-is nearly equal to the whole neat rent of their pense, not only in proportion to their revenue, estates. It is the accumulated expense of seve but something more than in that proportion.ral successive generations, laid out upon ob The rent of houses, though it in some re-jects of great beauty and magnificence, inspects resembles the rent of land, is in one deed, but, in proportion to what they cost, of respect essentially different from it. The very small exchangeable value.

rent of land is paid for the use of a produc- Ground-rents are a still more proper subtive subject. The land which pays it project of taxation than the rent of houses. A duces it. The rent of houses is paid for the tax upon ground-rents would not raise the use of an unproductive subject. Neither the rent of houses; it would fall altogether upon house, nor the ground which it stands upon, the owner of the ground-rent, who acts always produce any thing. The person who pays the as a monopolist, and exacts the greatest rent rent, therefore, must draw it from some other which can be got for the use of his ground. source of revenue, distinct from and indepen dent of this subject. A tax upon the rent of houses, so far as i falls upon the inhabitants,

• Since the first publication of this book, a tax nearly upon the above mentioned principles has been imposed

It

More or less can be got for it, according as in ascertaining what part of the rent ought to the competitors happen to be richer or poorer, be considered as ground-rent, and what part or can afford to gratify their fancy for a par- ought to be considered as building-rent. ticular spot of ground at a greater or smaller should not, however, seem very difficult to expense. In every country, the greatest distinguish those two parts of the rent from number of rich competitors is in the capital, one another. and it is there accordingly that the highest In Great Britain the rent of houses is supground-rents are always to be found. As the posed to be taxed in the same proportion wealth of those competitors would in no re- as the rent of land, by what is called the anspect be increased by a tax upon ground-rents, nual land tax. The valuation, according to they would not probably be disposed to pay which each different parish and district is asmore for the use of the ground. Whether the sessed to this tax, is always the same. It was tax was to be advanced by the inhabitant or originally extremely unequal, and it still conby the owner of the ground, would be of little tinues to be so. Through the greater part of importance. The more the inhabitant was the kingdom this tax falls still more lightly obliged to pay for the tax, the less he would upon the rent of houses than upon that of incline to pay for the ground; so that the final land. In some few districts only, which payment of the tax would fall altogether upon were originally rated high, and in which the the owner of the ground-rent. The ground. rents of houses have fallen considerably, the rents of uninhabited houses ought to pay no tax. land tax of three or four shillings in the pound Both ground-rents, and the ordinary rent of is said to amount to an equal proportion of land, are a species of revenue which the owner, the real rent of houses. Üntenanted houses, in many cases, enjoys without any care or at- though by law subject to the tax, are, in most tention of his own. Though a part of this districts, exempted from it by the favour of revenue should be taken from him in order to the assessors; and this exemption sometimes defray the expenses of the state, no discour-occasions some little variation in the rate of agement will thereby be given to any sort of particular houses, though that of the district industry. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land, are therefore, perhaps, the species of revenue which can best bear to have a peculiar tax im-is posed upon them.

is always the same. Improvements of rent, by new buildings, repairs, &c. go to the discharge of the district, which occasions still further variations in the rate of particular houses.

There

In the province of Holland, every house taxed at two and a-half per cent. of its value, without any regard, either to the rent Ground-rents seem, in this respect, a more which it actually pays, or to the circumstance proper subject of peculiar taxation, than even of its being tenanted or untenanted. the ordinary rent of land. The ordinary rent seems to be a hardship in obliging the proof land is, in many cases, owing partly, at prietor to pay a tax for an untenanted house, kast, to the attention and good management of from which he can derive no revenue, espe. the landlord. A very heavy tax might dis- cially so very heavy a tax. In Holland, courage, too much, this attention and good where the market rate of interest does not management. Ground-rents, so far as they exceed three per cent., two and a-half per exceed the ordinary rent of land, are altogeth-cent. upon the whole value of the house er owing to the good government of the sove-must, in most cases, amount to more than a reign, which, by protecting the industry either third of the building-rent, perhaps of the of the whole people or of the inhabitants of some particular place, enables them to pay so much more than its real value for the ground which they build their houses upon; or to make to its owner so much more than compensation for the loss which he might sustain by this use of it. Nothing can be more rea- The contrivers of the several taxes which sonable, than that a fund, which owes its exist-in England have, at different times, been imence to the good government of the state, should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that go

vernment.

Though, in many different countries of Europe, taxes have been imposed upon the rent of houses, I do not know of any in which ground-rents have been considered as a separate subject of taxation. The contrivers of taxes nave, probably, found some difficulty

whole rent. The valuation, indeed, according to which the houses are rated, though very unequal, is said to be always below the real value. When a house is rebuilt, improved, or enlarged, there is a new valuation, and the tax is rated accordingly.

posed upon houses, seem to have imagined that there was some great difficulty in ascertain ing, with tolerable exactness, what was the real rent of every house. They have regulated their taxes, therefore, according to some more obvious circumstance, such as they had probably imagined would, in most cases, bear some proportion to the rent.

The first tax of this kind was hearth-money;

* Memoires concernant les Droits, &c. p. 223

This

er a tax of two shillings upon every hearth. inhabitants. Had it not been for the tax, In order to ascertain how many hearths were rents would probably have risen still higher. in the house, it was necessary that the tax-gatherer should enter every room in it. odious visit rendered the tax odious. after the Revolution, therefore, it was abolished as a badge of slavery.

Soon ART. IL-Taxes upon Profit, or upon the Re venue arising from Stock.

The next tax of this kind was a tax of two shillings upon every dwelling-house inhabited. A house with ten windows to pay four shillings more. A house with twenty windows and upwards to pay eight shillings. This tax was afterwards so far altered, that houses with twenty windows, and with less than thirty, were ordered to pay ten shillings, and those with thirty windows and upwards to pay twenty shillings. The number of windows can, in most cases, be counted from the outside, and, in all cases, without entering every room in the house. The visit of the tax-gatherer, therefore, was less offensive in this tax than in the hearth-money.

This tax was afterwards repealed, and in the room of it was established the window-tax, which has undergone two several alterations and augmentations. The window tax, as it stands at present (January 1775), over and above the duty of three shillings upon every house in England, and of one shilling upon every house in Scotland, lays a duty upon every window, which in England augments gradually from twopence, the lowest rate upon houses with not more than seven windows, to two shillings, the highest rate upon houses with twenty-five windows and upwards.

THE revenue or profit arising from stock naturally divides itself into two parts; that which pays the interest, and which belongs to the owner of the stock; and that surplus part which is over and above what is necessary for paying the interest.

This latter part of profit is evidently a subject not taxable directly. It is the compensation, and, in most cases, it is no more than a very moderate compensation for the risk and trouble of employing the stock. The employer must have this compensation, otherwise he cannot, consistently with his own interest, continue the employment. If he was taxed directly, therefore, in proportion to the whole profit, he would be obliged either to raise the rate of his profit, or to charge the tax upon the interest of money; that is, to pay less interest. If he raised the rate of his profit in proportion to the tax, the whole tax, though it might be advanced by him, would be finally paid by one or other of two different sets of people, according to the different ways in which he might employ the stock of which he had the management. If he employed it as a farming stock, in the cultivation of land, he could raise the rate of his profit only by retaining a greater portion, or, what comes to The principal objection to all such taxes is the same thing, the price of a greater portion, their inequality; an inequality of the worst of the produce of the land; and as this could kind, as they must frequently fall much hea- be done only by a reduction of rent, the final vier upon the poor than upon the rich. A payment of the tax would fall upon the landhouse of ten pounds rent in a country town, lord. If he employed it as a mercantile or may sometimes have more windows than a manufacturing stock, he could raise the rate house of five hundred pounds rent in Lon- of his profit only by raising the price of his don; and though the inhabitant of the former goods; in which case, the final payment of is likely to be a much poorer man than that of the tax would fall altogether upon the conthe latter, yet, so far as his contribution is re-sumers of those goods. If he did not raise gulated by the window tax, he must contri- the rate of his profit, he would be obliged to bute more to the support of the state. Such taxes are, therefore, directly contrary to the first of the four maxims above mentioned. They do not seem to offend much against any of the other three.

The natural tendency of the window tax, and of all other taxes upon houses, is to lower rents. The more a man pays for the tax, the less, it is evident, he can afford to pay for the rent. Since the imposition of the window tax, however, the rents of houses have, upon the whole, risen more or less, in almost every town and village of Great Britain, with which I am acquainted. Such has been, almost everywhere, the increase of the demand for houses, that it has raised the rents more than the window tax could sink them; one of the many proofs of the great prosperity of the country, and of the increasing revenue of its

charge the whole tax upon that part of it which was allotted for the interest of money. He could afford less interest for whatever stock he borrowed, and the whole weight of the tax would, in this case, fall ultimately upon the interest of money. So far as he could not relieve himself from the tax in the one way, he would be obliged to relieve himself in the other.

The interest of money 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

Stock cultivates land; stock

after the tax than before it, so, for the same try which he left. reason, a tax upon the interest of money could employs labour. A tax which tended to drive not raise the rate of interest; the quantity of away stock from any particular country, would stock or money in the country, like the quan- so far tend to dry up every source of revetity of land, being supposed to remain the nue, both to the sovereign and to the society. same after the tax as before it. The ordi- Not only the profits of stock, but the rent nary rate of profit, it has been shewn, in the of land, and the wages of labour, would nefirst book, is everywhere regulated by the cessarily be more or less diminished by its requantity of stock to be employed, in propor- moval. tion to the quantity of the employment, or of The nations, accordingly, who have atthe business which must be done by it. But tempted to tax the revenue arising from the quantity of the employment, or of the bu-stock, instead of any severe inquisition of this siness to be done by stock, could neither be kind, have been obliged to content themselves increased nor diminished by any tax upon the with some very loose, and, therefore, more or interest of money. If the quantity of the less arbitrary estimation. The extreme inestock to be employed, therefore, was neither quality and uncertainty of a tax assessed in increased nor diminished by it, the ordinary this manner, can be compensated only by its rate of profit would necessarily remain the extreme moderation; in consequence of same. But the portion of this profit, neces- which, every man finds himself rated so very sary for compensating the risk and trouble of much below his real revenue, that he gives the employer, would likewise remain the same; himself little disturbance though his neighthat risk and trouble being in no respect al-bour should be rated somewhat lower. tered. The residue, therefore, that portion By what is called the land tax in England, which belongs to the owner of the stock, and it was intended that the stock should be taxed which pays the interest of money, would ne- in the same proportion as land. When the cessarily remain the same too. At first sight, tax upon land was at four shillings in the therefore, the interest of money seems to be a pound, or at one-fifth of the supposed rent, subject as fit to be taxed directly as the rent it was intended that stock should be taxed at of land. one-fifth of the supposed interest. When the There are, however, two different circum-present annual land tax was first imposed, the stances, which render the interest of money a legal rate of interest was six per cent. Every much less proper subject of direct taxation than the rent of land.

The

hundred pounds stock, accordingly, was supposed to be taxed at twenty-four shillings, First, the quantity and value of the land the fifth part of six pounds. Since the legal which any man possesses, can never be a se- rate of interest has been reduced to five per cret, and can always be ascertained with great cent. every hundred pounds stock is supposexactness. But the whole amount of the ca-ed to be taxed at twenty shillings only. pital stock which he possesses is almost always a secret, and can scarce ever be ascertained with tolerable exactness. It is liable, besides, to almost continual variations. A year seldom passes away, frequently not a month, sometimes scarce a single day, in which it does not rise or fall more or less. An inquisition into every man's private circumstances, and an inquisition which, in order to accommodate the tax to them, watched over all the fluctuations of his fortune, would be a source of such continual and endless vexation as no person could support.

sum to be raised, by what is called the land tax, was divided between the country and the principal towns. The greater part of it was laid upon the country; and of what was laid upon the towns, the greater part was assessed upon the houses. What remained to be assessed upon the stock or trade of the towns (for the stock upon the land was not meant to be taxed) was very much below the real value of that stock or trade. Whatever inequalities, therefore, there might be in the original assessment, gave little disturbance. Every parish and district still continues to be Secondly, land is a subject which cannot be rated for its land, its houses, and its stock, removed; whereas stock easily may. The according to the original assessment; and proprietor of land is necessarily a citizen of the almost universal prosperity of the country, the particular country in which his estate lies. which, in most places, has raised very much The proprietor of stock is properly a citizen the value of all these, has rendered those of the world, and is not necessarily attached inequalities of still less importance now. The to any particular country. He would be apt rate, too, upon each district, continuing alto abandon the country in which he was ex-ways the same, the uncertainty of this tax, posed to a vexatious inquisition, in order to so far as it might he assessed upon the stock be assessed to a burdensome tax; and would of any individual, has been very much dimairemove his stock to some other country, where he could either carry on his business, or enjoy his fortune more at his ease. By removing his stock, he would put an end to all the industry which it had maintained in the coun

nished, as well as rendered of much les consequence. If the greater part of the lands of England are not rated to the land tax at half their actual value, the greater part of the stock of England is, perhaps, scarce rated at

the fiftieth part of its actual value. In some tremble at the thoughts of being obliged, at towns, the whole land tax is assessed upon houses; as in Westminster, where stock and trade are free. It is otherwise in London. In all countries, a severe inquisition into the circumstances of private persons has been carefully avoided.

all times, to expose the real state of their circumstances. The ruin of their credit, and the miscarriage of their projects, they foresee, would too often be the consequence. A sober and parsimonious people, who are strangers to all such projects, do not feel that they have occasion for any such concealment.

At Hamburg, every inhabitant is obliged to pay to the state one fourth per cent. of all In Holland, soon after the exaitation of that he possesses; and as the wealth of the the late prince of Orange to the stadtholderpeople of Hamburg consists principally in ship, a tax of two per cent, or the fiftieth stock, this tax may be considered as a tax penny, as it was called, was imposed upon the upon stock. Every man assesses himself, whole substance of every citizen. Every citiand, in the presence of the magistrate, puts zen assessed himself, and paid his tax, in the annually into the public coffer a certain sum same manner as at Hamburg, and it was in of money, which he declares upon oath, to be general supposed to have been paid with one fourth per cent. of all that he possesses, great fidelity. The people had at that time but without declaring what it amounts to, or the greatest affection for their new governbeing liable to any examination upon that ment, which they had just established by a gesubject. This tax is generally supposed to neral insurrection. The tax was to be paid but be paid with great fidelity. In a small re- once, in order to relieve the state in a partipublic, where the people have entire confi- cular exigency. It was, indeed, too heavy dence in their magistrates, are convinced of to be permanent. In a country where the the necessity of the tax for the support of the market rate of interest seldom exceeds three state, and believe that it will be faithfully ap- per cent., a tax of two per cent. amounts to plied to that purpose, such conscientious and thirteen shillings and four pence in the voluntary payment may sometimes be expect-pound, upon the highest neat revenue which ed. It is not peculiar to the people of Ham- is commonly drawn from stock. It is a tax burg. which very few people could pay, without The canton of Underwald, in Switzerland, encroaching more or less upon their capitals. is frequently ravaged by storms and inunda- In a particular exigency, the people may, tions, and it is thereby exposed to extraordi- from great public zeal, make a great effort, nary expenses. Upon such occasions the and give up even a part of their capital, in people assemble, and every one is said to order to relieve the state. But it is impossideclare with the greatest frankness what he is ble that they should continue to do so for any worth, in order to be taxed accordingly. At considerable time; and if they did, the tax Zurich, the law orders, that in cases of neces- would soon ruin them so completely, as to sity, every one should be taxed in proportion render them altogether incapable of supportto his revenue; the amount of which he is ing the state. obliged to declare upon oath. They have no The tax upon stock, imposed by the land suspicion, it is said, that any of their fellow-tax bill in England, though it is proportioned citizens will deceive them. At Basil, the to the capital, is not intended to diminish or principal revenue of the state arises from a take away any part of that capital. It is small custom upon goods exported. All the meant only to be a tax upon the interest of citizens make oath, that they will pay every three months all the taxes imposed by law. All merchants, and even all inn-keepers, are trusted with keeping themselves the account of the goods which they sell, either within or without the territory. At the end of every three months, they send this account to the treasurer, with the amount of the tax computed at the bottom of it. It is not suspected that the revenue suffers by this confi- tax upon the capital. dence.†

To oblige every citizen to declare publicly

money, proportioned to that upon the rent of land; so that when the latter is at four shillings in the pound, the former may be at four shillings in the pound too. The tax at Hamburg, and the still more moderate taxes of Underwald and Zurich, are meant, in the same manner, to be taxes, not upon the capital, but upon the interest or neat revenue of stock. That of Holland was meant to be a

ments.

upon oath, the amount of his fortune, must Taxes upon the Profit of particular Employnot, it seems, in those Swiss cantons, be reckoned a hardship. At Hamburg it would be reckoned the greatest. Merchants engaged in the hazardous projects of trade, all

Memoires concernant les Droits, tom. i, p. 74. + Memoires concernant les Droits, tom. i. p 163, 167, 171.

In some countries, extraordinary taxes are imposed upon the profits of stock; sometimes when employed in particular branches of trade, and sometimes when employed in agriculture.

Of the former kind, are in England, the