ESSAY VIII.

OF TAXES.

THERE is a prevailing maxim among some reasoners, That every new tax creates a new ability in the subject to bear it, and that each increase of public burdens increases proportionably the industry of the people. This maxim is of such a nature, as is most likely to be abused, and is so much the more dangerous, as its truth cannot be altogether denied; but it must be owned, when kept within certain bounds, to have some foundation in reason and experience.

When a tax is laid upon commodities which are consumed by the common people, the necessary consequence may seem to be, either that the poor must retrench something from their way of living, or raise their wages, so as to make the burden of the tax fall entirely upon the rich. But there is a third consequence which often follows upon taxes, namely, that the poor increase their industry, perform more work, and live as well as before, without demanding more for their labor. Where taxes are moderate, are laid on gradually, and affect not the necessaries of life, this consequence naturally follows; and it is certain, that such difficulties often serve to excite the industry of a people, and render them more

opulent and laborious than others, who enjoy the greatest advantages; for we may observe as a parallel instance, that the most commercial nations have not always possessed the greatest extent of fertile land, but, on the contrary, that they have labored under many natural disadvantages. Tyre, Athens, Carthage, Rhodes, Genoa, Venice, Holland, are strong examples to this purpose; and in all history, we find only three instances of large and fertile countries which have possessed much trade, the Netherlands, England, and France. The two former seem to have been allured by the advantages of their maritime situation, and the necessity they lay under of frequenting foreign ports, in order to procure what their own climate refused them; and as to France, trade has come late into that kingdom, and seems to have been the effect of reflection and observation in an ingenious and enterprising people, who remarked the riches acquired by such of the neighboring nations as cultivated navigation and commerce.

The places mentioned by Cicero,* as possessed of the greatest commerce in his time, are Alexandria, Colchus, Tyre, Sidon, Andros, Cyprus, Pamphylia, Lycia, Rhodes, Chios, Byzantium, Lesbos, Smyrna, Miletum, Coos. All these, except Alexandria, were either small islands, or narrow territories; and that city owed its trade entirely to the happiness of its situation.

Since, therefore, some natural necessities or disadvantages may be thought favorable to industry, why may not artificial burdens have the same effect? Sir William Temple, we may observe, ascribes the industry of the Dutch entirely to necessity, proceeding from their natu

Epist. ad Att. lib. ix. ep. 11.

† Account of the Netherlands, chap. 6.

ral disadvantages; and illustrates his doctrine by a striking comparison with Ireland, "where," says he, "by the largeness and plenty of the soil, and scarcity of people, all things necessary to life are so cheap, that an industrious man, by two days' labor, may gain enough to feed him the rest of the week; which I take to be a very plain ground of the laziness attributed to the people; for men naturally prefer ease before labor, and will not take pains if they can live idle; though when, by necessity, they have been inured to it, they cannot leave it, being grown a custom necessary to their health, and to their very entertainment. Nor perhaps is the change harder, from constant ease to labor, than from constant labor to ease." After which the author proceeds to confirm his doctrine, by enumerating, as above, the places where trade has most flourished in ancient and modern times, and which are commonly observed to be such narrow confined territories, as beget a necessity for industry.*

* It is always observed in years of scarcity, if it be not extreme, that the poor labor more, and really live better, than in years of great plenty, when they indulge themselves in idleness and riot. I have been told, by a considerable manufacturer, that in the year 1740, when bread and provisions of all kinds were very dear, his workmen not only made a shift to live, but paid debts which they had contracted in former years that were much more favorable and abundant.†

This doctrine, therefore, with regard to taxes, may be admitted in some degree; but beware of the abuse. Taxes, like necessity, when carried too far, destroy industry, by engendering despair; and even before they reach this pitch, they raise the wages of the laborer and manufacturer, and heighten the price of all commodities. An attentive disinterested legislature will observe the point when the emolument ceases, and the prejudice begins; but as the contrary character is much more common, it is to be feared that taxes all over Europe are multiplying to such a degree as will entirely crush all art and industry, though perhaps their past increase, along with other circumstances, might contribute to the growth of these advantages.-EDITIONS F, G, H, N.

To this purpose, see also Essay I. at the end.

The best taxes are such as are levied upon consumptions, especially those of luxury, because such taxes are least felt by the people. They seem in some measure voluntary, since a man may choose how far he will use the commodity which is taxed. They are paid gradually and insensibly; they naturally produce sobriety and frugality, if judiciously imposed; and being confounded with the natural price of the commodity, they are scarcely perceived by the consumers. Their only disadvantage is, that they are expensive in the levying.

Taxes upon possessions are levied without expense, but have every other disadvantage. Most states, however, are obliged to have recourse to them, in order to supply the deficiencies of the other.

But the most pernicious of all taxes are the arbitrary. They are commonly converted, by their management, into punishments on industry; and also, by their unavoidable inequality, are more grievous, than by the real burden which they impose. It is surprising, therefore, to see them have place among any civilized people.

In general, all poll-taxes, even when not arbitrary, which they commonly are, may be esteemed dangerous: because it is so easy for the sovereign to add a little more, and a little more, to the sum demanded, that these taxes are apt to become altogether oppressive and intolerable. On the other hand, a duty upon commodities checks itself; and a prince will soon find, that an increase of the impost is no increase of his revenue. It is not easy, therefore, for a people to be altogether ruined by

such taxes.

Historians inform us, that one of the chief causes of the destruction of the Roman state, was the alteration which Constantine introduced into the finances, by sub

stituting an universal poll-tax, in lieu of almost all the tithes, customs, and excises, which formerly composed the revenue of the empire. The people, in all the provinces, were so grinded and oppressed by the publicans, that they were glad to take refuge under the conquering arms of the barbarians, whose dominion, as they had fewer necessities and less art, was found preferable to the refined tyranny of the Romans.

It is an opinion, zealously promoted by some political writers, that, since all taxes, as they pretend, fall ultimately upon land, it were better to lay them originally there, and abolish every duty upon consumptions. But it is denied that all taxes fall ultimately upon land. If a duty be laid upon any commodity consumed by an artisan, he has two obvious expedients for paying it: he may retrench somewhat of his expense, or he may increase his labor. Both these resources are more easy and natural than that of heightening his wages. We see, that, in years of scarcity, the weaver either consumes less or labors more, or employs both these expe dients of frugality and industry, by which he is enabled to reach the end of the year. It is but just that he should subject himself to the same hardships, if they deserve the name, for the sake of the public which gives him protection. By what contrivance can he raise the price of his labor? The manufacturer who employs him will not give him more: neither can he, because the merchant who exports the cloth cannot raise its price, being limited by the price which it yields in foreign markets. Every man, to be sure, is desirous of pushing off from himself the burden of any tax which is imposed, and of laying it upon others: but as every man has the same inclination, and is upon the defensive, no set of men can be supposed to prevail altogether in this