Thoughts on the mechanism of societies

The immediate effect of a tax, is to raise the price of the object on which it is laid, by at least the whole amount of the tax: nothing can be more just; but it is at the same time a consideration which ought to keep pace with the one I have already offered, on the very positive object of all kinds of taxation, namely, to secure the sum at which the product of the impost is valued, whatever that sum may be.

Now, in order to estimate justly the system of taxation we are considering, it must be presented in all its glory, that is, such as all Ministers of finance in Europe seem to wish it; such as all the English news-papers recommend it, rather roughly, each of them at least once a week; such as all Oppositions, past, present, and future, have pretended, do pretend, and ever will pretend it to be, so easy and so equitable; such as all preachers of the Roman, English, Jansenist and Presbyterian persuasion, are wont to deliver it every day among the private societies whom they are pleased to honour with their partly christian, partly political reflexions, and would speak it out from the pulpit, if Ministers of finance had any leisure to hear their sermons, &c. I shall therefore suppose that the tax of 10 millions, mentioned in the three foregoing articles, should be assessed in so able, so charitable a manner, that 5 millions should fall on the landlord, and the other 5 on the richest proprietor of money. I shall begin with the most essential, for the State is certainly founded on the landed property.

What is the revenue of the land-proprietor?—Nothing more, all expences defrayed, than the third part of the real produce of his lands; and this third is, in the hypothesis, estimated at 20 millions only.—These 20 millions finding in the hands of industry, that portion which usually gave the balance of those 20 millions, raised to 25 millions by means of the tax, it clearly appears that the proprietor alluded to is short by 25 per cent. of the sum required to pay that portion.—In this case what is he to do?

Shall he leave industry in possession of one fifth of his former comforts?—Then industry would be debarred from the sale of that fifth part; one fifth of its artificers would be left without any other resource than that which the highway might afford, and the main object of the taxation would be defeated in the following year, unless exportation should make up to industry for the want of home-consumption, (the only one by which a State can prosper,) and the deficit of the tax laid on the home-consumption, should be compensated by another tax on foreign consumption, that is on the exports.

We shall suppose this to be the case, and that industry actually exports that fifth part of the national commodities which the land proprietor is not able any longer to consume, and which, nevertheless, industry is compelled to sell, in order to be reimbursed the tax she has advanced, and be prepared to answer the fresh demand which next year government will have occasion to make.—But if it were to such means that England should stand indebted for part of the increase in her exports, her industry, methinks, would have derived less advantage therefrom, than a home-sale might have procured, even supposing the inconvenience of which I shall speak presently: it appears to me also, that the land proprietors would, in that case, have some reason to complain, and that the rest of the nation would have no cause to boast of the immensity of her exportation.—The draw-backs granted on the very exportation of the taxed commodities, prove that such an expedient never was adopted in England.

Will the land proprietor come to a resolution to fly from his native country, in search of another, where good men content themselves with declaiming against luxury, without making any attempt to destroy it? No, he never did, nor ever will take that resolution; he is fast bound to his land by the roots of every plant he has laid on it.—What then is he to do? It behoves the Minister of finance to give him some wholesome advice.

If the Minister be silent, or if he shuffle, because he is closely watched by Opposition, he must equally lose his popularity; for the land proprietor, left to shift for himself, will raise the price of the productions of his land, in proportion as the tax has increased that part of the products of industry that concerns him.—

But his 20 millions revenue, have, as I have said, the same component parts as the 40 millions which he is obliged to give up for the expences of cultivation, and other incumbrances attending property:—he cannot therefore increase them to 25 millions, without raising by one twelfth the total amount of the 60 millions of landed revenue; this will at once carry up the quarter of wheat from 40s. to 43s. 4d.: this is therefore an advance of 8⅓ per cent. on his commodities:—upon which we must observe, that no increase will take place in the wages of the mechanic, or of the husbandman; for the objects of luxury are the only ones which we suppose to have been taxed: such is the infernal side of this heavenly system.—Yet this is not all.

What is the money-proprietor to do, not having it in his power to raise the price of his money as the landed proprietor can do that of his wheat, but who, on the contrary, is invariably limited to the same nominal revenue, whilst the tax of the other 5 millions, which the humanity of the taxator had levelled at him, has occasioned a rise of 25 per cent. in the nominal value of those articles of luxury in which he indulged himself?—He will, he must leave them in the hands of industry, and confine himself to such objects as are not taxed; it is a resource, as it is at the same time a compulsive measure.—The produce of the tax will then be inadequate to the want: a second impost must then be thought on, to supply the deficit of the first.—Fall again upon luxury, cry the enthusiasts; this is more necessary than ever, for bread is already 8⅓ per cent. dearer than it was, and the land proprietors have abated nothing of their luxury; they ride still in their chariots, whilst the poor loaded porter constantly trudges on foot. Enthusiasts will never see further, and those who are not enthusiasts do not yet see far enough; for they only say that it is expedient for government, that the prices of commodities be kept up, in order to facilitate the payment of the impost.—Yet, if it is expedient for government, that the prices be kept up to facilitate the payment of the impost, I conclude that it is an absolute necessity for government, that the prices do increase, when there is no other visible means to establish the possibility of paying taxes. I therefore have to answer only to the enthusiasts, and let it be as the enthusiasts will have it:—

But the first 5 millions of the charitable tax could not be paid, without an advanced price of 8⅓ per cent. on all the productions of the earth, without raising the wheat from 40s. to 43s. 4d.—it will then be necessary to increase its price by as much again; it must advance from 43s. 4d. to 46s. 8d. in order that the tax be paid without foreign assistance. Then all will be settled, regulated, balanced, and paid between the capitalists of land and those of industry; but as no objects will have been taxed but those of luxury, how long will it be before the people, the labouring man can see justice done to him?—Ten popular insurrections perhaps will be required to extort it. Yet let us suppose that the very first proves sufficient to procure it complete, that is, that their wages be raised 16⅔ per cent. as the tax after all the necessary re-actions has increased the price of the produce of their labour:—in this case, instead of the 20 millions allowed before to each of the two classes of working men, cultivators and mechanics, they will then receive 23,333,333l. 13s. 4d.—But how will you wrest from the hands of the land proprietor 3,333,333l. 13s. 4d. out of the portion which he was obliged to lay by, that the tax might be paid by his consumption, without his advancing again the price of his commodities in such a proportion as will return him the new sum which he is forced to pay?—And were he not to augment again the price of his commodities, would not then a new tax become necessary to supply the deficit which the rise of wages of the labouring men must occasion in the consumption of their employers?—The land proprietor will then add still to the price of his goods;—but will not this addition, equally necessary as the two first, be productive of a further necessity of raising in proportion the price of labour, the wages of the labouring man?—No doubt; and another insurrection would procure justice, if the thought did not occur at last of observing, that the class of labouring men being, before the tax, in possession of one third of the general revenue, forms, in this respect, a third interest equal to one half of the two other. Now, the tax having enforced an advance in prices of 16⅔, to shelter the two former from its effect, there must also be, in favour of the third interest, a third increase of 8⅓, which rising at last to 25 per cent. more, the price of labour, as that of its produce, both in regard to land and industry, will exactly leave to each of the three interests, under the denomination of twenty-five, the same comforts as each of them enjoyed under that of twenty before the tax was laid.

In regard therefore to the effects of the tax on the prices of provisions, there is not the least difference between the system of taxing luxury, and that of a land-tax; 50s. in the supposition of an impost of ten millions, would prove in either system the necessary price of wheat; for if ever a price can be termed necessary, it is when it cannot be lower without effecting the ruin of the land proprietor, and even without missing the sole and indispensable end of taxation, unless recourse be had to one of the following resources:

Either

To export such commodities, which, as it might be absurdly supposed, the nation is no longer able to consume,

Or,

To steal from the people the proportionable increase due to them in the price of their labour, if they should prove so complaisant as tamely to submit, out of gratitude, for the tax being laid only upon luxury.

I shall conclude this article with a reflexion which may give birth to many others.

The impost on luxury, which, after a very little time, as we have seen, proves no ways injurious to those who were able to pay for the objects upon which the tax was laid, is besides, under another point of view, really advantageous to those very men who seem the only contributors to it; because it sets entirely above the reach of the people, a number of articles in which they would indulge themselves, to the great benefit of the tax, and which, though perhaps intended by the general provider, as well for the poor as for the rich, are nevertheless, by the merciful system of taxation, exclusively reserved to the rich.—Is this the intention of the merciful taxator?—in my opinion it ought not to be that of an intelligent one.