Ihaveshewnhowthegreatamountoftaxescomestobetakenfromtheincomeofthoseindividualswhosefortuneisalreadymade，orwhosedailyprofitsareconsiderable:Ihavesuggestedhowcircumscribedtheexpenceofthisclassmustbe，whenconsideredwithrespecttotheemploymentitprocurestothebodyofapeople。Doesnottheexperienceofformeragesshowhowaptprivateopulenceistosinkintotreasures，whenatasteforindustrydoesnotanimatethelowerclassestocreatenewobjectsofdesireinthewealthy？Whereinisastatebenefitedbytheluxuriousgratificationsoftherich，unlessitbebytheemploymenttheyprocureforthosewhoprovidetheobjectsofluxury？Thoseverygratificationsare，inonesense，taxesupontherichinfavouroftheindustrious:theyincreaseexpence，andthrowmoneyintocirculation。InSpainandPortugal，whereindustryisnotintroducedamongthelowerclasses，thestrangersaretheywhoineffectlevysuchtaxesuponthem。Werethetaxestheypay，properlyappliedfortheencouragementofthearts，insteadofbeingappropriatedtoprivatepurposes，andtotheenrichingofprivatemen，whosetasteforexpenceisalwayscircumscribedtotheobjectsoftheirownwants，howsoonshouldweseethemvyingwithusineverymarketofEurope，andsupplyingthemselvesasfarastheircountryiscalculatedforit。
Thereciprocalwantsofindustriousnations，resemblethereciprocalwantsoftradesmen；allmaybeemployedinsupplyingoneanother，aswellasthemselves。
Whenadueproportionoftheamountoftaxesisproperlylaidoutinpremiums，fortheencouragementoftheindustrious，thepricesoflabouruponarticlesofexportation，maybebroughtsolow，thatallnationswhodonotfollowthelikepolicy，mustlanguishanddecay。Luxuryathomewillthenceasetohurttheforeigntradeofthenation。Inhertreatiesofcommerce，shemaythrowopenherportstomanyarticlesofforeignconsumption，withoutincurringanyinconveniencefromsuchallowances；whileontheotherhand，shewillreapthegreatestadvantagesfromareciprocalpermission。
TheexamplebywhichIhaveillustratedthenatureofpubliccontributions，mustnotbeunderstoodtotallywithrespecttoproportion。Itwouldbebothridiculousandimpossibletoreducealltheexpencesofrichmentothebarelysufficient。AllI
meantwas，toshewhowtaxes，whenproperlyapplied，maybeconsideredaspublicoeconomy；andhowthelevyingofthemhasnodirecttendencytohurtanationinpointofeaseandprosperity。
Chap。VIII
OftheExtentofTaxationOnegoodwaytodiscoverthenatureoftaxes，is，toexaminehowfaritmaybepossibletocarrythem。Thisismyintentioninthischapter。
Ihavesaidthattheobjectoftaxeswasincome，andnotstock。Ihaveshewnhowthoseoftheproportionalkindaffecttheincomeofstockalreadymade，andenhancetheexpenceofpersonswhoenjoylargeprofitsupontheirdailyindustry。Ihavepointedouttheimproprietyofimposingcumulativetaxes，uponsuchasdrawnothingmorefromtheirindustrythananeasysubsistence；
andIhavegivenageneralpreferencetothoseoftheproportionalkind；becausetheyconstantlyimplybothalienationandconsumption:alienationinthosewhoadvancethetaxes，consumptioninthosewhopaythem。
Could，therefore，taxesbelevieduponeveryalienation，whereconsumptionisimplied，andthatinproportiontothewholesuperfluityofthosewhoaretoconsume，proportionaltaxeswouldbecarriedtotheirutmostextent。
Ishallnowanalizethissubjectstillfarther，inordertodiscoverhowfarthisextentmayreach；andbythisinquiry，theprinciplesoftaxationwillbethebetterunderstood。
Theobjectofalienationcomprehendsallthatisincommerceamongmen，moveable，andimmoveable。
Whatismoveableisgenerallyconsumable，whatisimmoveable，isgenerallynotso。
Asconsumptionisarequisite，togetherwithalienation，inordertoformaproperobjectforproportionaltaxes，weseehowcontrarytoprinciplesitwouldbe，totaxthealienationoflands，houses，etc。inthesameproportionasconsumablecommodities。Thesearefunds，notincome；andthemoneywithwhichtheyarepurchased，mustbeconsideredinthelightofafund，whileitisinthehandsofthebuyer。Whenonceitcomesintothehandsoftheselleroftheimmoveablesubject，itfrequently，indeed，partakesofthenatureofincome；thatistosay，itisspentintheconsumptionoffruits，andofthelabourofman；andthenitwillbeproperlyaffectedbyproportionaltaxes。Thismaysufficetorecaltomindtheprincipleswelaiddowninthe26thchapterofthesecondbook，concerningtheeffectsofthevibrationofthebalanceofwealthbetweenthemembersofamodernstate。
Thenextthingwearetoconsideristhestateofcirculation。Astothis，wehavefrequentlyobserved，howitmustbeinproportiontoalienation。
Thisproportionisnotdeterminedbythevalue，ordenominationsofthemoneycirculating；butbythisvaluecombinedwiththefrequencyoftransitionsfromhandtohand；astheforceofacannonballisestimatedbytheweightoftheball，andtheswiftnessofthemotionatthetimeitstrikes。
Letusnowlayasidetheconsiderationofimmoveablepropertyaltogether；andexaminethenatureofconsumption，alienation，andsale，withrespecttootherthings。
Consumptioncomprehendseverythingproducedbytheearth，orbyman；alienationisconfinedtothatpartofconsumptionwhichisexchangedbetweenmen；andsaletothatpartofalienationwhichisexchangedforanequivalentinmoney。
Whateverpartisconsumedwithoutalienation，ought，Ithink，tobeoutofthereachofproportionaltaxes，unless，bysomecircumstanceorother，itcanbemadetofallundertheeyeofthepublic，inamannerresemblingitscomingtomarket。Thusataxuponmaltmaywithproprietybeleviedatthemalt-house，asifitweresoldtothemaltster，althoughitbemadefortheconsumptionofthegrowerofthebarley。Inlikemannerataxuponcornforbreadmaybeleviedeitheratthemillwhereitisground，orattheovenwhereitisbaked。9*
Theworstkindofproportionaltaxesarethosewhicharelevieduponprivatemanufacturing，anduponunmanufacturedconsumption，wherenoalienationtakesplace。Anexampleofthefirstwehaveintheexciseuponmalt，cyder，candles，etc。madeinprivatehousesforprivateuse:thelastisknowninHolland，whereamancannotkillhisownpig，orhisowncalf，withoutpayingatax。Weretaxesofthisnatureextendedtothemakingofbread，cookingofvictuals，&c。Iapprehendtheywouldbecomeofanaturemoreburdensomethananyhithertoinvented，unlesspubliccooks，&c。wereestablished，aspublicovensareinmanypartsofFrance:insuchcases，taxesmightbelevieduponeverypartofconsumption。
Investigationsofthisnaturearesodisagreeable，thatitiswithreluctanceImentionthem；butwheninfact，suchtaxesarefoundestablishedindifferentcountries，itishighlyproperthatthenatureofthemshouldbeinquiredinto。
TaxesinHollandaresomultiplied，astodescendtothissort，inmanyplaces，aswehaveseenbytheexamplejustgiven；
buteventhese，howeveroppressivetheymayappeartothosewhoarenotaccustomedtothem，arestilllesssothanmanyofthecumulativekindwehavementioned，particularlythetaxuponindustryandthecapitationinFrance。Theyapproachnearertoproportionaltaxesandderiveeveryalleviationoftheirburdenfromthiscircumstance。Hewhopayssuchtaxes，seesthathecanavoidthem，byretrenchinghisconsumption；andwhentheyfalluponthenecessariesoflife，hemaydrawthemback，providedhebeanindustriousman，andthateveryonewhoentersintocompetitionwithhimforemployment，beequallysubjectedtothesameburden。Buttheyaremoreburdensomethanthosewheresaletakesplace；because，whenapoorman，whowishestoconsume，hasnomoney，heconsidershimselfinthesamelightasifthethingwerenottobesold；butwhenhehaswhathehasacquiredbyhisownlabour，andcannotconsumeitforwantofmoneytopayforapermission，asitwere，hemusteitherstarveforhungerinthemidstofplenty，orbereduced，perhaps，tobeggary，forhavingpreservedhislifebydefraudingthetax。
Whathasbeensaid，is，Ithink，sufficienttoshewthehardshipswhichoccur，whentaxesareimposeduponbareconsumption，wherenoalienationtakesplace:theymust，ineveryrespect，berangedunderthoseoftheproportionalkind，althoughsomeprincipalrequisitesbewantingtoengageanyonetoapproveoftheirinstitution。
Itappearsstillmoredifficulttoestablishaproportionaltaxuponbarter，ortheexchangeofcommoditiesoneforanother，unlesssalebeunderstood。Thiswouldbethecasewereaprivateperson，notsubjecttotheexciseuponbeermadeinhisownhouse，topayinthatcommodity。Hewouldnotthereescapetheimputationoffraud；andmight，withpropriety，beconsideredasaretailer。Idonot，however，doubtbutexamplesoftaxesuponbartermightbefound；someevenoccurtomyself；buttheyaretootriflingtomention。10*
Thelastandprincipalrequisite，torenderproportionaltaxeseasyandlight，issale。Theretheburdenmustbeproportionaltothebuyer’spurse；andifitpreventtheconsumptionofthethingtaxed，thedefectwillmanifestitself。
Ofthesetaxeswemaysay，thattheyareinproportiontocirculation；andaccordingly，weseehowdifficultitwastoraisethem，aslongascirculationremainedconfinedtothesmallquantityofcoininthecountry。Asmoneyincreased，bothbytheincreaseoftradeandalienations，theybecamemoreproductive；
andwerethenatureofthemrightlyunderstood，andweretheyproperlyimposed，theywouldsoonbemoregenerallyadopted。
Intreatingofpubliccredit，Ihavesaidthatitisthedutyofastatesmantoaugmentthequantityofmoney，inproportionasheintendstomultiplytaxesonhispeople。Ishallnow，beforeI
concludethischapter，explainthemeaningofwhatwastherethrownoutrelativelytoanothersubject。
Themoneyofacountry，wehavesaid，bearsnodeterminateproportiontocirculation；itisthemoneycirculating，multipliedbythenumberoftransitionsfromhandtohand。Again，wehavesaidthatthepricesofallthingsaredeterminedbydemandandcompetition。Themeaningofthis，asitconcernsthepresentquestion，is，thatinproportiontothecompetitionofthosewhoappearwithmoney，inordertoacquirewhatcomestomarket，alargerorasmallersumisbroughtintocirculation。
Now，accordingtotheprincipleslaiddowninthefirstchapterofthisbook，wesawhowthefullvalueoftheindustriousseller’sexpenceandprofit，weremadeuptohiminthesaleofhiswork；andifhehadadvancedanytaxuponanypartofhisworkorconsumption，thateventhiswasrefundedtohimbythebuyer，who，ifheconsumedinthelightofanidleman，paidforthewhole。
Farther，whenaproportionaltaxisimposed，wesaiditwas，inamanner，asifthestateinterposedatthetimeofalienation，andexactedofthepurchaseracertainvalueinmoney，inproportiontothecommodity，asthepriceofthepermissiontoacquirewhathisownindustryhadnotproduced。
FromthisIdrawthefollowingconsequence，thatinproportiontothetax，anadditionalsumofmoneyisdrawnintocirculation，whichwouldotherwisehaveremainedinthepocketofthepurchaser；consequently，onimposingproportionaltaxes，theycannot，atfirst，exceedthatproportionofmoneywhichisfoundinthepocketsoftheconsumers，overandabovewhattheyusedtopayforwhattheyconsumed。
Thetruthofthispropositionisestablisheduponmanyfacts。
First，incountrieswherepeoplekeeptheirmoneylockedup，proportionaltaxesareverywellpaid。HencethegreatamountofthealcavalaandcientosinSpain，whichamounttogetherto14
percentuponeveryconsecutivealienationofthecommoditieswhichtheyaffect，chieflyindeedfortheconsumptionoftherich。
Secondly，WhenexciseswereaugmentedinEngland，inthereignofkingWilliam，Davenanttellsus，thatthegoodsexcisedfellintheirprice。
Thirdly，WhenawarhaslastedanytimeinFrance，taxesceasetobesoproductive。
Arenotallthese，andmanyotherappearances，resolveduponthesameprinciple，viz。thattaxesmustcomeoutofthatmoneywhichexceedswhatwasnecessaryforcarryingonalienationbeforetheywereimposed？
InSpainsuchtaxesdrawmoneyfromthechestsofthehoarders，andincreasecirculationforawhile。
InEngland，duringKingWilliam’swars，thequantityofmoneybeingverysmall，andtradebeingverylow，thetaxuponmaltcouldcomeoutofnootherfundthanthepriceusuallygivenforbarley。
InFrancepeoplearebetteracquaintedwithtaxes，andthegreatbulkofexcisesareadministeredbythefarmers，whoneverlowertheirprice；sothatthediminutionofthemassofcoinmustdiminishconsumption。
Butwhenmethodscanbefallenupontoincreasemoneyaccordingtotheusesfoundforit，taxeswillcontinuetoproduce，consumptionwillnotdiminish，andcirculationwillkeeppacewiththem。
Couldwesuppose，thatbeforetheimpositionoftaxes，everypersoninastatehadlaiditdownasarule，tospendthewholeofhisincome，butnoneofhistreasure，intheconsumptionofwhatisbroughttomarket，itisplain，thatinaluxuriouS
nation，taxesmightbecarriedsohighastodrawthelastfarthingofthetreasureintocirculation，eventhoughitweresupposedtoexceedthevaluewhichdemandhadfixedforallthatwasformerlybroughttomarket。Butwithoutaluxuriousturnthiswouldnotbethecase。Therearecountriesaboundingwithcoin，whichitisimpossibletocomeatbyproportionaltaxes。Thereasonisplain:thevaluewhichdemandfixesuponthetotalofthearticlesofconsumptionexposedtosaleinthecountry，bearsbutatriflingproportiontothecoinwhichremainslockedup。
ThiswasthecaseinancientGreece。Inthiscase，proportionaltaxesnevercanexhaustthetreasure；becauseweretheytobemadehighuponarticlesofthefirstnecessity，allthepoorwouldstarve；ifuponarticlesofsuperfluity，demandwouldstop。
Proportionaltaxes，therefore，canberaisedinproportiononlytothedesireofspendingmoney；andasthisdesiredependsuponthespiritofthepeople，somusttheextentoftaxes。
Letmenowtracealittletheprogressofmoneybroughtintocirculationbyproportionaltaxesinaluxuriousnation。Ishallcallthevalue，fixedbydemand，forallthatcomestomarketY。Thesumleviedinconsequenceofthealienationofit，orinotherwords，thesumoftheproportionaltaxesX。AndthewholemoneyofthecountryZ。Thispremised，itwillfollow，fromwhathasbeensaid，thatassoonasallthemoneyofthecountryisbroughtintocirculation，thenZwillbeexactlyequaltothesumofYandX。
Letusnextsupposethewholealienationtobemadeatonce。
WillnotZthenimmediatelyappeardividedintoYandX？
Whatthenwillbecomeofthosetwosumswhichwesupposetoenterintocirculationatthesametime？Ianswer，thatYwillgoentirelyfreetotheindustriousseller:thatitis，orshouldbe，nearlyequaltotheformervalueofwhatcametomarketbeforetaxeswereimposed:andthatXisanadditionalsumdrawnfromtheidleconsumers，wholiveuponanincomealreadymade。ButsupposeXtobeaugmented，untilitexceedsthequantityofmoneyformerlysuperfluousforcarryingonalienation:thenIsay，thateithertaxeswillbecomeproportionallylessproductive，orconsumersmustmeltdownthecapitaloftheirfundsintopapermoney，totheamountofthedeficiencyofX；andthiswillsupplycirculationwiththeadditionalsumrequiredinconsequenceoftheimpositionoftaxes。
Now，Ithink，itisaluckycircumstance，thattheadditionalsumoftaxesshouldbepaidbythoseverypeoplewhoarethebestabletoborrowitupontheirfunds。
LetusproceedtoexaminetheprogressofYandXastheycontinueincirculation。Yisnosoonercomeintothehandsoftheindustriousseller，buthehasoccasiontogotomarket:thatmomentIconsiderhimasoneoftherich；andthemoneywhich，atthetimehesold，hadacquiredthedenominationofY，nowresumesthatofZ。WhenhecomestobuyacommoditywithwhatwasformerlyhisY，thereisimmediatelyapartofitconvertedintoanewX，andtheremainderkeepsthedenominationofY
inthehandsofhimfromwhomhebuys。Bythisprogressitisplain，thatafteracertainnumberofalienations，ortransitionsfromhandtohand，thewholequantityYwillbeconvertedintoX。
Experienceshewsthistobethefact；becausetheamountoftaxesinashorttime，farexceedsthevalueofallthemoneyofacountry。
LetusnextfollowtheprogressofX。
UponthefirstalienationofanypartofwhatcomestomarketfortheconsumptionoftheproprietorsofZ，aproportionalpartofZistransformedintoX，andiscarriedintothepubliccoffers。Wereittheretobelockedup，andnotthrownbackintocirculation，itisplain，thatinashorttimethewholeofZwouldbeconvertedintoX，andwouldbeshutupintheexchequer。
Whentheamountoftaxes，therefore，insteadofbeingshutupintheexchequerissentoutofthecountry，asintimeofwar，mustnotthisproduceasimilareffect？Hasnottheexportationofthisamountthesameeffectaslockingitup，sincetheoneandtheotherequallytakeitoutofcirculation？Doesitnotthenfollow，thatifmoremoneybenotobtained，eitherbyborrowingitbackfromstrangers，orbymeltingdownmoresolidproperty，thatsellingmuststop，andYdisappearaswellasX？Therich，therefore，mustgiveoverbuying，andtheproprietorsofallthatcomestomarketmustdealbybarterwithoneanother。
Hownaturallydoalltheseconsequencesfollowoneupontheother！andhowexactlydotheycorrespondtotheprincipleswhichrunthroughthatpartofthelastbookwherewetreatedofbanksandpubliccredit！
Taxesarenotraised，inourdaystoremainintreasures，buttoanswertheexigenciesofthestate。Themoment，therefore，thatthemoneyarisingfromthemcomesoutofthepubliccoffers，itlosesthecharacterofXandresumesthatofZ，inthesamemannerasYwastransformedintoZ，bybeingbroughttomarketinordertobuyacommodity。ThisnewZ，aswemaycallit，nosoonerreturnsintocirculation，thanitbecomesagainconvertedintoYandX，withthisdifference，however，thatwhatcamefromtheexchequer，sofarasitisconvertedintoX，returnsdirectlyintoitagain。
Henceitfollows，thatstatescommonlypaytheirservantsthefulloftheirsalaries，andmakethemrefundapartinconsequenceofcumulativetaxes，insteadofproportionallydiminishingwhatisduetothem。Andwhenthesalariesthemselvesareintendedtobe1aidunderpoundage，whichinfactisanactualdiminutionofthem，theychoosethatthetaxshouldappeartobeadeductionoutofwhatissupposeddue；becauseitseemslessarbitrarytoimposeatax，thantodiminishasalary，withoutassigninganyreasonforit；butindeed，besidesthisreason，itcommonlyhappens，thattheparticularappropriationsandadministrationoftherevenuerenderthismethodeasier。
Withrespecttoproportionaltaxestheyaffecttheexpencesofthestateinthesamemannerasthoseofindividuals；withthisdifference，aswehavesaid，thatthepartXreturnsintotheexchequer；butthepartYisfairlyspentbythestate，asbytheidleconsumer。
Fromwhathasbeensaid，wemaygathertheprincipleswhichleadtothemostextensiveestablishmentofproportionaltaxes，viz。eithertodrawbyparticularregulations，thewholerealandgrossproduceoflandandworktomarket；oratleasttobringitundertheeyeofthestate，inconsequenceofsomemodificationormanufactureperformeduponit，aswasobservedwithrespecttomalt-houses，mills，andpublicovens。When，bysuchcontrivances，thewholegrossproducefallsundertaxation，theproportionaltaxesmustbegentlylaidon，andgraduallyraiseduntiltheybegintointerruptconsumption；thentheymustbediminishedforawhile，untildissipationincrease；acasewhichwillprobablyhappen，asitcommonlykeepspacewithindustry。
Ifwesupposetherichtosetoutonaplanoflivingupontheircapitals，insteadoflivingupontheirincomes，aswehavehithertosupposedthemtodo，thenindeedtaxesmayaugmenttoadegreenottobeestimated。Thiscombinationhasalreadyfoundaplaceinthe26thchapterofthesecondbook，whereweexamineditwithregardtotheprogressofindustry。Inthatplaceitwassaid，thatinproportiontocreditandindustry，itmightbepossible，inthecompassofayear，toproducecommoditiestothevalueofthewholepropertyofthemostextendedkingdom。Werethisthecase，towhataheightmightnottaxesbecarried？
Ythenwouldrepresentthewholevalueofthecountry，andconsequentlyXwouldswellinproportion，accordingtothecompetitionamongtheinhabitants，topurchaseeveryparticulararticle。Subsistenceandnecessariesmightbetaxedlowinproportiontotheabilitiesofthoseofthelowerclasses；
articlesofluxurymightbetaxedinahigherproportion，inordertodrawthemoreintotheexchequer。
Weretaxesthuscarriedtotheirutmostextent，stilleverypersoninthestatemustbeleftatlibertytosave，ortospendthewhole，oranypartofhisstock，orincome；whichisnotthecasewhencumulativetaxesareimposed。Proportionaltaxes，thoughcarriedtotheirutmostextent，willnotdepriveanindustriousmanofhisphysical-necessary，noroftherewardofhisingenuity，norofthatrankinwealth，towhichhisbirthorexpenceentitleshim。11*
Whentaxeshavetheeffectofinterruptingthisharmonyofexpence，ofrestrainingthelibertyofsquandering，orofsaving，orofoppressingonesetofmenmorethananother，inallsuchcases，theyareimproperlyimposed；andinsteadofbeingtoohigh，asitiscommonlysupposed，Ithinkitisademonstrationthattheyarereallylowerthantheyneedtobe。Theclassesofmeninamodernstate，resemblethehorsesinateam。Wheneveryhorsedrawsfairlyandequally，thewholeforceisexerted；butifanyonehappentobestrainedbyanover-chargethrownuponhim，theforceoftheteamisgreatlydiminished。
Whenproportionaltaxesarecarriedtotheirfullextent，I
thenpresumeeveryonewillbeobligedtopayasmuchaspossible；Idonotmeanthateveryonewillbeforcedtopaytotheextentofhisabilities，butIsay，thatthegeneralitywill；
andtherefore，werecumulative，orpersonaltaxes，tobesuperaddedonthosewhoalreadypayalltheycan，theywould，byaffectingthemunequally，deprivemanyoftheirphysical-necessary，orsmallprofits；andconsequentlydestroytheproperbalanceoftheircompetition。Thesettingofthelowerclassesfreefromcumulativetaxes，willhavetheeffectonlyofputtingthegrowingwealthofthepenuriousandsavingpartoftheindustriousinhabitantsoutofthereachoftaxation。Thisoughtingoodpolicytobedone，ashasbeenshewninanotherplace。But，farther，wehaveobserved，thattaxescanbeincreasedinproportiononlytothespiritofdissipationinthepeople。Toforcemoney，therefore，outofthehandsofthosewhodonotinclinetospendit，isforcingthespiritofthepeople；
andifitbenottyranny，itisatleastgreatseverity。Besides，weshallpresentlyshew，howimpossibleitisthesesavingsshouldescapebeingtaxedwhenevertheybegintoproduceanincome；andallowingthattheymaybegreatlyaccumulated，andthrownintotrade，yetstilltheymustinonewayorotherappearinalienation，andbecomesubjecttotheproportionaltaxes。Theonlypart，therefore，ofthesavingsnotaffectedbytaxes，willbeconfinedtothatwhichislockedup。Thisinaprodigalnationshouldneverbetouched。Theinconveniencesresultingtothestatefromsosmallaninequalityoftaxation，istootriflingtobeattendedto，andtoodifficulttobeprevented。
Icomenexttoexaminetheextentofcumulativetaxes。
Ifwesupposetheproportionaltaxestobecarriedtotheirfullextent，therewillbelittleplacefoundforthecumulative，ashasbeensaid。Theonlyobjectsleftforthemarethesavingslockedup，andthepureprofitsupontrade。
Butletussupposeproportionaltaxesoutofthequestion，astheymustbewhencontrarytothespiritofaparticularnation；
andtheninquireintotheprincipleswhichregulatetheimpositionofcumulativetaxes，inordertodiscovertowhatextenttheymaybecarried，andwhatconsequencesmayfollowwhentheyarebroughttoaheight。
Thisbranchhastwoobjects；first，income，whichisdeterminate；secondly，profitsfromindustry，whichareandmustbeveryuncertain。
Income，Idivideintotwosorts；thatwhichproceedsfromeverybranchofsolidproperty，capableofproducingit:Land，houses，evencattle，furniture，&c。allmay，insomerespects，produceanincome，moreorlesspermanentaccordingtocircumstances。Thissortofincomeisestablishedbylease。Thesecondsortistheinterestofmoney，constitutedbythecontractofloan。
Inimposingcumulativetaxesuponincome，itisverypropertoattendtothenatureofeveryspeciesofit，withrespecttoitsstability。Landedpropertyisfixed，andcannotescapetaxation，werethetaxtobecarriedeventotheextentofthefullincome，ashasbeenobserved。Werethesameproportiontobelaidonhouses，theywouldsoonfalltoruin，becausethenominalproprietorwouldnotkeepthemup。Likecircumstancesmustbeattendedto，intaxingeveryotherarticleofrevenue。
Themethodofascertainingthevalueofthiskindofproperty，istoobligeallleasestoberecorded，underasufficientpenalty。ThisisthemethodinFrance，forthesakeofthecontrole，whichisexacteduponrecordingthem；andthis，nodoubt，facilitatesthearisingofthetwentiethpenny，whichoperatesuponallsuchincome。
Thevalueonceascertained，thewholeincomeisatthemercyofthestate，inproportiontotheimpossibilityofavoidingthetax，byanychangeonthenatureofthefund。ItisfromthiscircumstancethatIhavecalledallsuchtaxesarbitraryimpositions。AndIcallthemalsocumulative；becausethereasongivenforimposingthem，is，thatitisjusteveryoneshouldpayageneraltax，forthesupportofthestate，inproportiontohisabilities。
Asthesetaxescannotbecarriedbeyondthevalueoftheincomewhichtheproprietorcannotwithdrawfromundertheburden，weseetheimpossibilityofestablishingthemuponthatincomewhichproceedsfrommoney。Ifataxofsomuchpercentbeimposeduponmoneylentatinterest，thelendermayimmediatelycallinhiscapitalfromhisdebtor，andsenditawaybeyondthereachofthetax。Ifthecallingitinbeprohibited，thenallcreditwillbedestroyedforthefuture，andnomoremoneywillbelent。Ifthestatesmanshouldbedisposedtoprofitoftheadvantagefoundinsecuringmoneyuponland-property；andif，trustingtothedesiremonied-peoplehaveofsettlingtheircapitalsinthatway，heshouldtakeoneormorepercent。uponcapitalssosecured；itwillstillhavetheeffectofhurtingthecreditoflandedmen，whohavefrequentlynogoodsecuritybuttheirlandtogive。
Itwasformerlythepracticetoallowthelandlordsaretentionofapartoftheinterest，inconsiderationofthetaxtheypaiduponthatpartoftheirland，whichwaspledgedforthesecurityofthemoneyborrowed；butwhencreditisonceestablished，thisregulationhasnoothereffect，thantoobligelandlordstoborrowsomuchdearerthanotherpeople，whohavenoretentiontoclaim。Whereindeedcreditisprecarious，sucharegulationmaybeconsideredasapremiumforgoodsecurity。
Ingeneral，Ibelieve，wemaysafelydetermine，thatallattemptstolayataxupontheincomeofsofluctuatingapropertyasmoney，wherethecapitalisdemandable，willproveunsuccessful。
Thecaseisdifferent，whenthecapitalisnotdemandable，ashasbeenobservedintheendofthe8thchapteruponpubliccredit；whereweweresuggestingareasonfortaxingtheinterestofnationaldebts，whengrownuptothefullamountofalltheincomeofacountry。Butamaterialdistinctionwastheremade，betweenthosedebtswhichweresupposedtobeconsolidatedintoapermanentproperty，andthenewcontractswhichweretobeconsideredasdebtsconstituteduponthatproperty。
Wesee，therefore，theextentofcumulativetaxesuponpossessionswhichproduceanincome。Letusnextexaminehowtheymaybemadetoaffectotherarticles。
Wehaveobservedhowimproper，andhowcontrarytoprinciplesitis，toimposeproportionaltaxesuponthosebranchesofsale，whichdonotchangethebalanceofwealthbetweenthecontractingparties。Yetcumulativetaxesmaythentakeplace；becausethereisnoreasontomakethemgeneral，orproportional。
Whenlands，forexample，carrytitlesalongwiththem，asisthecaseinmanycountries；andwhen，aswithusinScotland，theycarryarighttovoteforamemberofparliament，averyheavytaxmightbeimposeduponthealienationofthem。Thesamemaybesaidofeveryotherestatewhichrequiresafeudalinvestituretocompletetheright。ThustheLodsetVenteinFrance，whichisaproportionofthepriceofsuchlandsduetothesuperiororlord-paramountofthefee，amountinginmanycasestothesixthpartoftheprice，isahintforacumulativetaxtoberaiseduponthealienationofthiskindofproperty。
Werecumulativetaxesproperlylaiduponpersonalservice，aregularityinlevyingthematshortintervals，andaccordingtosomedeterminateproportion，woulddoagreatdealtowardscommunicatingtothemalltheadvantagesofthoseoftheproportionalkind。
Thusataxlaiduponthosewhoworkbytheday，maybeleviedinsuchamannerastobetolerablyeasy。Apennyadayormoreifnecessarypaidbyeveryindustriousman，regularly，onceaweek，wouldsoonenablehimtoraisehispriceinthatproportion。Butthendeductionsmustbeallowedforallaccidentalimpediments；andwereaplantobeconcerted，manyotherconsiderationswouldenterintoit，whichitwouldbesuperfluousheretomention，andwhich，perhaps，mayoccurinanotherplace。
Thetwoarticleswhich，inanalizingtheextentofproportionaltaxes，weobservedhadescapedthatimposition，towit，moneylockedup，andthepureprofitsontradeconstantlyaccumulatedintothestock，areequallyilladaptedtobearacumulativetax。Icanseenowayoftaxingmoneylockedup，anymorethanmoneylent，withoutopeningadoortothegreatestoppression。Andastothepureprofitsontrade，althoughtheyappeartobeincome，Iratherconsiderthemasstock，which，accordingtoprinciples，oughtnottobetaxed。Myreasonfornotconsideringthemasincome，isbecausewehavesupposedthemtobeaccumulatedbythemerchantintohistradingstock。Theyresembletheannualshootsofatree，whichaugmentthemassofit，butareverydifferentfromtheseedorfruitwhichisannuallyproduced，andisannuallyseparatedfromit。Iftheybespentbythemerchants，thentheyareundoubtedlyincome，andwillbeaffectedbyproportionaltaxes；butastheymayalsonotbespent，andbecomestock，thecumulativetaxwillaffecttheminbothcases。
Chap。X
AreTaxesaSpurtoIndustry，assomepretend？
Itisnoteasytofindout，apriori，howtaxesshouldproveaspurtoindustry。Whatmakesseveralpeopleadoptthisopinionisratherfromtheirfeelings，inconsequenceofmanycircumstancesarisingfromexperience，thanfromwhatreason，orthenatureofthething，haspointedout。Butasnothingcanbeproducedwithoutanadequateandnaturalcause，letusexaminethispoliticalproblem，byanapplicationoftheprincipleswehavelaiddownintheformerchapters。Ifthesebejust，weshalldiscoverbythem，howithappensthatincountrieswheretaxesarehigh，wherelivingisdear，andwhereeverycircumstanceseemstorenderthemeansofsubsistencedifficulttoobtain，peopleliveinthegreatestplenty，arebestandmosteasilysubsisted，andthatindustrytheremakesthegreatestprogress。
Forthesolutionofthisquestion，letuscalltomindtheprincipleswhichinfluencethemultiplicationofmankind，andtheincreaseoflabourandindustry，laiddowninthefirstbook。Wethereexplainedhowthewantsofmankindpromotetheirmultiplication。
Money，theinstrumentofalienation，wasrepresentedastheprimummobileinthisoperation；adesireintherichofacquiringeverythingwithmoney，thatisdemand，wasshewntobethespurtoindustryinthepoor。Itwassaid，thatifrichesdidnotinspireatasteforluxury，thatisfortheconsumptionofthelabourofman，thesericheswouldnotcirculate；andthattheywouldthenbeadoredratherasagod，thanmadesubservienttotheusesofmen。
Connectherewiththattheimpositionoftaxesisamethodofbringingmoneyintocirculation；thatthoseoftheproportionalkindhavetheeffectofdrawingfromtherichanadditionalpriceuponeverythingtheybuy，whichgoesfortheuseofthestate，andwhichotherwisewouldnothaveenteredintocirculationatthattime。
Fromtheseprinciples，Iconclude，thattaxespromoteindustry；notinconsequenceoftheirbeingraiseduponindividuals，butinconsequenceoftheirbeingexpendedbythestate；thatis，byincreasingdemandandcirculation。
Fromtheprinciplesabovelaiddown，Icannotdiscovertheshadowofareason，toconcludethattakingarbitrarilyawayfromsomeindividuals，apartoftheirgainsbycumulativetaxes，orproportionallyfromothers，byaugmentingthepriceofwhattheybuyandconsume，mustinanyrespectimplyanincitementintheconsumerstodemandmore；andwithoutthisitnevercanexcitetheindustriousmantoaugmentthesupply。
Ireadilyallowthateveryonewhohasbeenobligedtopayatax，mayhaveadesiretoindemnifyhimselfoftheexpencehehasbeenputto，byaugmentinghisindustry；butif，ontheotherhand，taxeshaveputeveryonetoaconsiderableadditionalexpence，inproportiontohisincome，itwouldbeabsurdtoallegethisdiminutionofhisfortune，asthecauseofadesiretoaugmenthisconsumption；andunlesstherichdoaugmenttheirconsumption，thepoorcannotaugmenttheirindustry。
Examine，ontheotherhand，theusemadebythestateofthemoneyraised，andyouwilleasilyperceivethejustness，Ithink，oftheabovementionedprinciples。Thismoneybelongstothepublic，andisadmasteredbyprivatepeople。Publicexpenceisdefrayedwithafullhand；theywhobestowthemoney，bestowitforthepublic，notforthemselves；andtheywhoworkforthepublic，find，oroughttofind，thegreatestencouragementtobediligent。
Everyapplicationofpublicmoneyimpliesawantinthestate；andeverywantsupplied，impliesanencouragementgiventoindustry。Inproportion，therefore，astaxesdrawmoneyintocirculation，whichotherwisewouldnothaveenteredintoitatthattime，theyencourageindustry；notbytakingthemoneyfromindividuals，butbythrowingitintothehandsofthestate，whichspendsit；andwhichtherebythrowsitdirectlyintothehandsoftheindustrious，oroftheluxuriouswhoemploythem。
Itisnoobjectiontothisrepresentationofthematter，thatthepersonsfromwhomthemoneyistaken，wouldhavespentitaswellasthestate。Theansweris，thatitmightbeso，ornot:
whereaswhenthestategetsit，itwillbespentundoubtedly。
Besides，haditbeenspentbyindividuals，itwouldhavebeenlaidoutforthesupplyofprivatewants，whicharenotnearsoextensiveasthoseofthepublic:andfarther，whenmoneyissotakenfromrichindividuals，itobligesthemtofindoutawayofprocuringmore，outoftheirsolidproperty；andwhenthisfacilityisn1otprocuredforthembytheirstatesman，weseehowtaxesbecomebothoppressiveandillpaid。Onthecontrary，whenitisprovided，eitherbythereturnsofforeigntrade，whichgreatlyaugmentthecoinofacountry；orbybanks，whichmeltdownpropertyintopapercirculation；weseetaxesaugmentingconstantly，withoutcreatinganyimpedimenttoconsumption，ordiscouragementtoindustry。Alltheseconsequenceshanginachain，andhencemaybegatheredthesolidityoftheprinciplesuponwhichtheydepend。
Afterthissolutionofthequestionproposed，letthosewhoareversedinhistorylaycircumstancestogetherandexaminewhetherfactsdonotprovethetruthofwhatIhavebeensaying。
Chap。XI
ConsiderationsuponLand-Taxes，withsomeObservationsuponthoseofEnglandandFranceOfallthekindsofcumulativetaxes，thatwhichisproperlyimposeduponlandsseemstobethebest:thatis，toimplythefewestinconveniencestothepersonspaying，andtothestateinraisingit。Thatitisanunequalimpositionisplainandcertain:thischaracterisunavoidablyattachedtoeveryspeciesofcumulativetaxes，inonewayorother。Ithasalsotheeffectofcastingageneraldiscredituponthepurchaseandimprovementofland；becausetheproprietorsarenaturallyexposedtoaugmentations，whichmay，almostwiththesameease，becarriedtothetotalamountoftheincome，astoanyproportionalpartofit。Thishasbeenmentionedinaformerchapter，wheretheinterestofanation’sdebtswassupposedtoincreasesoastoequalthevalueofalltheland-rents，andthewholerevenueofindividuals。
Land-taxesareimposedinvariousformsindifferentcountries，andallaresupposedtobearadeterminateproportiontotherent。This，however，isnever，norindeedcaniteverbethecase。Thevalueoflandisvaryingperpetually，fromtheindustryoftheinhabitants。Besidesthisinequality，thereareotherinconveniencesproceedingfromtheunequaldistributionofproperty。InScotland，forinstance，landisdividedintolargeportions；veryfewsmalllotsaretobefound。Theclassoffarmers，forthemostpart，labourthelandsofothers，whohavelargepossessions。Thisislessthecase，Ibelieve，inEngland，andstilllessinFranceandinGermany。Aland-tax，therefore，beingsupposeduniversal，would，inScotland，dolittleharm:inEngland，itwouldfallheavieruponthesmallproprietors；
becausethesumexactedwouldbearagreaterproportiontothesupposedsuperfluityoftheproprietor。InFrance，itwouldstillbeworse；fortheretheexemptionsofthenumerousclassofnobles，andmanyothercircumstancesmentionedabove，wouldentirelydestroyeventheshadowofproportion。Itisoutofmywaytoenterintoanylongdetailuponthishead，withrespecttodifferentcountries。
IshallthereforeconfinemyselftoaveryfewobservationsuponthemethodoflayingthistaxinEngland；anduponaprojectwhichhasbeenlonginagitationinFrance，toraisetheirland-taxbywayoftitheuponthefruits。
ThisschemewasfirstproposedtothelateKingofFrancebytheMarechaldeVauban，in1699，andtheproposalwasrenewedsomeyearsagoinaperformancecalledtheReformateur。ButasitwouldprovehurtfulandburdensometoFrance，inagreatdegree，fromacircumstancewhichhasnotbeenattendedtobytheseauthors，theexaminationofthissystemoftaxationwillserveasagoodillustrationofthispartofoursubject。
Theland-taxinEnglandhas，Ithink，tworemarkabledefects。
First，Thesumsimposedatcertainrates，uponeverydistrictofthekingdom，whethercities，towns，universities，oropencountry，evenupontheKing’spalaces，innsofcourt，&c。arenotdistributedaccordingtoanyruleofproportionuponthepropertyofindividuals；butthisoperationislefttoassessors。
Secondly，Allpersonalestates，exceptpropertyinthepublicfunds，andstockuponland，supposednecessaryforagriculture，arechargedinthesameproportionasland-rents。
Chap。XII
MiscellaneousQuestionsrelatingtoTaxesQuest。3。Whatismeantbyincome，relativelytoindividuals，ortoastate，andwhatisthenatureoftheexpencewhichmustdiminishit，whenitisconsideredastheobjectoftaxation？
Thegreatintricacyofthisquestionproceedsfromhence，thatwhatisreallyanexpencetooneistheincomeofanother:
sothatwithoutapplyingourreasoningtoeveryparticularfact，nogeneralexplanationcanberenderedintelligible。Myreasonforproposingitinthisplaceis，thatincommentinguponsomepassagesofDavenant，inhisdiscoursesupontherevenuesofEngland，Imayhaveanopportunityofillustratingsomethingswhichhavebeenalreadyexamined。
Davenantwasanadmirablewriter；hehadaremarkablegeniusforpoliticaltheory，andhissentimentsuponmanythingsareverygenerallyadopted。Myintentionhereisnottorefutehisopinions，buttoavailmyselfofhiscombinations，inordertoexplainmyownideas。
Inhisfirstdiscourseuponrevenues，wefindthefollowingpassage。
’Thenumberofthepeopleleadsustoknowwhattheyearlyincomemaybefromland，andwhatfrommines，houses，andhomesteads，rivers，lakes，meers，ponds，andwhatfromtrade，labour，industry，artsandsciences:forwhereanationcontainssomanyacresofarableland，somanyofpastureandmeadow，suchaquantityofwoodandcoppices，forests，parksandcommons，heaths，moors，mountains，roads，ways，andbarrenandwasteland；
andwherethedifferentvalueofthisiscomputed，bypropermediums，itisrationaltoconclude，thatsuchapartofthepeople’sexpenceismaintainedfromland，&c。andsuchapartfrommines，houses，&c。andthatsuchapartismaintainedfromtrade，labour，&c。andthepoorexceedingsomuchtherichinnumbers，thecommonpeoplearethepropermediumbywhichwemayjudgeofthisexpence。’
’Thereisacertainsumrequisitetoeveryoneforfood，raiment，andothernecessaries；asforexample，between7and8
l。perannum；butsomeexpendingless，andsomemore，itmaynotbeimpropertocompute，thatthemassofmankind，inEngland，expend，onewithanother，near8l。perannum:fromwhenceitmaybeconcluded，thatanannualincomeofsomanymillionsisneedfulforthenourishmentofsuchandsuchanumberofpeople。’
Thereasoningheretakesawrongturn。Itisofnoconsequencetocomputethevalueofthingsconsumedwithoutalienation。Itisofnousetoknowthatthevalueofthephysical-necessaryofanEnglishmanis8l。ayear；becauseifthissumbesupposedtobeanexactquantityofincome，notonefarthingoftaxcancomeoutofit。Sothatimposing，forexample，5percentuponthisarticlewouldberaisingonlythephysical-necessaryto8l。8s。which8s。mustbepaid，notbythephysical-necessarian，butbysomebodyhavingsuperfluitywhoemployshim:andiftherewerenotsuperfluityenoughinEnglandtoanswerto8s。ahead，suchataxcouldnotbelevied。
Heafterwardssupposesthattheincomeofthisclassmayamounttoabouttwentymillionsayear，whichat8l。each，answerstwomillionsandahalfofpeople。Hestatestheincomeoflandsatfourteenmillions，andtheincomeoftradeattenmillions，inallatforty-fourmillionsayear:andhenceheconcludes，thattaxesoughttobeimposedinsomeproportiontothistotal。
Nowifhesupposethefirstarticleoftwentymillions，arisingfromtheincomeofthosewhoareemployedinartsandmanufactures，accordingtotheformercalculationof8l。ahead，tobeasreadyafundfortaxationastheland-rents，wemustexamine，bytheprincipleswehavededuced，whethertherebeanygroundforsuchasupposition。
Letmesupposeoneofthisgreatclasstoworkawholedayforhisvictualsonly。Hereisanalienationofworkforfood。Itisimpossible，however，toraiseataxinmoneyuponthisalienation；becauseitmayeasilybesupposedthatneitherpartyhasafarthing。Theonlymethodtherefore，forimposingataxinsuchacase，wouldbe，eithertoobligetheworkmantosetapartaportionofhisday’sworkforonewhowouldpaythepublicforthevalueofit；ortoobligethepersonwhogiveshimhisfood，topaythepublicfortheprivilegeofemployinghiminhisservice。Theoneandtheotherareexamplesofproportionaltaxes。Butthismethodoftaxationisabsolutelyunknown。Inthisexamplethereisanalienation，which，Ihavesaid，constantlyimpliesasuperfluityofonekindorother。Thelabourofthepersonworkingis，here，superfluoustohimself；thereforeapartofitmaybeappliedtowardsthepublic。Butthebreadhereceivesisinnopartsuperfluous，andthereforecannotbelaidundertaxationastohim。Butthenthebreadgivenforthelabourissuperfluoustothepersonwhogivesit；andasthisimpliesthathehasasuperfluityofbread，thestatemaydemandashareofthissuperfluity。
Bythisexpositionofthematteritappears，thatinordertoraiseatax，inwhateverwayitbedone，somekindofsuperfluitymustbesupposed。Italsopointsouthowitshouldbelaidon:
forifbymistakingtheproperobject，apartofthebreadshouldbetakenfromtheworkman，insteadofbeingtakenfromthemanwhoemployshim，thetaxwouldaffectthephysical-necessaryofthelabourer，insteadofaffectingthesuperfluityoftheemployer。
Letusnextsupposeaworkmanabletodonomorethanwhatisrequisitetodigthegroundforrootstoeat，insteadofdiggingittoprocurebreadfromamanwhohasbreadtospare；stilltherewillbenoalienation；consequently，nopossibilityofestablishingatax:forifyoueithertakeapartofhislabour，orofhisfood，youdeprivehimequallyofhisphysical-necessary。Yettheworkofthisman，andhisfood，maybevaluedatsomuchmoney；andthusmayenter，inonesense，intoDavenant’sgeneralarticleofincomeorexpence；butitdoesnotfollowthatanytaxcanberaiseduponsuchanincome。
Toestimate，therefore，thetotalvalueofwhatistheobjectoftaxation，wemustgoanotherwaytowork。Thefirstarticlemustbetheannualincomeofallfunds。Byfunds，here，I
understandthecapitalwealthalreadymade，inoppositiontotheproduceofindustry，whichmaybeconsideredasthematerialsofwhichsuchfundsarecomposed。Thefundthereforeistheaccumulationofsavings，which，nothavingbeenspentbytheindustrious，formacapitalofanaturetoproduceanincome，eitherfromland，orfromanyothervaluablething。Thusland-rents，annuities，interestofmoney，emolumentsofoffices，salaries，evenwagesofservants，inshort，everyfixedincome，I
rangeinthisfirstarticle，whichIcallannualincome，producedfromacapitalalreadyformed，eitherrealorsupposed。
Thismaybelaidundertaxationbyapound-rateorotherwise，andformsthatkindoftaxwhichIcallcumulativeandarbitrary；
becauseamanwhohasanysortofvisiblerevenue，comesunderthisgeneralrate，lethimhaveeversomanynecessarydeductionsoutofit，eversomanydebtsandincumbrances。Fromsuchcircumstances，cumulativetaxesfrequentlyturnoutextremelyburdensome。
Thesecondobjectoftaxationisuponalienationsmadeformoney。Wheneverwecometodisposeofmoneyinthepurchaseofanything，thestatehasanopportunityofexactingapartofitasatax；butwhileitremainshid，itcanneitherbecomeat，orlaidundercontribution，withoutextortionorviolence。
Allbranchesofexpencemaybelaidundertaxationbyexcises，whichIcallproportionaltaxes；becauseamanisneversubjectedtothem，butinproportiontohisexpence；andhisexpenceoughtnaturallytoproceedfromhisincome。
Asfortrade，Idonotclearlyseehowtheprofitsofitcanberegularlytaxed。InFrance，indeed，theyaretaxedunderthefirsthead，andareconsideredasanincome。Suchanimpositionisnotwelljudged；becausetherethematerialsformakingthefundaretaxedasiftheyweretheincomeofafundalreadymade。
Thesavingsonlyoutoftheprofitsupontrade，placedsoastoproduceapermanentrevenueare，whatcanproperlybeconsideredasafund:theincomethereforeofthesesavingsandnotthesavingsthemselves，shouldcomeunderthisbranchoftaxation。
Customsareimproperlycalledtaxesupontrade。Whenillimposedtheymaystoptrade，orrenderitlessprofitablebydiminishingthedemandforthegoodssotaxed；buttheycantakenothingfromtheprofitsalreadymade。
Inatradingnation，thegreatbranchesofcommerceproduceacertaindeterminateprofit，subject，Iallow，toaugmentationsanddiminutions，fromaccidentsandcircumstancesimpossibletobeforeseen:andthecustomsimposeduponexportationandimportationdifferfromexcisesmoreinthemethodoflevyingthemthaninanythingelse。
Davenant，inmyopinion，wouldhavegivenabetterideaofthesumwhichtaxesmighthaveproducedinEngland，hadheexaminedtheamountofallthebranchesofrevenue，andofallthespeciesofsale，thaninthemannerhehasdone。Thesetwopointsknown，itwouldbeexpedientnexttoinquire，inwhatmannertheseveralarticlescouldbemadesubjecteithertocumulative，orproportionaltaxes。
ImustnowtakenoticeofanotherpassageofDavenant，whereheexplainshimselfuponthequestionbeforeus:itisinhisfifthdiscourseuponrevenues，wherehesays，’Byannualincome，wemeanthewholethatarisesinanycountryfromlandanditsproduct，fromforeigntrade，anddomesticbusiness，asarts，manufactures，&c。andbyannualexpenceweunderstandwhatisofnecessityconsumedtoclotheandfeedthepeople，orwhatisnecessaryfortheirdefenceintimeofwar，orfortheirornamentintimeofpeace:andwheretheannualincomeexceedstheexpencethereissuperlucrationarising，whichmaybecalledwealthornationalstock。Therevenueofagovernmentispartofthisannualincome，aslikewiseapartofitsexpence，andwhereitbearstoolargeaproportionwiththewhole，asinFrance，thecommonpeoplemustbemiserableandburdenedwithheavytaxes。’
Imustcommentalittleuponthispassage。
Ihavenoobjectiontothisexpositionofthematter；theideasareintelligibleandclear:butIobjectagainsttheapplicationofhisdoctrinetotaxes；becauseitwouldleadtoerror。Herearemyreasons:
First，Incomeiscalledthewholeoftheearth’sproductions:
thisImayadmittobejust，exceptwhenweconsiderincomeasanobjectoftaxation。Butifweretainthesamedefinitiontoexpresstheincomeofone，forexample，wholaboursthesoilforhisownsubsistence，aswellasofanotherwholaboursitasatrade，thedifferenceinpayingtheirtaxesoutofitwillbeverygreat。Hewhodrawsnothingfromthegroundbuthisphysical-necessary，canbelaidundernotaxation；becausehehasnosuperfluity。Andifhebeobligedeithertogiveapartofhiscropintax，ortosellanypartofitformoneytobepaidtothepublic，thisdiminisheshisphysical-necessary，andforceshimtostarve:whereastheother，whoexercisesagricultureasatrade，maybeobligedtopayapartofhissurplusbywayoftaxorrent；andstillhisphysicalnecessarymayremainuntouched。
Itisforthisreason，thatintreatingofthesematters，I
amalwaysatthegreatestpainstopointout，thatnothingcanbetheobjectoftaxation，exceptwhatisoverandabovethephysical-necessaryofeveryone。
Inallcountrieswherealand-tax，steuer，taille，orbywhatevernameitgoes，isestablished，caremustbetakentopreventthehusbandmenfromconfiningtheirlabourtosuchasmallspotofgroundasisbarelysufficienttoproducetheirownphysical-necessary，unlesswhentheyhaveatradetoassisttheminpayingwhatthepublicdemandsofthem。
Fromthiscircumstance，andthisonly，ithappens，thattheland-taxinEnglandissolittleburdensome，comparativelytowhatitisinmanynationsofEurope。LandsinEnglandareletinlargeportions:nobodywillletafarmsosmallastobeproportionedtothesupplyingofthemerephysicalwantsofthefarmer。Butinothercountries，wheretheoeconomyisdifferent；
whereinheritancesinlandareconstantlydivided，asmoveables，amongallthechildren；thelotsbecomesosmall，thattheproprietorcandrawnomorefromthemthanhisownsubsistence；
andthenwhenaland-taxisimposed，thispoorlittleportionbeingvaluedinproportiontowhatitcanproduce，aswellasthegreatestestateinland，thehusbandmanisstarved，althoughthetaxdemandedofhimbelaidonintheexactproportiontotheproduceofhisland，whilehethathasasurplusisquiteeasy。
Iwouldthereforerecommend，incountrieswherethisminutesubdivisionoflandshastakenplace，thatforthefuturenolotunderacertainextentorvalueshouldbesufferedtobedividedamongthechildren，butorderedtobesold，andthepricedividedamongthem；andthatthesameregulationshouldbeobserveduponthedeathofsuchproprietorswhoselandsarenotsufficienttoproducethreetimesthephysical-necessaryofthelabourers。Thiswouldengageapeopletoexerciseagricultureasatrade，andtogiveoverthattriflinghusbandrywhichproducesnosurplus，andwhichinvolvessomanypoorpeopleintheoppressionofland-taxes。Thisregulationnevercanberecommendedinaplantobeexecutedallatonce:itmustbedonebydegrees，andinproportiontotheprogressofindustry。Theprincipleissoevident，thatIneverfoundanyonewhodidnotimmediatelyagreetothejustnessofmyobservation；althoughinimposingland-taxesIhavenowherefounditproperlyattendedto。
Herethenistheuseoftheory；itdirectsusinpracticetoavoiddifficulties，whichmightotherwisebejudgedunsurmountable。
Secondly，Ifartherobserve，thatitisamorehurtfulerrorstilltomistaketheproduceofindustryforthetaxableincomearisingfromit，thantomistakethegrossproduceoflandfortherent:becausetheprofitsuponindustrybearfrequentlyasmallerproportiontoitsproduce，thantherentsoflandsdototheirfullfruits。
Thebestmethodofraisingmoneyuponthelowerclassesoftheindustriousisrightlytolaytheirconsumptionunderproportionaltaxes，whichtheymayeasilydrawback；becausetheywillraisethepriceoftheirworkproportionally。
Fromthiswemayconclude，contrarytothecommonopinion，thatthetestofwellimposedtaxesistoraisepricesinproportion。Whentheyarerightlyimposed，everyonewhosellsacommoditywhichhaspaidatax，willdrawitback，whetherhebeindustriousornot。Ifheconsumeit，hecannotdrawitback，butbyraisingthepriceofhiswork；whichagainhecannotdo，unlessthetaxbemadesogeneralastoaffectallhiscompetitors；andunlesstheconsumptionhehadmadebeunavoidabletoeveryoneofthem。
Whenwereflectuponthelargequantitiesofexciseablegoodswhichareconsumedassuperfluities，wemustconcludethattheriseofprices，dailycomplainedof，proceedsmorefromourmannersthanfromthetaxeswepay。
Thirdly，theexpenceofapeopleisnotmerelywhatissufficienttosubsistthem；butwhattheyconsume，eitherinfruitsormanufactures。HadindeedDavenantcomputedthevalueofthisnecessaryquantity，anddeducteditfromtheincome，accordingtohisacceptationofincome，theremainderwouldhavebeenatolerablygoodrepresentationofwhatImeanbyincome，ortaxablefund；becausewhateverapeopleconsumebeyondthenecessary，Iconsiderasasuperfluitywhichmaybelaidundertaxation。
Fourthly，Imustalsodifferfromhiminhisideaconcerningsuperlucration，wealth，ornationalstock。
Accordingtohim，thisisthequantityofincomeremainingafterthefollowingdeductions:First，Whatisnecessarytoclotheandfeedthepeople。Secondly，Whatisnecessaryfortheirdefenceintimeofwar，andornamentintimeofpeace。Butaccordingtomynotions，Imustalsodeductallwhichisconsumedinsuperfluities；forwhatisconsumed，whethernecessarilyorsuperfluously，nevercanmakeanarticleofsuperlucration，wealth，ornationalstock。
Thesuperlucrationthenofanationconsistsintheaugmentationsmadeuponherstockofeverykind，capableofproducingaproportionalincome:itistheconvertingintosomethingdurablethewellemployedtimeoftheinhabitants。InthissensethenewpavementofLondon，theroads，buildings，ships，etc。inEngland，areallarticlesofsuperlucration，aswellastheimprovementofthelands，andconsolidationofthebalanceofhertrade，whichhascreatedthatpartofthepublicfundsbelongingtonatives。
Everyonewhohaswrittenconcerningtaxeshasendeavouredtocontracttheobjectofthemasmuchaspossible:more，Iimaginewithaviewtoeasethepublicthanthepeople。Ihavefollowedanothercourse。Ihavebeenformultiplyingtheobjectsoftaxationasmuchaspossible，andformakingthemmoreinproportiontoexpencethantopropertyorincome。ButthatImayconformmyselfinsomemeasuretotheideasofthosewhohaveexaminedthesamesubject，Ishallproposeatax，whichwouldfilluptheplaceofeveryother；andcoulditbelevied，wouldbethebestperhapseverthoughtof。
Itisatax，atsomuchpercentuponthesaleofeverycommodity。
NOTES:
1。Thecorv閑inFranceisthepersonalserviceofallthelabouringclasses，forcarryingonpublicworks。Weretheypaidforinmoney，itiscomputedtheywouldamounttonomorethan1，200，000livresayear。ThistaxwasomittedintheaccountoftheFrenchrevenue。
2。ThegentlemenoftheMonthlyReviewforAugust1767，p。120，haveproposedanobjectiontothedoctrineherelaiddown；I
shallthereforeinsertthepassage，andendeavourareconciliationofopinions，whichisamorelaudableattempt，thanthemostsuccessfulrefutation。
’Inthediscussionofsodifficultandcomplexasubjectasthisoftaxessaythesegentlemengreatcareshouldbetakenthatthefoundationbelaiduponsolidprinciples；andthatnothingbeadmittedupontheauthorityoftheinquirers，becausethesmallesterrorinfirstprinciplesmustleadtogreatmistakesandconfusioninthesubsequentpartsoftheinquiry。
Whenourauthorsaysthattaxesoughttoimpairthefruitsandnotthefund；andrepresentsthisasafundamentalprincipleoftaxation-weshouldhavewishedtohaveseenthereasonuponwhichthisprincipleisfounded；asinourapprehensionitwantsmuchoftheclearnessofanintuitivetruth-Andweownitappearstousthateverymanwhosegoodsareembarkedinthepoliticalvessel，risksthewhole；andinequity，asinallothercasesofinsurance，oughttopay，inthelanguageofcommercialpolicies，asinterestmayappear:whichwillbeinproportiontothewholerisk，andnotinproportiontotheprofits，orfruits。
Thosewhosefundsaretheproductionofartificialsociety，orprotectedbythelawsofentail，evenagainsttheeffectoftheirownfollyandextravagance，ought，inouropinion，topayfortheirextraordinarycareandsecurity，thesebeingbenefitswhichthelaboriousmanhasnosharein，andwhichheliesundernoobligationtosupportwiththefruitsofhisindustry。Forthispurposewhatourauthorcallscumulativetaxesmaywithgreatjusticeandproprietybeapplied——’
OnthesejudiciousremarksImustobserve，thatnothingismorerequisite，intheperusalofthiswork，thanastrictattentiontothemannerofestablishingeveryprinciple。Thiswasmyparticularcareinthecompositionofit，andeveryoversightinthisrespectwillbetheobjectofajudiciouscriticism。
Imustnowexaminewhether，inthisplace，Ihavefailedinexactness，asitishereinsinuated；orwhethermycriticshavemisunderstoodthemeaningofmywords。Asfortheauthorityofmyopinion，Iperfectlyagreewiththemthatitshouldgofornothing。
Ihavesaidthatitisafundamentalprincipleintaxationthatthefruitsnotthefundsaretobeimpairedbythetax。InthisIspeakstrictlyintermsofmydefinitionofatax，insertedinthisveryReview，p。119。Ataxitistheresaidisacertaincontributionoffruitsserviceormoneyimposedontheindividualsofastate，&c。
Bythewordsfruitsandservice，thefundbearingthefruit，andthepersonserving，areevidentlysupposedtobeexempted；
andintheparagraphfollowing，themoneyexactedissaidtocomprehendtheequivalentgivenforwhatmaybeexactedintheothertwoways。Soaccordingtothisexpressdefinitionallimpositionsonfundsmustbeclassedunderadifferentheadfromtaxes；andtheseIhavecalledcontributions。
Myreasonforexcludinginmydefinitionofatax，allcontributionsfromfunds，suchasthatmadebytheDutch，isthattheycannot，bytheirnature，beannualandperpetual，astaxes，whichaffectgrowingfruitsonly，mayeasilybe。Weresuchcontributionsoutofproperty，tobeannuallylevied，overandabovethefullextentofthevalueofthefruitsorincome；thecontributorswouldbereducedtobeggary；andthetaxablefunditselfwouldintime，becomethepropertyofthestate。IsitpossiblethattheauthorsoftheMonthlyReviewshouldwish，inanycase，toseetaxescarriedbeyondtheextentofanyperson’sincomeorprofitsonhistradeandindustry？Surely，not:andthereforeImustsupposethattheyhavenotrightlyunderstoodmymeaning；thoughIcannotdiscoverwhereanyambiguitylies。
Whenamanpaysinsurance，asinterestmayappear，uponacargowhichrunsariskofbeingtotallylost，thiscaseseemstobeparalleltothatofapersonwhorunstheriskoflosinghiswholelandedestatebyaforeigninvasion。Inthiscase，indeed，asintheformer，hewouldnodoubtwillinglygivetotheconqueroronehalfofhislandstosecuretheother；butsuchacaseconveys，Ithink，noideaofatax；nordoesproperty，inanycountryIknow，standonsoprecariousafootingastomakeitreasonable。
ThusfarIhavesaidinexplanationofmymeaning，andinjustificationoftheprinciple，orratherofthedefinitionbywhichitisimplied，thattaxesshouldimpairthefruitsonly，andnotthefund。
InowwillinglyagreewiththegentlemenoftheReview，thatentailedpropertymayveryreasonablybetaxedhigherthananyother，onaccountoftheadditionalsecurity。Butstillthisaugmentationmustfallwithintheincomeoftheentailedlands；
because，shoulditexceedit，itwoulddestroytheentailitself，whichmakesthefundunalienable。Astofunds，whichthesegentlemencalltheproductionofArtificialSociety，Icansaynothing；Idonotunderstandthisterm，andIeventakeittobeanerrorofthepress。
Uponthewhole，Iconfessthatmyanxietyconcerningtheopinionofthepublic，inrelationtomyinquiriesintotheprinciplesoftaxation，was，lesttheyshouldbefoundtoextendtoofar:Itgivesmeaparticularsatisfactiontofindthat，bysome，theyarenotthoughttoextendfarenough。
3。TheTailleisproperlyaland-tax，towhichmencallednoblearenotsubjected。Thereasonofwhichis，thatitwasoriginallyimposedinlieuofsuchpersonalmilitaryservicesaswerepeculiartothelowerclasses。
TheFourageandUstencilarelaiduponallthosewhopaythetaille，andareinproportiontoit。Thefirstisappropriatedforthesubsistenceofthecavalry，whentheyareinquarters；
thelastforkettlesandsmallutensilsfortheinfantry。
TheCapitationisthepoll-tax。TheDixiemesandVingtiemeshavebeenalreadyexplained，andtithesarewellknowntoeveryone。
TheIndustrieisthatimpositionarbitrarilylaidonbytheIntendantsofprovinces，uponallclassesofindustriouspeople，inproportiontotheirsupposedprofitsineverybranchofbusiness。
4。Thissortoftailleiscalledtariff閑；becauseitisimposedaccordingtoavaluationoftheland。Itisalateimprovement；
butstillisexposedtonumberlessinconveniences，whicharementionedinthetext。
5。Thegabelleisabranchofthegeneralfarms，andconsistsofanexciseuponsalt。Themanufactureofthecommodityisinthehandsofthefarmers；andthey，foralibertytosellsaltatacertainprice，farabovetheexpenceofthemanufacture，paytotheKinganannualrevenueof28millionsoflivres。
ThisIcallaproportionaltax，relativelytoconsumers；
althoughinrealitynotax-gatherersbeemployedforthecollectionofit，contrarytowhatisthecaseofallexcises；
whichareseldomfarmedbygovernmenttothemanufacturersofthecommoditytaxed。
Thetraittes，or，astheyareotherwisecalled，thefivegreatfarms，wereestablishedbyColbert，whenhetookawayamultitudeofcustomspaiduponthetransportationofgoodsfromoneprovincetoanother。They，thetraittesforainesatleast，resembleverymuchourcustoms，orthedutiesoftunnageandpoundage，andarelettothefarmersgeneralforthesumof12
millions。
Thetobaccoisofthesamenaturewiththesalttax。ThefarmersgeneralhavetheexclusiveprivilegeofsellingitatapricefixedbytheKing。
Forthefarmofthetobaccoarepaid15millions。
Theaidesresembleourexcisesmorethanthosewehavementioned。Theyconsistindutiesuponliquors，eitherbroughtintotowns，orsoldbyretailinpublichouses；anduponallarticlesoffoodsoldincorporations，exceptgrainofeverykind，whichisfree。Theycomprehendalsoamultitudeofotherdutiessuperfluoustoenumerate。
Theyarecollectedbytax-gatherersatthegatesofeverytown，whoalsohaveaccesstoallpublichouses，whereretailislaidunderadditionalrates。Theaidesarefarmedat38，600，000
livres。Theseweretheratesinthefarmsletin1755。Theyhavebeensinceaugmentedin1762，ashasbeenobserved。
6。Whenexcisesareimposeduponanycommodity，itiscontrarytoallprinciplesinfixingtheassize，nottosuperaddthewholedutyimposedtotheformersellingprice。Thishoweverissometimesomitted，withanintentiontomakepartofthedutyfalluponthemanufacturer，totheeaseofthesubject。Theconsequencesare，First，Themanufacturersblowupthespiritofthepeopleagainstthetax，whoneverwouldthinkofmakinganoutcry，weretheynotexcitedtoitbytheinterestedmotivesofthemanufacturers。Werehighprofitsallowedtomanufacturersonimposingthetax，theywouldbequiet:andiftheprofitswereafterwardsfoundtobetoohigh，itwouldthenbeapopularmeasuretoreducethesellingprice，andalsoameansofsettingpeopleonthesideofgovernment，againstthemanufacturers，whoaretheirrealtax-gatherers。
Secondly，Itisimpossibletocompasstheendproposed。A
proportionaltax，rightlyimposed，mustbedrawnback；andallattemptstopreventit，occasiononlyamultiplicationoffrauds，andabadmanufacture。
Infixingassizesuponthemanufacturingofgoods，whichindifferentyearsvaryintheirprice，regardshouldbehadtosuchvariations；otherwisethemanufacturerwillbedistressed，andthepublicwillbeillserved:ineitherofwhichcases，thepeoplewillbeanimatedagainstsuchduties。
Theonlyexpedienttosharetheprofitsofthemanufacturersofexciseablecommodities，istolaythemundersomecumulativetaxwhichtheycannotdrawback，suchasmakingthempayforalicence。
7。Itmust，however，beobserved，thatthepriceofbeerwasnotraised，eitherbythebrewers，orbythevictuallers，onaccountoftheadditionalmalt-duty，1760。
8。Thegabelle，orsalt-taxinFrance，isnotleviedineveryprovince；becauseofcertainprivilegesofexemption，whichsomehaveallalongenjoyed。
Thisopensadoortothegreatestabuse，bysmugglingsaltfromplaceswhereitisfree，intoplaceswherethetaxisimposed，atmany100percentabovethevalue；andobligestheKingtousegreatseverityuponthosewhoareloadedwiththisduty。
Theconsumptionofeveryfamilyisfixedtoacertainquantity；andifitbefoundthattheyhavenotbought，fromtheKing’sgranaries，tothefullextentofwhatisreckonednecessaryforthem，itissupposedthatthedeficiencyhasbeenmadeupfromcontrabandsalt，andthedeficiencyisexacted。
9。Examplesofthesekindsoftaxeswerefamiliarinformertimes。Vassalswereobligedtogrindintheirlord’smill，bakeinhisoven，presstheirwineinthepublicpressoftheterritory，etc。
Thiswasfoundveryuseful，inageswhenalienationandsalewerelittleknown；butnowtheyareconsideredasoppressive，andsoIthinktheyare，whencomparedwithproportionaltaxes，whichtakeplaceuponthesaleonlyofthecommodity:butstilltheyarefarpreferabletomanytaxesofthecumulativekind。
10。TwogentlemeninFranceexchangecasksoftheirwine，theyarebothobligedtopayataxuponremovingthewinefromtheircellar。ThisdutyiscalledRemuage。
11。Aman’srank，inamodernsociety，seemstobedeterminedmoreaccordingtohisbirth，ortohisexpence，thanaccordingtohisstock，orincome。