The net produce of a tax is all that the state is interested in, and therefore any violation of the fourth maxim of Adam Smith is liable to the same objections as those already stated in reference to the third. Such violation increases the amount of the tax directly, as the former Was shown to increase it indirectly, without any advantriso to the state. Facility of collection is a great recommendation to any tax ; and, on the contrary, a disproportion between the cost of collecting aud the amount ultimately secured is a good ground for removing a tax, though founded in other respects upon just principles.. On this accouirt'alone. as well as for the general convenience of trade, it has been a wise policy to reduce, as far as possible, the number of article', upon which customs duties are levied. The coat of collecting the duties upon the larger and more productive articles of import bears only a small proportion to the amount of the tax, while the expense of col lecting the duties on the smaller and less productive articles bears a large proportion to the tax, and may in some cases exceed it.
hi/crest Kinds of Tares.—In selecting taxes for raising the revenue of a state, the principles already discussed should be adhered to as far as possible ; but these do not point out any particular mode of taxation as preferable to others. Whatever mode of raising the necesaery funds may be found to press most equally upon different members of the community, to be least liable to objections of uncertainty, or inconve nience in the mode or times of payment, or to be attended with the least expense, is fairly open to the choke of s statesman ; unless objections of some other nature can be proved to outweigh these recommendations.
The two great divisions under which most taxes may be classed are direct and indirec.
Direct taxes ought to be paid from the income of the community. To derive revenue from capital is to act the part of a spendthrift ; and such a practice as, in private life, must be condemned. If the taxes of any country should become so disproportioned to its income, that, in order to pay them, continual demands must be made upon its capital, its resources would fail, employment of labour would decrease, and the revenue must necessarily be reduced by the general impoverishment of the taxpayers. Such a system could not long con tinue as regards all capital, but it may affect particular branches of capital, or all capital in certain conditions. lu whatever degree it is permitted to operate, it is injurious. A tax upon legacies is a direct deduction from capital, and on that account objectionable, although it is profitable to the treasury, and s-ery easily collected. [LEGACY ; PROBATE.] The same observations apply to the probate duty, and to duties charged upon succession to the personal property of inteatatee.
With these exceptions, it has been the object of the British legisla ture to derive all taxes from income, either by direct assessment or by means of the voluntary expenditure of the people upon taxed commodities.
Direct taxes upon the land have been universally resorted to by all nations. In countries without commerce, land is the only source from which a revenue can be derived. In most of the Eastern monarchies the greater part of the revenue has usually been raised by heavy taxes upon the soil ; and in Spain, at the present time, the taxes upon the soil are most oppressive and injurious.
In England, under the Saxon kings, there was a land-tax. When the invasions of the Danes became frequent, it was customary to pur chase their forbearance by large sums of money; and, as the ordinary revenues of the crown were not sufficient, a tax was imposed on every hide of land in the kingdom. This tax seems to have been first imposed A.D. 091, and was called Danegeld, or Danish tax or tribute. [DANEGELD.] It was abolished about seventy years after the Norman Conquest, but a revenue still continued to be derived, under different names, from assessments upon all persons holding lands, which, how ever, became merged in the general subsidies introduced in the reigns of Richard 11. and Henry IV. During the troubles in the reign of Charles I. and the Commonwealth, the practice of laying weekly and monthly assessments of specific sums upon the several counties was resorted to, and was found so profitable, that after the Restoration the ancient mode of granting subsidies was renewed on two occasions only. In 1692 a new valuation of estates was made, and certain payments were apportioned to each county and hundred, or other division. For upwards of a century the tax was payable under annual acts, and varied in amount from ono shilling in the pound to four shillings, at which latter sum it was made perpetual by the 38 Geo. Ill., c, 60, subject, however, to redemption by the landowners upon certain con ditions. But no new valuation of the land has been made, and the proportion chargeable to each district has continued the same as it was in the time of King William Ill., as regulated by the act of 1692. That assessment is said not to have been accurate even at that time, and of course improved cultivation and the application of capital have since completely changed the relative value of different portions of the soil. On account of the generally increased productiveness of land, the tax bears upon the whole a trifling proportion to the rent, yot its inequality is very great. Adam Smith imagined that this tax was borne entirely by the landlords, but this opinion has beeu proved to be erroneous by modern political economists, who hold that the tax increases the price of the produce of the laud, and is therefore 'said by the consumers. The tax is also obviously objectionable ou the ground of inequality.