, in pursuance of his notice, rose to move for the repeal of those taxes which lower the profits of capital and the wages of labour. He was aware, that the question of a Property-tax had, for the present, already been decided by the House, and that hon. Members were wearied out by the protracted debate which had recently taken place upon this subject. Nevertheless, as the question of a Property-tax had, as it appeared to him, been so much misunderstood, he would intreat the indulgence of the House while he endeavoured, as briefly as possible, to explain the manner of its operation, and to obviate the objections which had been brought forward against it. All the wealth of the country might be divided into distinct and different portions, namely, fixed property and floating capital; fixed property consisting of land, houses, funds, and money upon mortgage; and floating capital being the stock employed in cultivation, in manufactures, in trade, and commerce. Now it would appear, on a careful examination of the subject, that the revenue derived from floating capital was regulated by causes altogether different from those which regulated the revenue derived from fixed capital. In every country there was a customary rate of pro fit, without obtaining winch, capitalists would not engage and would not remain in 843 business. It was this customary rate of profit, always tending to equality for every species of floating capital, which determined the income of floating capital. Assuming, for the sake of illustration, that this rate of profit was ten percent, then the income of a farmer employing 2,000l. of floating capital, would be 200l. per annum. But what determined the income of the proprietor of the farmer? It was clear that the proprietor could obtain as his income on rent, only that portion of the surplus produce which might remain after the farmer had obtained his ten per cent, upon his capital of 2,000l.; and, supposing the whole surplus produce to be worth 400l., the rent would be 200l. The principles which regulated the respective incomes of the farmer and of the proprietor were these: the customary rate of profit determined, in the first instance, what the former should receive, and then the rent of the proprietor was determined by the degree in which the value of the surplus produce exceeded what was the customary profit upon the cultivator's profit. The same principle held good with respect to houses. The building rent was regulated by the profits upon the cost of erecting the house; the ground rent was determined by the advantages of situation, giving to the occupier benefits exceeding the customary profits upon his capital. Now, if hon. Members would consider the difference between the revenue derived from floating capital and the revenue obtained from fixed property, they would immediately perceive that all the objections which had been urged against a tax upon fixed property fell to the ground, and were altogether inapplicable. In the first place, it had been urged that it would be unequal and unjust to tax fixed property, and to leave other descriptions of property free from impost. Now, how did this objection apply to the landed proprietor? Suppose, for illustration, that the customary rate of profit was ten percent, and that a farmer employing 2,000l. in cultivation raises a surplus produce which, after all his outlay was paid, left him 400l. As 200l. will yield him the customary profit upon his capital, the other 200l. will be rent, and will be paid to the proprietor. But lay a tax upon the farmer's income of 100l. and that which will remain after yielding the customary profit will be only 100l. On the expiration of the contract between the landlord and tenant, the rent will therefore be reduced from 200l. to 100l.; because, were the 844 tenant required to pay more than this, he could not obtain the customary rate of profit upon his capital, and would withdraw to some other pursuit. It was quite clear, therefore, that as far as the land was concerned, taxes upon the farmer's profit fall ultimately upon the proprietor, and that therefore there could be nothing unjust or unfair, or in any way injurious to the proprietors of fixed property, in taxing it, without taxing floating capital in the same proportion. But this was understating the case. He (Colonel Torrens) was prepared to show, and he hoped to demonstrate, that taxes upon revenue arising from floating capital, employed in productive industry, were injurious to the proprietors of fixed property, and that the rents of landed proprietors would be actually increased by a commutation of taxes, which would relieve productive industry by laying a direct impost upon the revenue derived from fixed property. He believed that, with the indulgence of the House, he might be able to demonstrate this by a brief and simple illustration:—Suppose a farmer, with 2,000l. cultivating land which yields him over and above his outlay 250l.; in this case the rent will be 50l. Now, lay a tax of fifty per cent, upon the farmer's income of 200l. and the land must be abandoned and no rent whatever paid; for the farmer being entitled to ten per cent upon his capital of 2,000l., will obtain, after the tax, only 150l., and will betake himself, on the expiration of his contract, to some other pursuit. Thus taxes upon the income derived from agricultural capital prevent the cultivation of a belt of land which might otherwise be profitably tilled; and, as a necessary consequence, keep down the rent upon all the better below the point which it otherwise would attain. Not only are the industrious classes deprived of employment, but the proprietors of the soil are more injured, by a tax upon floating capital, than they could be by an equal per centage levied upon fixed property. It had been urged, as an objection to a tax upon fixed property, that it would drive capital abroad—that all would seek to escape the tax by selling out of the Funds, or by disposing of their estates and making investments in Foreign Securities. This objection was quite futile. The alarm which induced the proprietors of fixed property to sell would operate upon those who were able to purchase, and the price of all fixed property would immediately fall in proportion to the tax, so that no inducement could remain for 845 foreign investment. But it had been supposed that the motive to accumulating and saving would be diminished. No such thing. If the price of real and fixed property fell in proportion to the tax, as it certainly would, investments in fixed property would be just as beneficial, would yield just the same per centage as before, and no conceivable diminution in the motive to saving could occur. There was only one objection to a tax upon fixed property which deserved serious notice, and that was, that it might operate as a discouragement to permanent improvements. But this objection was easily obviated. Let notice he given of all permanent improvements required, and let no increased rate be imposed in consequence of them for a period of ten or twenty years, so as to free the capitalist who effected them from discouragement. He begged pardon of the House for having detained them so long upon a subject dry and uninviting. But it did appear to him, that a crisis had arrived which had rendered it necessary to reverse the whole system of our financial policy, in order to relieve the industry of the country, and that it was, therefore, most important the real incidence and effect of a tax upon fixed property should be placed distinctly before the House and the country. He felt it to be his duty to endeavour, however imperfectly, to perform this task. He would not, as the sense of the House had been so recently taken upon the question of a Property-tax, press his Motion to a division, but would rest satisfied with having enunciated principles, which, as he believed it would, at no distant period, become imperative upon the Legislature to adopt.
seconded the Motion. The taxes on capital employed in industry amounted to twenty-five per cent.; which, as the gallant Colonel had observed, was in a great measure the cause why the distress of the country was so great. It was impossible to take away from the profits of those who employed labourers, without compelling them to lower the rate of wages of the labourer. If the House duly considered the poverty and misery which at present existed, they would try to place the burthens of the country in such a position as not to drive the people to despair. Since the year 1819 the wages of the manufacturing labourer had been reduced one-half; and it was their only consolation that the wages of the agricultural labourer had fallen as much. But what was the case with those who lived on the taxes? That 846 the fundholder received eighty-seven sovereigns for that for which he had given only forty. Those two causes had produced the existing state of things. He was persuaded that if we adhered to the present standard of value, it would be impossible long to carry on the financial affairs of the country; and general misery would go on increasing until it resulted in anarchy. He wished to support public credit; but if every kind of artificial means possible were resorted to for that purpose, we should take from the country more than its resources would allow, and should be utterly unable to go on. If the gallant Colonel pressed the Motion to a division, he would divide with him.
§ Mr. Cobbett
said, that he was not so fortunate as to understand the gallant Colonel's arguments, but he was more fortunate as to his Motion; and if the gallant officer would stop with the proposition for repealing the taxes paid out of the wages of labour, he (Mr. Cobbett) was quite ready to agree with him; but if he pressed the whole of his Motion to a division, he must certainly oppose it.
§ Lord Althorp
could not consent to the Motion of the gallant Colonel. The question was a purely scientific one; and he did not see how the gallant Colonel had made out by argument the reposition which he bad submitted to the House. The gallant Colonel was entirely mistaken, if he supposed that any peculiar injury was sustained by raising a part of the taxes from the capital of employers. He would not, however, go into the question at present; but would content himself with negativing the Motion.
§ Motion negatived without a division.