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its full share of the burdens of the state, and industry, having the full enjoyment of its reward, would never have been so depressed as of late years it has become, under indirect taxes. The substitution of these latter threw upon labor the whole burden of the government expenses, and by making property comparatively exempt, enabled it to accumulate with greater rapidity in fewer hands, and checked its acquirement by those whose only capital was their labor, and whose only income its wages.

The operation of indirect taxes falls almost altogether on the laborious class, because they form part of the cost of every necessary purchased with the proceeds of their industry. The condition of Great Britain is a remarkable evidence of the evil of indirect taxes. The working many have, for centuries, discharged the national expenditure, and the wealthy few have not only been comparatively exempt from taxes, but to a considerable extent they have been recipients of those paid by others. Had a just system of taxation been in operation at the close of the 18th century, Great Britain would never have spent years and much blood and treasure in European wars, in which the people had no real interest. As long as the wealthy classes were, however, to derive all the honor and profit, and the laboring portion to pay all the expense, there was no thought of peace. The expenses of those wars vastly increased taxation, and by so doing only served to drain more rapidly the wealth of the country, which is created by the many, into the hands of the few. The moment peace was declared, direct taxes on property were abandoned, and indirect taxes upon labor continued, for the discharge, not only of the current expenditure, but the enormous debts contracted for the wars. The result has been, vast "mountains of wealth and deep valleys of poverty." Thirty years of this operation reached the "limits of indirect taxation," and they produced a necessity for a return to direct taxes upon property, and a remission of those upon labor. The manner in which the value of labor declined, while that of property advanced, from 1821 to 1844, is indicated in the following table. We may state, that the official value of British exports is a fixed value, and indicates quantities only, in the comparison of a term of years. The declared, is the actual invoice value.

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The depreciation in the money value of the products of labor, was, it appears, 80 per cent., while funded property advanced 32 per cent. That is to say, the value of labor has continually diminished, while that of wealth has increased in a double ratio. As thus: In 1821, £10,000 of stocks were worth £6,800 in money; or they would buy 1,760 oz. of gold, 552 tons of iron, or 1,250 qrs. of wheat. The same £10,000 has gradually increased, until in 1844 it would buy 2,600 oz. of gold, 1,250 tons of iron, or 3,846 qrs. of wheat. Or thus:

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This table shows very clearly the increased value of wealth, and the enhanced misery of laborers. The process of making iron has not undergone so much improvement as to materially lighten the labor of the workman, as as been the case with many articles, and which has aided in producing the

great depreciation in exportable values. The aristocratic stockholder can now command 125 per cent. more of the labor of the iron-maker than he could 25 years since. His stock is worth 50 per cent. more gold, and near 50 per cent, more wheat, now than then, yet the industry of the laborer, the income of a workman, will command very little more wheat than it did then. Why should the iron-miner be compelled to bring forth two and one-quarter tons of iron for the same reward that a quarter of a century since he obtained for one ton? Why should the fund-holder, after the enjoyment of 25 years revenue, without laboring for it, obtain double the labor of other people for his capital? These are questions that it is difficult to answer; nevertheless, the facts are so. They have grown mainly out of the system of taxation. The tradesman has been compelled, not only to pay indirect taxes upon all that himself and family consume, but on all the material which he uses in his manufacture; and has had his markets, manufacture and business interfered with in every possible way, through the operation of the taxes. Competition has reduced the prices of goods, and compelled the reduction of wages to the extent in which taxation enters into the cost of the articles made. The fund-holder has paid only the tax upon that which he consumes, and that but partially, because the wages of labor have been reduced to make it up. It was in view of these facts that the government, in 1842, declared that the limits of indirect taxation had been reached, and that thenceforth revenue must be raised from property, and the incometax was levied. The collection from this tax has far exceeded the estimates, as will be seen in the following table. The minister presented his plan in five schedules. The first A, comprised the rent of land, of 3,460,000 houses, tithes, railways and canals, mines, and iron-works. The next, B, the amount assessed on occupiers of land; C, public funds and stocks; D, profits of trades and professions; E, income of public officers. The table shows the assessed amount of each of these items, and the estimated tax to be collected at 3 per cent., with the actual tax collected in 1845:

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This was a great result, and it is highly probable, that pursuing this system the income tax will be raised to five per cent. and become permanent. It has been found to be absolutely necessary to release labor from its burden and impose it upon wealth. Nevertheless, there seems to be in England a universal outcry against the inequality and injustice of the present income tax, as if by any possibility it could be more unjust than that system which has produced such great poverty on one hand and such enormous wealth on the other. There is no doubt but that the income tax operates unequally, to some extent; but while the necessity for raising money for public purposes exists, it is to be shown that any tax can be imposed to operate more equally. It is objected that the artisan, whose income is $1,000, depending from year to year on his own exertion, and ceasing with his ability to work, pays as much as him who derives an equal sum from a funded stock, and does not work at all. This is certainly unjust; but we do not see that if each of these pays three per cent. of his income directly to the state, that more, or indeed so much injustice is inflicted, as when the same amount i

raised by indirect taxes, which draw from the artisan as much as from the fundholder on what each consumes, but which materially lessens the income of the former, by spoiling his market and interfering with his business. It is as if a shop-keeper should agree with his landlord that he would pay no rent, but give the latter a right to station a man at his door, and levy a small tax upon every customer coming in. He might flatter himself that he was living at a very cheap rent, but would find in his diminished income that he was not thereby a gainer. It may be necessary to classify and graduate an income tax, so as generally to remove much injustice.

M'Culloch, and many other distinguished writers, object to an income tax, that "it lessens the means of employing labor." This idea we conceive rests on a fallacy. No man employs labor because he has an income. On the other hand, the largest incomes have been derived from the most extensive employment of labor, or in other words, the most successful appropriation of the wealth created by others. Many eastern manufacturers of inordinate wealth acquired it, by employing numbers of hands, and paying them far less than the value of their labor. If, now, one such person who derives $50,000 per annum from the labor of others, should be charged with a tax of $1,500, would he therefore discharge the hands that e rn him that sum? It has, however, resulted from the manufacturing indirect tax system, that a very large class of the English people are dependent employers, while in the United States, as yet, the majority are independent producers, who pay not only the expense of government in indirect taxes, but are also made by that system tributary to manufactures, to an extent vastly greate than the amount paid to government; a process which is rapidly producing great wealth on one side and extreme poverty on the other.

The example of England has shown that the ultimate tendency of indirect taxes is ruin to the many, and that direct taxes must ultimately be resorted

to.

Wisdom would therefore dictate that the true principle should be adopted before universal distress compels it. Why wait until the many are ruined, before changing the false system which is the cause of the ruin? Fortunately the wants of the United States in time of peace are not large. Of the English revenue three fifths goes to the interest on the public debt. In the United States that is not the case. It is true that the war is causing a debt to be created that may reach $100,000,000, being already half that sum. That is, however, comparatively but a temporary circumstance. The ordinary wants of the federal government are about $25,000,000; of this suin four fifths may be raised by taxes on income and property, and the remainder per capita of all the population enjoying the protection of the gov ernment, without any great burden upon any class. On the other hand, by removing all trammels upon trade, and all restriction upon intercourse, the amount of incomes and the value of property would be enhanced far above the small amount paid to the government. The sources from which the government could draw sufficient means are four :-the public lands, a legacy duty, a tax on incomes over $500, and lastly, a capitation tax.

The public lands of the United States will, or may be made for many years to come, to yield a revenue of 3 to $5,000,000. It has been supposed and advocated in many quarters, that the lands should be made free to all settlers. We do not, however, in such an arrangement, recognize the principle of justice. The people of the United States have, by conquest and purchase, acquired, at much expense, possession of vast domains, and have made those lands a desirable place of residence. If, then, an individual wishes to monopolise a portion of that land to himself forever, he can do so. There is no good reason, however, why he should not pay his proportion of the original cost and expense of that land. He may squat upon it under a rëemption right, and have years in which to earn the small sum of 1.25

per acre, to reimburse the people of the Union who have been taxed to open land to his reception. The proceeds of the land are now mortgaged for twenty years to discharge the new loan; nevertheless they are a source of income. A well regulated legacy duty would, in time, become the most fruitful source of revenue to the government, and one which, while partaking of the nature of an indirect tax, would in no way interfere with business or the operations of trade. There can be no more legitimate object of taxation than property, which, under the protection of the government, having gone on to accumulate from year to year in the hands of an individual, passes at his decease into the possession of another, who has done nothing to earn it, and into whose hands it falls by the death of the testator, and the operation of law. Without good government, stable laws and just administration, property would be very precarious in its descent, and it is therefore just that that property should pay its proportion of the cost of the government. We may take an eminent individual example. Mr. Astor, of New-York, by great enterprise, perseverance and skill through a long life, has amassed a fortune estimated at say $25,000,000. That fortune has been attained by a foreigner by birth, under the protection of the United States laws, and the action of Congress has more than once been solicited to shield him from injuries to which his vast and praiseworthy commercial operations have, from time to time, been exposed. Yet, under our system of indirect taxes, Mr. Astor has contributed no more to the support of the federal government than the laboring man, whose utmost exertions have not enabled him to accumulate a dollar. When the latter dies he leaves nothing, and has no occasion for the protection of law. When, in course of nature, the vast property alluded to descends to heirs, the operation of law and the protective influences of government are required to ensure the passage of the property to its proper destination, and to secure to the heirs the full enjoyment thereof. Hence it arises that the property in its passage should be charged with a reasonable duty or tax for the benefit of the government, in order to relieve the shoulders of those without property from taxes, and to remove obstacles in the way of trade. It is also reasonable that fortunes accumulated in commerce, for the protection of which a navy is supported at vast expense, should pay their proportion. A tax of this

nature can be no burden upon the recipient of a legacy. The amount received is a gratuity in any event. When a prize is drawn in a lottery it is customary to deduct a per centage, commonly a large one; yet the winner of a prize is not known to complain on that account. Nor does that circumstance retard the purchase of a ticket. When property passes to a widow, or descends to children, it is less in the nature of a prize, and therefore the duty admits of graduation; as one per cent. to a widow, two per cent. to a child, three per cent. to brothers, four per cent. to brother's children, up to perhaps ten per cent. to strangers. A tax of this nature, applicable alike to real and personal property, would probably produce $10,000,000 per annum, and be subject to annual augmentation. In England, a legacy duty of the nature indicated exists, applicable, however, to personal property only, and it has increased from $1,000,000 annual income in 1805, to $13,000,000 of revenue, in 1844. At least $10,000,000 might be realized in the United States from such a tax, by including real property in its operation. A large portion of this English tax has been derived from the descent of the national debt at the increased money value it has undergone, as shown above. It was objected by Ricardo to the English legacy duty, that it impaired the capital of the country, inasmuch as that when $1000 would be left to a person, and $100 deducted for duty, he considered his legacy but $900, and took no measures to make up the tax by economy, as might have been the case had the tax been

looking forward to leaving a large property or any property, a man is quite as likely to take the duty into consideration, and save that in addition for the benefit of his family, as he would be to save any other tax for their benefit.

Indirect taxes are a wasteful and injurious mode of levying an income tax, because they tax every article consumed by persons and families, and by so doing diminish incomes; that is to say, they make every article bought dearer than they would be otherwise. By this operation they compel each person to pay four times as much as the government gets; that is to say, in the United States the government gets $1,50 per head for every individual. This is raised from foreign goods, which are about ten per cent. of the whole quantity of similar goods consumed in the country, and as the prices of the whole mass of those goods, regulated by foreign supply, are raised by the tax on those imported goods, the consumer is obliged to pay at least $5 for every $1,50 procured by the government. Now, the population of Great Britain was 19,000,000 in 1841, and the proceeds of the income tax £5,330,502, which gives a tax per capita of $1,25, representing an average income of $41,67 per head, all incomes below $7,25 being exempt. In the United States income is much more equally distributed. There are fewer exorbitant revenues and fewer very small ones. Probably the average incomes in the United States are $30, excluding all under $400. This would give an annual income for the nation at $600,000,000, on which one per cent. instead of three, as paid in England, would give $6,000,000. It may be estimated at $5,000,000. It would be necessary to classify this tax by distinguishing the nature of the income. That derived exclusively from property should pay a higher rate than that derived partly from property and partly from business, or produced in labor. That derived exclusively from the manual labor of a man would probably seldom come up to the range of taxation. Property itself will thus be taxed in the legacy duty, and that in possession will pay its quota according to its magnitude. It becomes then necessary to tax all those who derive benefit from the government in protection to their persons. The amount probably required would be $5,000,000 after the sums raised on land and property, and twenty cents per head per annum would pay this. That is, a man with a family of five pays $1 per annum. The income and personal tax for each family of five having an income of $1000, would amount to $11 per annum, for the support of the government directly, in place of $25 that they now pay indirectly. The sum of these taxes and land proceeds would give the government $25,000,000 based on data as they now exist. But when once in operation, they would increase largely year by year, according to the numbers and wealth of the people, until in a short time, through the operation of these causes, the tax to each family would be reduced to $5 per head per annum and less.

When the burden of taxation is thus fixed in a compound ratio of numbers and wealth, its constant tendency is to lighten in the progress of the country. As wealth increases, the ratio per cent. of the tax required from it will diminish, the wants of the government remaining the same. As numbers increase the tax per head will diminish; as, thus, if there are fifteen persons, of whom ten have taxable incomes of $1000 each, and it is required to raise $25, then the fifteen pay $1 per head and the ten pay one per cent. tax. If, now, the number increase to thirty, and ten incomes rise to $2000, and ten more to $1000, then the whole tax is reduced to fifty cents per head, and one third of one per cent on the incomes, still giving the required amount. By this operation, a few years of peace would place the country comparatively free from taxation.

Such a means of revenue of course contemplates the entire abandonment of indirect taxes. The custom-houses, the revenue service, and all the vast

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