Taxation

The invention of artillery and fortifications has forced the princes of Europe, in modern times, to return to the use of regular troops, in order to garrison their towns; but however lawful their motives, it is to be feared the effect may be no less fatal.

There is no better reason now than formerly for depopulating the country to form armies and garrisons, nor should the people be oppressed to support, them; in a word, these dangerous establishments have increased of late years with such rapidity in this part of the world, that they evidently threaten to depopulate Europe, and sooner or later to ruin its inhabitants.

Be this as it may, it ought to be seen that such institutions necessarily subvert the true economic system, which draws the principal revenue of the State from the public demesne, and leave only the troublesome resource of subsidies and imposts; with which it remains to deal.

It should be remembered that the foundation of the social compact is property; and its first condition, that every one should be maintained in the peaceful possession of what belongs to him.

It is true that, by the same treaty, every one binds himself, at least tacitly, to be assessed toward the public wants: but as this undertaking cannot prejudice the fundamental law, and presupposes that the need is clearly recognised by all who contribute to it, it is plain that such assessment, in order to be lawful, must be voluntary; it must depend, not indeed on a particular will, as if it were necessary to have the consent of each individual, and that he should give no more than just what he pleased, but on a general will, decided by vote of a majority, and on the basis of a proportional rating which leaves nothing arbitrary in the imposition of the tax.

That taxes cannot be legitimately established except by the consent of the people or its representatives, is a truth generally admitted by all philosophers and jurists of any repute on questions of public right, not even excepting Bodin.

If any of them have laid down rules which seem to contradict this, their particular motives for doing so may easily be seen; and they introduce so many conditions and restrictions that the argument comes at bottom to the same thing: for whether the people has it in its power to refuse, or the Sovereign ought not to exact, is a matter of indifference with regard to right; and if the point in question concerns only power, it is useless to inquire whether it is legitimate or not.

Contributions levied on the people are two kinds; real, levied on commodities, and personal, paid by the head. Both are called taxes or subsidies: when the people fixes the sum to be paid, it is called subsidy; but when it grants the product of an imposition, it is called a tax.

We are told in the Spirit of the Laws that a capitation tax is most suited to slavery, and a real tax most in accordance with liberty.

This would be incontestable, if the circumstances of every person were equal; for otherwise nothing can be more disproportionate than such a tax; and it is in the observations of exact proportions that the spirit of liberty consists. But if a tax by heads were exactly proportioned to the circumstances of individuals, as what is called the capitation tax in France might be, is would be the most equitable and consequently the most proper for free-men.

These proportions appear at first very easy to note, because, being relative to each man’s position in the world, their incidence is always public: but proper regard is seldom paid to all the elements that should enter into such a calculation, even apart from deception arising from avarice, fraud and self-interest.

In the first place, we have to consider the relation of quantities, according to which, ceteris paribus, the person who has ten times the property of another man ought to pay ten times as much to the State. Secondly, the relation of the use made, that is to say, the distinction between necessaries and superfluities.

He who possesses only the common necessaries of life should pay nothing at all, while the tax on him who is in possession of superfluities may justly be extended to everything he has over and above mere necessaries.

To this he will possibly object that, when his rank is taken into account, what may be superfluous to a man of inferior station is necessary for him. But this is false: for a grandee has two legs just like a cow-herd, and, like him again, but one belly.

Besides, these pretended necessaries are really so little necessary to his rank, that if he should renounce them on any worthy occasion, he would only be the more honoured.

The populace would be ready to adore a Minister who went to Council on foot, because he had sold off his carriages to supply a pressing need of the State. Lastly, to no man does the law prescribe magnificence; and propriety is no argument against right.

A third relation, which is never taken into account, though it ought to be the chief consideration, is the advantage that every person derives from the social confederacy; for this provides a powerful protection for the immense possessions of the rich, and hardly leaves the poor man in quiet possession of the cottage he builds with his own hands. Are not all the advantages of society for the rich and powerful? Are not all lucrative posts in their hands?

Are not all privileges and exemptions reserved for them alone? Is not the public authority always on their side? If a man of eminence robs his creditors, or is guilty of other knaveries, is he not always assured of impunity? Are not the assaults, acts of violence, assassinations, and even murders committed by the great, matters that are hushed up in a few months, and of which nothing more is thought?

But if a great man himself is robbed or insulted, the whole police force is immediately in motion, and woe even to innocent persons who chance to be suspected.

If he has to pass through any dangerous road, the country is up in arms to escort him. If the axle-tree of his chaise breaks, everybody flies to his assistance. If there is a noise at his door, he speaks but a word, and all is silent. If he is incommoded by the crowd, he waves his hand and every one makes way.

If his coach is met on the road by a wagon, his servants are ready to beat the driver’s brains out, and fifty honest pedestrians going quietly about their business had better be knocked on the head than an idle jackanapes be delayed in his coach. Yet all this respect costs him not a farthing: it is the rich man’s right, and not what he buys with his wealth. How different the case of the poor man! the more humanity owes him, the more society denies him. Every door is shut against him, even when he has a right to its being opened: and if ever he obtains justice, it is with much greater difficulty than others obtain favours.

If the militia is to be raised or the highway to be mended, he is always given the preference; he always bears the burden which his richer neighbour has influence enough to get exempted from. On the least accident that happens to him, everybody avoids him: if his cart be overturned in the road, so far is he from receiving any assistance, that he is lucky if he does not get horse-whipped by the impudent lackeys of some young Duke; in a word, all gratuitous assistance is denied to the poor when they need it, just because they cannot pay for it.

I look upon any poor man as totally undone, if he has the misfortune to have an honest heart, a fine daughter, and a powerful neighbour.

Another no less important fact is that the losses of the poor are much harder to repair than those of the rich, and that the difficulty of acquisition is always greater in proportion as there is more need for it. “Nothing comes out of nothing,” is as true of life as in physics: money is the seed of money, and the first guinea is sometimes more difficult to acquire than the second million. Add to this that what the poor pay is lost to them for ever, and remains in, or returns to, the hands of the rich: and as, to those who share in the government or to their dependents, the whole produce of the taxes must sooner or later pass, although they pay their share, these persons have always a sensible interest in increasing them.

The terms of the social compact between these two estates of men may be summed up in a few words. “You have need of me, because I am rich and you are poor. We will therefore come to an agreement. I will permit you to have the honour of serving me, on condition that you bestow on me the little you have left, in return for the pains I shall take to command you.”

Putting all these considerations carefully together, we shall find that, in order to levy taxes in a truly equitable and proportionate manner, the imposition ought not to be in simple ratio to the property of the contributors, but in compound ratio to the difference of their conditions and the superfluity of their possessions. This very important and difficult operation is daily made by numbers of honest clerks, who know their arithmetic; but a Plato or a Montesquieu would not venture to undertake it without the greatest diffidence, or without praying to Heaven for understanding and integrity.

Another disadvantage of personal taxes is that they may be too much felt or raised with too great severity. This, however, does not prevent them from being frequently evaded; for it is much easier for persons to escape a tax than for their possessions.

Of all impositions, that on land, or real taxation, has always been regarded as most advantageous in countries where more attention is paid to what the tax will produce, and to the certainty of recovering the product, than to securing the least discomfort for the people. It has been even maintained that it is necessary to burden the peasant in order to rouse him from indolence, and that he would never work if he had no taxes to pay. But in all countries experience confutes this ridiculous notion. In England and Holland the farmer pays very little, and in China nothing: yet these are the countries in which the land is best cultivated. On the other hand, in those countries where the husbandman is taxed in proportion to the produce of his lands, he leaves them uncultivated, or reaps just as much from them as suffices for bare subsistence. For to him who loses the fruit of his labour, it is some gain to do nothing. To lay a tax on industry is a very singular expedient for banishing idleness.

Taxes on land or corn, especially when they are excessive, lead to two results so fatal in their effect that they cannot but depopulate and ruin, in the long run, all countries in which they are established.

The first of these arises from the defective circulation of specie; for industry and commerce draw all the money from the country into the capitals: and as the tax destroys the proportion there might otherwise be between the needs of the husbandman and the price of his corn, money is always leaving and never returning. Thus the richer the city the poorer the country. The product of the taxes passes from the hands of the Prince or his financial officers into those of artists and traders; and the husbandman, who receives, only the smallest part of it, is at length exhausted by paying always the same, and receiving constantly less.

How could a human body subsist if it had veins and no arteries, or if its arteries conveyed the blood only within four inches of the heart? Chardin tells us that in Persia the royal dues on commodities are paid in kind: this custom, which, Herodotus informs us, prevailed long ago in the same country down to the time of Darius, might prevent the evil of which I have been speaking. But unless Intendants, Directors, Commissioners and Warehousemen in Persia are a different kind of people from what they are elsewhere, I can hardly believe that the smallest part of this produce ever reaches the king, or that the corn is not spoilt in every granary, and the greater part of the warehouses not consumed by fire.

The second evil effect arises from an apparent advantage, which aggravates the evil before it can be perceived. That is that corn is a commodity whose price is not enhanced by taxes in the country producing it, and which, in spite of its absolute necessity, may be diminished in quantity without the price being increased. Hence, many people die of hunger, although corn remains cheap, and the husbandman bears the whole charge of a tax, for which he cannot indemnify himself by the price of his corn.

It must be observed that we ought not to reason about a land-tax in the same manner as about duties laid on various kinds of merchandise; for the effect of such duties is to raise the price, and they are paid by the buyers rather than the sellers. For these duties, however heavy, are still voluntary, and are paid by the merchant only in proportion to the quantity he buys; and as he buys only in proportion to his sale, he himself gives the law its particular application; but the farmer who is obliged to pay his rent at stated times, whether he sells or not, cannot wait till he can get his own price for his commodity: even if he is not forced to sell for mere subsistence, he must sell to pay the taxes; so that it is frequently the heaviness of the tax that keeps the price of corn low.

It is further to be noticed that the resources of commerce and industry are so far from rendering the tax more supportable through abundance of money, that they only render it more burdensome. I shall not insist on what is very evident; i.e. that, although a greater or less quantity of money in a State may give it the greater or less credit in the eye of the foreigner, it makes not the least difference to the real fortune of the citizens, and does not make their condition any more or less comfortable.

But I must make these two important remarks: first, unless a State possesses superfluous commodities, and abundance of money results from foreign trade, only trading cities are sensible of the abundance; while the peasant only becomes relatively poorer. Secondly, as the price of everything is enhanced by the increase of money, taxes also must be proportionately increased; so that the farmer will find himself still more burdened without having more resources.

It ought to be observed that the tax on land is a real duty on the produce. It is universally agreed, however, that nothing is so dangerous as a tax on corn paid by the purchaser: but how comes it we do not see that it is a hundred times worse when the duty is paid by the cultivator himself? Is not this an attack on the substance of the State at its very source? Is it not the directest possible method of depopulating a country, and therefore in the end ruining it? For the worst kind of scarcity a nation can suffer from is lack of inhabitants.

Only the real statesman can rise, in imposing taxes, above the mere financial object: he alone can transform heavy burdens into useful regulations, and make the people even doubtful whether such establishments were not calculated rather for the good of the nation in general, than merely for the raising of money.

Duties on the importation of foreign commodities, of which the natives are fond, without the country standing in need of them; on the exportation of those of the growth of the country which are not too plentiful, and which foreigners cannot do without; on the productions of frivolous and all too lucrative arts; on the importation of all pure luxuries; and in general on all objects of luxury; will answer the two-fold end in view.

It is by such taxes, indeed, by which the poor are eased, and the burdens thrown on the rich, that it is possible to prevent the continual increase of inequality of fortune; the subjection of such a multitude of artisans and useless servants to the rich, the multiplication of idle persons in our cities, and the depopulation of the country-side.

It is important that the value of any commodity and the duties laid on it should be so proportioned that the avarice of individuals may not be too strongly tempted to fraud by the greatness of the possible profit. To make smuggling difficult, those commodities should be singled out which are hardest to conceal. All duties should be rather paid by the consumer of the commodity taxed than by him who sells it: as the quantity of duty he would be obliged to pay would lay him open to greater temptations, and afford him more opportunities for fraud.

This is the constant custom in China, a country where the taxes are greater and yet better paid than in any other part of the world. The merchant himself there pays no duty; the buyer alone, without murmuring or sedition, meets the whole charge; for as the necessaries of life, such as rice and corn, are absolutely exempt from taxation, the common people is not oppressed, and the duty falls only on those who are well-to-do. Precautions against smuggling ought not to be dictated so much by the fear of it occurring, as by the attention which the government should pay to securing individuals from being seduced by illegitimate profits, which first make them bad citizens, and afterwards soon turn them into dishonest men.

Heavy taxes should be laid on servants in livery, on equipages, rich furniture, fine clothes, on spacious courts and gardens, on public entertainments of all kinds, on useless professions, such as dancers, singers, players, and in a word, on all that multiplicity of objects of luxury, amusement and idleness, which strike the eyes of all, and can the less be hidden, as their whole purpose is to be seen, without which they would be useless.

We need be under no apprehension of the produce of these taxes being arbitrary, because they are laid on things not absolutely necessary. They must know but little of mankind who imagine that, after they have been once seduced by luxury, they can ever renounce it: they would a hundred times sooner renounce common necessaries, and had much rather die of hunger than of shame. The increase in their expense is only an additional reason for supporting them, when the vanity of appearing wealthy reaps its profit from the price of the thing and the charge of the tax. As long as there are rich people in the world, they will be desirous of distinguishing themselves from the poor, nor can the State devise a revenue less burdensome or more certain than what arises from this distinction.

For the same reason, industry would have nothing to suffer from an economic system which increased the revenue, encouraged agriculture by relieving the husbandman, and insensibly tended to bring all fortunes nearer to that middle condition which constitutes the genuine strength of the State.

These taxes might, I admit, bring certain fashionable articles of dress and amusement to an untimely end; but it would be only to substitute others, by which the artificer would gain, and the exchequer suffer no loss. In a word, suppose the spirit of government was constantly to tax only the superfluities of the rich, one of two things must happen: either the rich would convert their superfluous expenses into useful ones, which would redound to the profit of the State, and thus the imposition of taxes would have the effect of the best sumptuary laws, the expenses of the State would necessarily diminish with those of individuals, and the treasury would not receive so much less as it would gain by having less to pay; or, if the rich did not become less extravagant, the exchequer would have such resources in the product of taxes on their expenditure as would provide for the needs of the State. In the first case the treasury would be the richer by what it would save, from having the less to do with its money; and in the second, it would be enriched by the useless expenses of individuals.

We may add to all this a very important distinction in matters of political right, to which governments, constantly tenacious of doing everything for themselves, ought to pay great attention. It has been observed that personal taxes and duties on the necessaries of life, as they directly trespass on the right of property, and consequently on the true foundation of political society, are always liable to have dangerous results, if they are not established with the express consent of the people or its representatives. It is not the same with articles the use of which we can deny ourselves; for as the individual is under no absolute necessity to pay, his contribution may count as voluntary.

The particular consent of each contributor then takes the place of the general consent of the whole people: for why should a people oppose the imposition of a tax which falls only on those who desire to pay it? It appears to me certain that everything, which is not proscribed by law, or contrary to morality, and yet may be prohibited by the government, may also be permitted on payment of a certain duty. Thus, for example, if the government may prohibit the use of coaches, it may certainly impose a tax on them; and this is a prudent and useful method of censuring their use without absolutely forbidding it. In this case, the tax may be regarded as a sort of fine, the product of which compensates for the abuse it punishes.

It may perhaps be objected that those, whom Bodin calls impostors, i.e. those who impose or contrive the taxes, being in the class of the rich, will be far from sparing themselves to relieve the poor.

But this is quite beside the point. If, in every nation, those to whom the Sovereign commits the government of the people, were, from their position, its enemies, it would not be worth while to inquire what they ought to do to make the people happy.