§ 4. A Single Tax.

On reading the endless list of taxes invented by the ingenuity of financiers the question occurs : Why all these complications? Why not make a direct demand on each taxpayer for an amount proportionate to his fortune? Accordingly various proposals have been made for a single tax either on land, or income, or again on capital.

The obstacle to the adoption of this attractive plan is the difficulty of finding any basis that would insure the tax being duly proportioned to individual means. The whole burden ought not to be borne by land, for land is not the sole source of wealth. Nor ought it to be imposed only on fixed capital, for those who draw their incomes from circulating capital or from their professions-merchants, bankers, lawyers, doctors, engineers, tradesmen-would pay little or nothing. Again, to require from every one a contribution in proportion to their income would be the perfection of justice; but how is their income to be ascertained?

Rather than to commit gross injustices affecting individuals, it is better to submit to many petty inequalities of which every one feels a share,

5. Direct and Indirect Taxation.

Direct taxes strike directly at those at whom they are aimed, for instance, at landed proprietors when they have to pay a land tax. Indirect taxes are

really paid by consumers, but through the medium of the manufacturers who have to advance them. Thus the brewer pays the tax on beer, but since prices rise to cover this advance, it is the beer consumer who indirectly bears the burden.

Statesmen who maintain large armies prefer indirect taxes, because the people pay them without noticing it. In this way the pigeon may be plucked without crying out. But the inconveniences of these taxes are none the less great: they are obstacles to commerce, as in the case of custom-dues; they hamper industries, like the sugar tax; or they diminish the comfort of the working classes, like taxes or salt, beer or wine.

Unfortunately as these taxes are very productive they are difficult to suppress. Two free countries, England and the United States, still derive the chief part of their revenue from indirect taxation.

As a general rule the most necessary articles of consumption, such as salt and bread, should be left untaxed, and heavy imposts should be placed on superfluous or harmful luxuries, such as tobacco and alcohol.

§ 6. The Budget.

The budget-an English word from the old French bogète, a small pocket—is the estimate of the state's revenue and expenditure for the coming year.

In free countries the budget is brought forward by the Finance Minister, and passed by a vote of Parliament.

The annual vote on the budget is the weapon by which the legislative power, the Parliament, can impose its will on the executive power, the elected or hereditary sovereign. The holder of the purse strings has always the upper hand. If Parliament refuses to vote supplies the sovereign is reduced to impotence, unless by a violation of the constitution he impose taxes on his own authority.

The budget should be clear, exact, and with securities against a deficit. In modern states this last quality is rare. The bogète from being a little purse has become enormous. It grows every year, and is too frequently empty.

§ 7. Loans.

When a deficit occurs in a budget, from some unexpected event such as a war, or dearth, or an excess of ordinary or extraordinary expenditure, states have recourse to borrowing. The budgets of future years are often burdened with the interest and sinking funds for these loans.

Nearly all governments contract loans with a readiness truly deplorable. A statesman who borrows has large means at his disposal. The public who subscribe for the shares find a good investment. The tax payer is blind or indifferent, or, if he calculates, only concerns himself with the facts immediately

before him. The advantages of the expenditure are felt at once, the weight of the debt is reserved for the future.

The greater a government's want of foresight, the more dangerous does the system of borrowing become. In Spain, Mexico, Peru, and Turkey, it has ruined either the state, or its creditors, and in some cases both.

The only legitimate excuses for hampering future generations with a debt, are to save a country, or to execute works from which posterity will profit.

The founders of the Republic of the United States of America could not tolerate a standing debt. They maintained that each generation ought to pay its own way. It is in pursuance of this theory that the citizens of the United States still continue to pay war-taxes, to the end that their debt may be completely wiped off.

The general public so little understands the disastrous effects of loans that it is still ready to repeat the foolish remark of Voltaire: "A state which is indebted only to its own citizens is in no way impoverished, and its debts are actually a fresh encouragement to industry." (Observations sur le Commerce, le Luxe et les Impots.)

To meet exceptional expenses it is always better to have recourse to taxation rather than borrowing. This has always been the theory and the aim of Mr. Gladstone. On either plan money, or the goods

which it represents, are withdrawn from private consumers and employed by the state. The drain effected by taxation is the more severe, since the taxpayer receives no bonds in exchange. On the other hand, the drain caused by loans, though less severe, is more lasting. Every year the taxpayer has to sacrifice some enjoyment to pay his share of the interest of the National Debt. In addition to this, as Tracy remarks, "The payment of this interest provides the means of living for a crowd of idle people who, without it, would be obliged to seek useful employments either for themselves or their capital." (Commentaire sur l'Esprit des Lois, bk. xxii.)

The national debts of most civilised countries are enormous, and many states are no longer able to pay the stipulated interest. The following table will show the amounts of the debts of the principal states in 1879: