Well may the Lords' Committee on the burdens affecting landed property have said, "Neither the law nor the spirit of the constitution originally contemplated so partial a system of taxation."31 In truth, originally some of the heaviest present exclusive burdens on real property were born equally by personal estates. "The poor law of Elizabeth," says the report, "and the land tax of William and Mary, embraced every species of income; but in consequence of the comparative facility of rating visible property, and the small amount of income derived from other sources in the early period of their assessment, personalty seems to have escaped its legal share of contribution to the public service. The liability of stock in trade, however, was continued by law to a late period, and is, up to the present day, only suspended by an annual act of exemption." The Committee here point out, or rather hint at the real cause of the extraordinary exemption from their due share of the public burdens which has grown up insensibly in favour of movable property. Land has two admirable qualities in the estimation of Chancellors of the Exchequer. It can neither be concealed nor removed. Movable estates, stock in trade, are susceptible of both. The landholder has no secret invisible funds which he can bring forth when desired in the form of convenient loans to government to meet the state necessities. He has only a visible fixed estate, which can neither be concealed nor withdrawn from its annual burdens. Hence the influence and exemptions of the one, and the injustice experienced by and burdens of the other.

But in addition to this, there is another circumstance which has powerfully contributed to establish this extraordinary and iniquitous exemption of personal property from direct taxation. This is the difficulty which in practice amounts to an impossibility of getting by any means at the real amount of rateable personal property. The Commissioners of the Income Tax through the country will have no difficulty in understanding what is here meant. All the efforts of government and their official organs to ascertain the real amount of assessable movable property, have been insufficient to accomplish that end. Doubtless there are in the commercial and professional class many just and honourable men who give a true account to the last farthing of their gains. These are men, the honour and support of the country, whose word is their bond, and who may confidently be relied on to speak the truth under any circumstances. But, unhappily, experience has too clearly proved that the facility of concealing gains derived from stock in trade, and thus withdrawing it from its just liability for assessment, is too strong a temptation to be resisted. The proof of this is decisive. The returns of the income tax show £175,000,000 of annual income rated to that assessment, while only £1,541,000 was in 1845 paid by the whole professional persons in Great Britain. Of this £1,541,000, only £1200,000, at the very utmost can be estimated as coming from commercial or trade incomes, which, at sevenpence in the pound, corresponds to about £40,000,000 of annual income. Is it possible to believe that the whole commercial and trading classes in Great Britain, whose wealth is in every direction purchasing up the estates of the landed proprietors in the island, only enjoy forty out of one hundred and seventy-five millions of the rateable national income? Have they less than a fourth of the whole income rated to the income tax? If they have no more, they certainly make a good use of what they have, and must deem themselves singularly fortunate in that happy exemption from taxation which has enabled them, with less than a fourth of the general income, to get the command of the state, and buy up the properties of all the other classes.

There is one peculiarity in the income tax as at present established, which is productive of the greatest injustice, and loudly calls for immediate remedy. This consists in the taxing all incomes at the same rate, whether derived from professional income, annuity, land, or realized funds. This is just another instance of the careless and reckless way in which our system of direct taxation has at different times been framed, without any regard to principle, and alternately unjustly favouring or grossly oppressing every class in society, except the great capitalists. They have been always and unduly considered. What can be more unjust than to tax every man of the same income at the same rate, whether it is derived from land or funded property, worth thirty years' purchase, or railway or bank stock worth twenty, or an annuity worth five, or a precarious professional income, which would not bring, from the uncertainty of life and the public favour, or the winds or monetary changes, above two or three? Under the present most unjust system, they all pay alike on their income, that is, some pay about fifteen times as much on what they are worth in the world in comparison with others! A man who derives £300 a-year from the three per cents. on land has a capital stock worth about £10,000. He pays as much, and no more, as a poor widow, just dropping into the grave, who has a jointure of £300 a-year, for which no insurance company in the kingdom would give her above £500, or a hard-working lawyer or country surgeon with the same income, whose chances of life and business are not worth three years' purchase. The gross injustice of this inequality requires no illustration.

Nor is it any answer to this to say, that if the professional and commercial classes are unduly oppressed by the income tax, they, are proportionally benefited by their general exemption from the heavy, direct taxation which in other respects weighs down the land; and that the one injustice may be set off against the other. We protest against the system of setting off one injustice against another: there is no compensation of evils in an equitable administration. In the present instance there can be no compensation, for the acts of injustice are committed against different classes. It is the trading classes which enjoy the means, from the occult nature of their gains, of evading by fallacious returns the income tax. The honest and honourable pay it to the last farthing: it is the dishonest who escape. The persons upon whom the levying the income tax in its present form operates with the most cruel severity are the professional men and annuitants. They cannot evade it, as the trading classes can. Their gains are generally known: if they are at all eminent or prosperous, the kindness or envy of the public generally helps them to at least a half more than they really enjoy. Merchants or shopkeepers are less in the public eye; and even when most prominent, their transactions are so various and wide-spread, that no one but themselves can estimate their profits. Every one knows, or can easily guess, what Dr. Chambers or the Attorney-General make a-year; but it would puzzle the most experienced heads on 'Change to say what were the yearly profits of the great bankers, merchants and manufacturers.

There is another enormous injustice connected with the income tax, and indeed all the direct taxes to Government, which loudly calls for remedy—Ireland pays none of them. It is high time that England and Scotland should rouse themselves to a sense of this most unreasonable and unjust exemption, and unite their strength by the proper constitutional means to remove it. We are always told Ireland cannot afford to pay any direct taxes. What, then, comes of its £12,000,000 of rental? Scotland, with little more than a third of that land rent, pays it and the assessed taxes besides, without either complaint or difficulty. But it is said the landlords are so eat up with mortgages, that they have not a fourth part of their nominal incomes left to live upon. That is a good reason for only making them pay, as under the income tax they would, on the free balance, deductis debitis. But, in the name of Heaven, why should the bondholders pay nothing? If they sit at home at ease in Dublin, Cork, or Belfast, and quietly enjoy £9,000,000 out of the £12,000,000 of Irish rental, why cannot they as well pay the income tax as their brethren in London, Liverpool, or Glasgow? The bondholders of Ireland alone, would, if they paid an income tax, contribute more to the common necessities of the State than the whole land and industry of Scotland put together. So vast are the natural resources which Providence has bestowed on that fickle and misguided people, and so few those enjoyed by the hardy and industrious Scotch mountaineers.

On what conceivable ground of justice or reason can this most monstrous and invidious exemption in favour of Ireland from income and assessed taxes be defended? Is it that Ireland with its 12,000,000 arable acres, and 5,000,000 of mountain and waste, has fewer natural resources than Scotland with its 4,500,000 of arable acres, and 12,000,000 of mountain and waste? Is it that 8,500,000 persons now in Ireland, cannot pay even what 2,900,000 now pay in Scotland? Is it that Ireland is so singularly peaceable and loyal, and gives so little anxiety or disquiet to the rest of the empire, that it must be rewarded for its admirable and dutiful conduct by an absolute exemption from all direct taxation to government? Is it that the troops required to be kept in it are so few, and in Scotland so numerous, that the former country may be liberated from taxation, while the latter is subjected to it in full extent? Is it that industry in towns in Ireland is so great, and manufacturing skill so transcendant, that it is entitled to be liberated from direct taxation in consideration of the vast amount of its indirect custom-house duties, in comparison of which those of London, yielding £12,000,000; of Liverpool, yielding £4,500,000 a-year; or Glasgow and the Clyde harbours, yielding £1,200,000; and Leith, yielding £589,000, are as nothing? Or is it that this extraordinary exemption is the reward of tumult, disaffection, and treason; of turbulent demagogues and factious priests, and an indolent people; of active and incessant combination for the purposes of evil, and total inability to combine for the purposes of good? And is it the first fruits of the regeneration of government by the Reform Bill, that it can raise a revenue only from the loyal and pacific and industrious part of the empire, and must proclaim relief from all taxation as the reward of tumult, disorder, murder, monster meetings, and treason? We leave it to the advocates of the present system of government, or those who established it, to answer these questions. We did neither the one nor the other, but have constantly opposed both; and Great Britain, in the system of direct taxation we have now exposed, is reaping the fruits of the changes she has thought proper to introduce.

Lastly, there is another peculiarity of the income tax which requires revision, and that is this;—at present it descends only to £150 a-year income; and every one practically acquainted with these matters, knows that this, with the trading classes at least, whose gains can be concealed, amounts to a practical exemption, generally speaking, of all under at least £200 a-year. Nothing can be plainer than that, as matters stand at least, this exemption of all below such line is invidious, unjust, and, if persisted in, will lead to ruinous consequences. No reason can be assigned for it which will bear examination; for it is to be supposed the practical necessity of conciliating the ten pounders, the great majority of whom escape the tax altogether in this way, will not, in public at least, be assigned as a reason, how cogent soever it may be felt and candidly acknowledged in private. Why should a man, whose income, perhaps derived from land or funded property below £150, pay nothing, while a hard working clerk, attorney, or country surgeon, who makes £155, and is not worth a tenth part of the other's realised capital, pays income-tax? It is in vain to say you must draw a line somewhere. So you must, but you must not draw it in a way to do gross and palpable injustice,—to exempt the comparatively affluent, and oppress the industrious poor. There is a vital distinction, which it would be well if the income tax recognised, between income, of any amount, derived from realised property and from professional exertions. By all means give the humble professional classes the benefit of this distinction. But to draw the line, not according to the quality of the income as derived from capital or labour, but from its absolute amount, is arbitrary, invidious, and unjust.

The great advantage to be derived from making the income tax, modified as now suggested, descend lower in society is, that it would interest a larger number in guarding against its abuse. At present, it is said, there are three hundred and twenty thousand persons rated to the income tax in Great Britain, but not half of them really pay on their own account. Many pay the income tax of one; as a landlord's whole tenants for his rent, though not more than one or two, perhaps none, certainly not half the number, are separate persons whose incomes are really made liable. But can any thing be more unjust than to select in this way a particular class, not more than a two-hundredth part of the community, and subject them and them alone to the heaviest of the direct taxes? It is just the privileged class of old France over again, with this difference, that the privileged class in England is distinguished by being obliged to bear not to avoid the hated taille. Nevertheless, nothing is more certain than that, as long as this invidious and unjust accumulation of the whole direct tax is on one class of 150,000 persons, it will be highly popular with the remaining 29,000,000, and that the popular journals will never cease to resound with the propriety of extending still farther the partial burden of direct, and the general exemption under the name of Free Trade from the indirect taxes.

The increase of direct taxation, till it proved fatal to industry, population, national strength, and every thing save great capital, was the cause of the ruin of the Roman empire. Many circumstances, alas! concur in showing, and will ere long demonstrate to the most inconsiderate, that we are fast following in the same direction; and if so, we shall beyond all question share the same fate. The extension of the income tax, on a graduated scale, to persons as low even as £50 a-year, is the only way to arrest this great and growing evil. What is wanted is not the money to be drawn from these poorer but more numerous classes, but the interesting them in resisting its undue extension. If 150,000 persons only pay the income tax, it is very likely ere long to be raised to 10 or 15 per cent. If a million pay it, no such extension need be dreaded. No matter though the additional 850,000 pay only 10s. a piece, or £425,000 in all: their doing so would probably save the state from ruin. What is wanted is not their money, but their breath; not their contributions, but their clamour. They have a majority of votes in the constituencies. In a serious conflict their voice would be decisive in favour of any side they espoused. Interested to prevent the confiscation of property, they will effectually do so. Exempted from direct taxation, they will promote its increase till it has swallowed up the state, and themselves in its ruin, as it did the Roman empire.

So much has been said on the inequalities and injustice of the present system of direct taxation established in Great Britain, that little room remains for the true principles on the subject; but fortunately, like a beacon, it shows what rock should be avoided in the course. A system of direct taxation would not be far from just, which in every respect was precisely the reverse of that which at present exists amongst us.

I. The first thing to be done is to equalise the succession tax, lay it equally on land and personal estate, and lower it to the whole one-half. Five per cent. in succession to strangers; two-and-a-half to relations; and a half per cent. to parents or brothers, alike in land and money, would probably augment the produce of the tax, and certainly greatly relieve a most meritorious class of society, the representatives of small capitals.

II. All direct taxes should be levied equally on landed and personal estates, and, subject to the distinction after-mentioned, equally on professional income, as the fruit of realised capital. This rule should apply to all local or parochial, as well as public burdens. The effect of it would be to let in, as taxable income, in addition to the £2,666,000 now derived from land, a sum at least as large derived from personal estates or incomes. It would therefore lower this most oppressive tax, supposing its absolute amount undiminished one-half. The same would be the case with land tax, highway rates, church rates, police rates, &c. They would all be lowered a-half to the persons at present burdened with them, and that simply by the adoption of the just principle, that all fortunes in the same situation should be taxed alike for the general service of the state, and that the commercial classes who create the poor, and are enriched by their labour, should contribute equally with the landed to their support.

III. In levying the income tax, a different rate should be imposed on income, according as it is derived or not derived from realised capital. If it is so it should be taxed alike for all direct taxes. But if it is derived from annuity or professions, a lower rate should be adopted. If the property tax is 5 per cent. the income tax should not exceed 2-1/2 per cent.; whatever the one is the other should be a-half of it only. This modification of an impost now felt as so oppressive by all subjected to it, would go far towards reconciling the numerous class of small traders, the great majority in all urban constituencies, to the change—to its continuance, and also justify its extension to all incomes above £50 or £100 a-year. Without that extension it will inevitably degenerate into a confiscation of property above a certain level.

IV. Stamps or conveyances, or burdening of property, should be the same, and not higher, on personalty or landed estates. For the additional security of the latter, the borrower pays amply in the greater expense of the law deeds requisite to constitute effectual securities over real estates than over stock or movable funds. Stamps on bills, &c., which are advances for a short period only, should be rated at a widely different scale from that adopted in permanent loans. But there is no reason why securities over real estates should require to be written on paper bearing a higher stamp than those over personal effects.

V. The present system of the assessed taxes should be altered, so as to make it include all classes alike, and not, as at present, fall twice as heavily on the inhabitants of the country as those of towns. This may be done best by making these taxes a certain proportion of the value of the house inhabited by the party, as rated for the property tax—perhaps a fourth or fifth part, abolishing all other assessed taxes. This would reach all classes alike in town and country: for whatever may be said as to doing without an establishment in town, no one can do even there without a house. And the rich misers who live in a poor lodging and spend nothing, would be effectually reached in the heavy property tax, on their funds, wherever invested.

VI. To obviate the innumerable frauds daily practised in the concealment of professional incomes, especially by small traders, a power should be given to the Commissioners in all cases where they were dissatisfied with the return of professional income, to assess the party for income at five times the value at which his house is rated. On this principle if a lawyer or physician lives in a house rated at £100 a-year, he would pay on £500 a-year as income: if he occupied one rated at £2000, he would be taxed on £10,000. If the tax on realised property was 5 per cent. which it will soon be, that would just subject the professional one to two and a half. Perhaps it would be better to adopt some such general principle for all cases of professional income, and avoid the requiring returns at all.

In some cases the above plan might be adopted as a substitute for the income tax, or rather as a mode of levying it on professional persons. Those whose income is derived from land, the funds, or other realised property, would be entitled to exemption or deduction, upon production of the proper evidence that they were rated for the property tax at the higher rate.

VII. Ireland should pay the income and all direct taxes, at least on land, bonds, and other realised property, as well as the assessed and other direct taxes, just as Great Britain. Nothing can be advanced, founded either in reason or justice, in favour of the further continuance of their present most invidious and unjust exemption.

We have thus laid before our readers a just and reasonable system of direct taxation, from which the landed interest, now so unjustly oppressed, would derive great relief, simply by doing equal justice to them and the other classes in the state. The amount of injustice which such a system would remove, may be accurately measured by the amount of resistance which the system we have now advocated would doubtless experience, just as the injustice of the exemption from direct taxation enjoyed by the nobles and clergy of old France was measured by the obstinate resistance they made to an equalisation of the public burdens. Men cling to nothing with such a tenacity as unjust privileges and exemptions. But the changes we recommend have one lasting recommendation: they are founded on obvious justice. They go only to levy all taxes alike on all classes, in proportion, as nearly as may be, to their ability to pay them. And we implore the Conservative body, with whom we have so long acted, to consider whether it would not be far wiser to unite their strength to convince the country of the justice and expedience of some, at least, of these changes, than to follow the example of the Free Traders in urging the repeal of the malt tax, which could only be followed, as no addition to the indirect taxes is to be thought of, by a vast increase of the income tax, two-thirds of which would fall on the land itself.

And now a single word in conclusion on ourselves. We need not say how long and steadily we ranged ourselves on the side of the late Premier, or how widely the principles now contended for differ from those which he has carried into effect. We are actuated by no spirit of hostility either to the late or the present Government. Our course is that of freedom and independence. During Sir R. Peel's long and able contest with the movement party from 1838 to 1841, we stood faithfully by him, and that when many who have been most courtly during the subsequent days of his power, were not the least intemperate leaders on the other side. From respect for his talents and gratitude for his public services when in opposition, and a natural reluctance to believe that we had been mistaken in one whom we so long acknowledged as the leader of the Conservative party, we tempered our political discussion during the last twelvemonths with more forbearance than we should have done under other circumstances. But the die is now cast: it has been cast by himself. We can feel no dependence in a minister who introduces measures directly at variance with the whole principles of his public life: and we earnestly trust that by far the greater portion of the true-hearted and loyal men who, from over-confidence in their chief, have allowed themselves to be compromised in the late political transactions, will not again commit themselves to any leader in whose candour and integrity they cannot thoroughly rely.

This narrative was originally composed in the third person; but so much of it consists of my own personal intercourse with Mr. Smith, that the use of that circuitous form of expression became as irksome to the writer, as he thinks it would have proved tedious and irritating to the reader.

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