It is also remarkable that whereas Land and Houses are placed in Schedule A, the first branch of our Income Tax, the so-called Land-Tax of 1692 placed lands and houses in its third category. The Act of 1692, moreover, as we have seen, made the taxation of personalty its first aim, and brought in a charge on land, houses and other fixed property to make up any deficiency.

With our modern Income Tax, fortunately, personalty does not escape as it seems to have done in the seventeenth and eighteenth centuries, but it is still true that a great deal of personal income evades taxation, while it is impossible for fixed property to elude the assessors.

I have taken the trouble to set out the foregoing details at some length because the fact that Schedule A of the Income Tax, like Section 4 of the Act of 1692, is a Land-Tax, appears to have escaped the attention of many of those who desire to tax the unearned increment which so often accrues to the owners of land. At the present moment, the owners of land contribute 14 pence in the pound of its annual revenue to Imperial Taxation under Schedule A. In the case of a small landowner with an income of £750 a year that may be enough. In the case of a great landowner with a rent roll of £20,000 a year it is certainly too little. If, then, we would justly tax the income of those who derive unearned revenue from land, we must graduate our income tax. In doing so, fortunately, we shall not tax merely one form of unearned increment. The conclusive proof of unearned income is the possession of a great income. Whether it arises from rent, or from interest, or from the direct taxation of labour is a secondary consideration. Whether its owner has bought broad acres with profits drawn from the exertions of others, or whether he has bought railway stock or foreign investments with the proceeds of the sale of broad acres, we need not inquire. The great income, the fact that the individual who receives it is one of the small number of people who enjoy one-third of the entire income of the country, is sufficient proof of "ability" to contribute generously to the revenues of what should be the rich government of a rich State. And it is difficult to imagine a rich man so wanting in that social instinct which we call patriotism that, when once his extraordinary position in relation to his fellows is made clear to him, he will not consent freely to make such contribution.

The Income Tax, as it now exists, is an instrument of extraordinary clumsiness and complexity. An intelligent foreigner, coming freshly to the examination of its curious provisions, would be driven to the conclusion that a junta of bureaucrats, intent upon hiding the mysteries of statecraft from the knowledge of the vulgar, had of set purpose wrapped its machinery and intention in every device of obscurement which perverted ingenuity could suggest.

In "Riches and Poverty," edition 1905, I gave an account of the Income Tax as it then stood. I reproduce the account in order to make the subsequent alterations clearer.

Incomes, from whatever source arising, which do not exceed £160 per annum, are entirely exempt from the tax.

Incomes between £160 and £700 are allowed certain abatements which are equivalent to a rough graduation of the tax. The following table shows the nature of the abatements:—

INCOME TAX ABATEMENTS

The following table shows how the abatements graduate the Income Tax when the nominal rate of tax is 1s. in the £.