But the last and strongest of the objec tions to an income-tax is the inquisitorial nature of the investigation into the affairs of all men, which is necessary to secure a statement of their incomes. This objection, indeed, is treated lightly by some ; but by the mass of the contributors it is con sidered the most inconvenient and unsea sonable quality of an income-tax. Even if the exposure of a man's affairs could do him no possible injury, yet as an offence to his feelings, or even caprice, it is a hardship which is not involved in the payment of other taxes. But apart from matters of feeling, injury of a real cha racter is also inflicted upon individuals by an exposure of their means and sources of income. Mercantile men, from the dread of competition, take pains to con ceal from others, especially if in the same business, the application of their capital, the rate of profit realized, their connec tions, and their credit, all of which must be disclosed, perhaps to their serious in jury, when there is an investigation of their profits.
For these reasons, the mode of collect ing the income-tax certainly cannot be approved of as being " most likely to be convenient to the contributor.' Its gene ral unpopularity when in operation is the best proof of its hardship and inconve nience. Upon the whole, a tax upon in come is so difficult to adjust equitably to the means of individuals, and the mode of collection is necessarily liable to such strong objection, that, if resorted to at all, it should be reserved for extraordinary occasions of state necessity _or danger, when ordinary sources of revenue cannot safely be relied on.
The English assessed taxes have as few objections in principle as most modes of direct taxation. With an equitable as sessment and special exemptions in cer tain cases, they are capable of being made to bear a tolerably just proportion to the incomes of the individuals paying them. They share, however, in the general unpopularity of all direct taxes, and it cannot be denied that they often press unequally upon particular persons. The number of windows in a house is a very imperfect criterion of its annual value, and the house-tax which has been re moved was far preferable to the window duty, which is still retained. The in equalities in the assessments were un deniable ; but these might have been cor rected. Under ordinary circumstances, a tax upon houses will fall upon the occu pier, *ho is intended to pay it ; but if a very heavy tax were imposed, it would discourage the occupation of houses, lessen the demand for them, and thereby dimi nish the rent of the landlord, or, in other words, transfer the actual payment to him. (Adam Smith, book 5, chap. ii.; Ricardo's Political Economy, chap. xiv.) Such a tax would be attended with very bad consequences: it would compel many persons to live in inferior houses or in lodgings, and thus diminish their com forts and deteriorate their habits of life ; and by reducing the demand for houses it would limit the employment of capital and labour in building. The direct taxes upon horses, carriages, hair-powder, ar morial bearings, &c., being paid volun
tarily by the rich to gratify their own taste for luxury or display, are not likely to meet with many objectors. The use of such articles generally indicates the scale of income enjoyed by the contribu tor, and the tax is too light to discourage expenditure or to make any sensible de duction from his means.
For arguments and illustrations con cerning the incidence of tithes, of taxes upon profits, upon wages, and other de scriptions of direct imposts, we refer to the works of Adam Smith, Ricardo, M'Culloch, and other writers upon poli• tical economy.
Indirect Taxes.—In preferring one tax to another, a statesman may be influenced by political considerations, as well as by strict views of financial expediency, and nothing is more likely to determine his choice than the probability of a cheerful acquiescence on the part of the people. All taxes are disliked, and the more directly and distinctly they are required to be paid, the more hateful they become. On this, as well as on other grounds, " in direct taxes," or taxes upon the consump tion of various articles of merchandise, have been in favour with most govern ments. "Taxes upon merchandise," says Montesquieu, " are felt the least by the people, because no formal demand is made upon them. They can be so wisely con trived, that the people shall scarcely know that they pay them. For this end it is of great consequence that the seller shall pay the tax. He knows well that he does not pay it for himself; and the buyer, who pays it in the end, confounds it with the price." (Esprit des Lois, livre chap. vii.) This effect of indirect taxes is apt to be undervalued by writers on political economy ; but it is undoubtedly a great merit in any system of taxation (which is but a part of general govern ment) that it should be popular and not give rise to discontent. A tax that is positively injurious to the very parties who pay it without thought, is certainly not to be defended merely on the ground that no complaints are made of it ; but it may be safely admitted as a principle, that of two taxes equally good in other respects, that is the best which is most acceptable to the people. The very faci lity, however, with which indirect taxes may be levied, makes it necessary to con sider the incidents and effects of them with peculiar caution. The statesman has no warning, as in the cases of direct taxes, that evils are caused by au impost which is productive and which every one seems willing to pay. When any branch of industry is visibly declining, and its failure can be traced to no other cause than the discouraging pressure of a tax, the necessity of relief is felt at once; but if trade and manufactures are flourishing, and the country advancing in prosperity, it is difficult to detect the latent influence of taxes in restraining that progress, which but for them would have been greater ; and still more difficult to ima gine the new sources of wealth which might have been laid open if such taxes had not existed, or had been less heavy, or had been collected at different times or in different ways.