An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗

of country

labour would be advanced by the farmer, who, in order to maintain

the same number of labourers as before, would be obliged to

employ a greater capital. In order to get back this greater

capital, together with the ordinary profits of stock, it would be

necessary that he should retain a larger portion, or, what comes

to the same thing, the price of a larger portion, of the produce

of the land, and, consequently, that he should pay less rent to

the landlord. The final payment of this rise of wages, therefore,

would, in this case, fall upon the landlord, together with the

additional profit of the farmer who had advanced it. In all

cases, a direct tax upon the wages of labour must, in the

long-run, occasion both a greater reduction in the rent of land,

and a greater rise in the price of manufactured goods than would

have followed from the proper assessment of a sum equal to the

produce of the tax, partly upon the rent of land, and partly upon

consumable commodities.

 

If direct taxes upon the wages of labour have not always

occasioned a proportionable rise in those wages, it is because

they have generally occasioned a considerable fall in the demand

of labour. The declension of industry, the decrease of

employment for the poor, the diminution of the annual produce of

the land and labour of the country, have generally been the

effects of such taxes. In consequence of them, however, the price

of labour must always be higher than it otherwise would have been

in the actual state of the demand ; and this enhancenmnt of

price, together with the profit of those who advance it, must

always be finally paid by the landlords and comsumers.

 

A tax upon the wages of country labour does not raise the price

of the rude produce of land in proportion to the tax; for the

same reason that a tax upon the farmer’s profit does not raise

that price in that proportion.

 

Absurd and destructive as such taxes are, however, they take

place in many countries. In France, that part of the taille which

is charged upon the industry of workmen and day-laboururs in

country villages, is properly a tax of this kind. Their wages are

computed according to the common rate of the district in which

they reside ; and, that they may be as little liable as possible

to any overcharge, their yearly gains are estimated at no more

than two hundred working days in the year. {Memoires concernant

les Droits, etc. tom. ii. p. 108.} The tax of each individual is

varied from year to year, according to different circumstances,

of which the collector or the commissary, whom intendant appoints

to assist him, are the judges. In Bohemia, in consequence of

the alteration in the system of finances which was begun in 1748,

a very heavy tax is imposed upon the industry of artificers. They

are divided into four classes. The highest class pay a hundred

florins a year, which, at two-and-twenty pence half penny

a-florin, amounts to �9:7:6. The second class are taxed at

seventy ; the third at fifty ; and the fourth, comprehending

artificers in villages, and the lowest class of those in towns,

at twentyfive florins.{ Memoires concemant les Droits, etc. tom.

iii. p. 87.}

 

The recompence of ingenious artists, and of men of liberal

professions, I have endeavoured to show in the first book,

necessarily keeps a certain proportion to the emoluments of

inferior trades. A tax upon this recompence, therefore, could

have no other effect than to raise it somewhat higher than in

proportion to the tax. If it did not rise in this manner, the

ingenious arts and the liberal professions, being; no longer upon

a level with other trades, would be so much deserted, that they

would soon return to that level.

 

The emoluments of offices are not, like those of trades and

professions, regulated by the free competition of the market, and

do not, therefore, always bear a just proportion to what the

nature of the employment requires. They are, perhaps, in most

countries, higher than it requires; the persons who have the

administration of government being generally disposed to regard

both themselves and their immediate dependents, rather more than

enough. The emoluments of offices, therefore, can, in most cases,

very well bear to be taxed. The persons, besides, who enjoy

public offices, especially the more lucrative, are, in all

countries, the objects of general envy ; and a tax upon their

emolmnents, even though it should be somewhat higher than upon

any other sort of revenue, is always a very popular tax. In

England, for example, when, by the land-tax, every other sort of

revenue was supposed to be assessed at four shillings in the

pound, it was very popular to lay a real tax of five shillings

and sixpence in the pound upon the salaries of offices which

exceeded a hundred pounds a-year; the pensions of the younger

branches of the royal family, the pay of the officers of the army

and navy, and a few others less obnoxious to envy, excepted.

There are in England no other direct taxes upon the wages of

labour.

 

ARTICLE IV. � Taxes which it is intended should fall

indifferently upon every different Species of Revenue.

 

The taxes which it is intended should fall indifferently upon

every different species of revenue, are capitation taxes, and

taxes upon consunmble commodities. Those must be paid

indifferently, from whatever revenue the contributors may possess

; from the rent of their land, from the profits of their stock,

or from the wages of their labour.

 

Capitation Taxes.

 

Capitation taxes, if it is attempted to proportion them to the

fortune or revenue of each contributor, become altogether

arbitrary. The state of a man’s fortune varies from day to day ;

and, without an inquisition, more intolerable than any tax, and

renewed at least once every year, can only be guessed at. His

assessment, therefore, must, in most cases, depend upon the good

or bad humour of his assessors, and must, therefore, be

altogether arbitrary and uncertain.

 

Capitation taxes, if they are proportioned, not to the supposed

fortune, but to the rank of each contributor, become altogether

unequal ; the degrees of fortune being frequently unequal in the

same degree of rank.

 

Such taxes, therefore, if it is attempted to render them equal,

become altogether arbitrary and uncertain ; and if it is

attempted to render them certain and not arbitrary, become

altogether unequal. Let the tax be light or heavy, uncertainty is

always a great grievance. In a light tax, a considerable degree

of inequality may be supported; in a heavy one, it is altogether

intolerable.

 

In the different poll-taxes which took place in England during

the reign of William III. the contributors were, the greater part

of them, assessed according to the degree of their rank; as

dukes, marquises, earls, viscounts, barons, esquires, gentlemen,

the eldest and youngest sons of peers, etc. All shopkeepers and

tradesmen worth more than three hundred pounds, that is, the

better sort of them, were subject to the same assessment, how

great soever might be the difference in their fortunes. Their

rank was more considered than their fortune. Several of those

who, in the first poll-tax, were rated according to their

supposed fortune were afterwards rated according to their rank.

Serjeants, attorneys, and proctors at law, who, in the first

poll-tax, were assessed at three shillings in the pound of their

supposed income, were afterwards assessed as gentlemen. In the

assessment of a tax which was not very heavy, a considerable

degree of inequality had been found less insupportable than any

degree of uncertainty.

 

In the capitation which has been levied in France, without-any

interruption, since the beginning of the present century, the

highest orders of people are rated according to their rank, by an

invariable tariff; the lower orders of people, according to what

is supposed to be their fortune, by an assessment which varies

from year to year. The officers of the king’s court, the judges,

and other officers in the superior courts of justice, the

officers of the troops, etc are assessed in the first manner. The

inferior ranks of people in the provinces are assessed in the

second. In France, the great easily submit to a considerable

degree of inequality in a tax which, so far as it affects them,

is not a very heavy one; but could not brook the arbitrary

assessment of an intendant.

 

The inferior ranks of people must, in that country, suffer

patiently the usage which their superiors think proper to give

them.

 

In England, the different poll-taxes never produced the sum which

had been expected from them, or which it was supposed they might

have produced, had they been exactly levied. In France, the

capitation always produces the sum expected from it. The mild

government of England, when it assessed the different ranks of

people to the poll-tax, contented itself with what that

assessment happened to produce, and required no compensation for

the loss which the state might sustain, either by those who could

not pay, or by those who would not pay (for there were many

such), and who, by the indulgent execution of the law, were not

forced to pay. The more severe government of France assesses upon

each generality a certain sum, which the intendant must find as

he can. If any province complains of being assessed too high, it

may, in the assessment of next year, obtain an abatement

proportioned to the overcharge of the year before ; but it must

pay in the mean time. The intendant, in order to be sure of

finding the sum assessed upon his generality, was empowered to

assess it in a larger sum, that the failure or inability of some

of the contributors might be compensated by the overcharge of the

rest ; and till 1765, the fixation of this surplus assessment was

left altogether to his discretion. In that year, indeed, the

council assumed this power to itself. In the capitation of the

provinces, it is observed by the perfectly well informed author

of the Memoirs upon the Impositions in France, the proportion

which falls upon the nobility, and upon those whose privileges

exempt them from the taille, is the least considerable. The

largest falls upon those subject to the taille, who are assessed

to the capitation at so much a-pound of what they pay to that

other tax.

 

Capitation taxes, so far as they are levied upon the lower ranks

of people, are direct taxes upon the wages of labour, and are

attended with all the inconveniencics of such taxes.

 

Capitation taxes are levied at little expense ; and, where they

are rigorously exacted, afford a very sure revenue to the state.

It is upon this account that, in countries where the case,

comfort, and security of the inferior ranks of people are little

attended to, capitation taxes are very common. It is in general,

however, but a small part of the public revenue, which, in a

great empire, has ever been drawn from such taxes ; and the

greatest sum which they have ever afforded, might always have

been found in some other way much more convenient to the people.

 

Taxes upon Consumable Commodities.

 

The impossibility of taxing the people, in proportion to their

revenue, by any capitation, seems to have given occasion to the

invention of taxes upon consumable commodities. The state not

knowing how to tax, directly and proportionably, the revenue of

its subjects, endeavours to tax it indirectly by taxing their

expense, which, it is supposed, will, in most cases, be nearly in

proportion to their revenue. Their expense is taxed, by taxing

the consumable commodities upon which it is laid out.

 

Consumable commodities