Public Finance

Bastable, Charles F.
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London: Macmillan and Co., Limited
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3rd edition
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§ 1. Older than the taxes that we have been engaged in considering, but now of little importance, are the capitation or poll taxes, so familiar to students of mediæval finance. Their origin is evidently found in the idea that persons, as such, should contribute to the wants of the public power. Capitation and property taxes were the two great categories of receipts in early times. When the greater part of a community possessed little accumulated wealth, the method of taxing each adult for a fixed sum was natural. What is very suitable in a rude state of society is altogether unfitted for a progressive and civilised one. No modern State could employ a capitation tax as a substantial source of revenue. Its inequality and directness combine to make it unpopular. The remains of this form of personal taxation are, however, very general, though their interest is rather historical or political than financial.


The equal taxation of persons by poll taxes or capitations generally develops by some form of graduation into an income tax,*61 or, as happened widely in the seventeenth century, is replaced by an excise on the necessaries of life. The sense of proportion accounts for the former, as the great dislike to the capitation tax does for the latter. But several countries, notwithstanding, retain a small charge on the person of each contributor.


§ 2. English history supplies us with some illustrations of the poll tax. The first was in 1377, followed immediately by those of 1379 and 1380 (the latter the proximate cause of the Peasant Revolt). The two latter were graduated according to rank. At intervals the graduated poll tax reappears, as in 1453, 1513, and 1641. Its last employment was under William III. in the French war, and it ceased completely after 1698.*62


The French capitation was first levied in 1695, and continued with changes up to the Revolution. It was graduated; at first twenty-two classes were formed, but this part of the system was altered in 1701. The constituent Assembly created the personal tax (1791), which consisted of the value of three days' labour, and added it to the mobilier. The price of the day's labour is determined for each commune by the Council of the department, within the limits of 5d. and 1s. 3d. No addition can be made for local charges, and where an octroi is levied, the personal tax may be paid out of it. So far as can be ascertained, the total yield is between £600,000 and £700,000.*63


The Italian States possessed complicated capitation taxes which have not survived the establishment of the present kingdom. So did many of the German States;*64 of which, the class tax of Prussia was the most noticeable. The poll tax of 1811 was replaced by the class tax of 1820 by which the mass of the population was grouped in four classes, paying various rates, from £1 16s. to 9d. The income tax and the class tax were separated in 1851, and the latter, confined to incomes under £150, was divided into twelve classes, which, under the law of 1875, paid from 3s. to £3 12s., incomes under £21 being exempt. By the law of 1891 the class tax was absorbed in the income tax, and incomes under £45 are exempted. The Saxon income tax in its lower part is practically the same as a capitation tax. The poll tax also survives in Switzerland, where it is chiefly employed for local purposes, and not in all the cantons.


Russia, which had long preserved the capitation, abandoned it in 1887. The nobility had been always exempt, and, since 1866, the commercial classes. While it was in force the rate varied from district to district, and its amount was about £9,000,000 (taking the rouble at its nominal value).


In the United States poll taxes have been used from the colonial period. At present, more than half of the States have them in force, mostly for the state or commonwealth revenue, but, in some cases, for the counties, and in others for education, or road making. In some commonwealths the payment of the poll tax is a condition of the suffrage.*65


In addition to the taxes already noticed, we should mention the services demanded by the State from its citizens. Military service is the most prominent, and it is a large part of the real, as distinguished from the nominal, cost of Continental armies. The real nature of this service, as a tax, is best shown by the compensatory tax (Wehrsteuer), imposed on those who do not serve, which has given rise to so much controversy in Germany.


The method of Prestations in France for the repair of roads is another example, and there too the alternative of working or paying is open. The mediæval system of finance availed itself more extensively of this direct method of procuring resources; the surviving instances in modern times are—with the exception of military duty—more curious than important.


§ 3. The poll or capitation tax is far from being a pure tax on wages: the taxation of professions through Schedule D of the English Income Tax, and by the fourth division (Table D) of the Patente, is a nearer approach to that point. Attempts to reach the great body of wage-earners are generally made by means of indirect taxation. The enforcement of a capitation tax is certain to meet with, at least, passive opposition, and in any case its productiveness cannot be great. The method of using it as a necessary condition to acquiring full political rights may be admissible if the receipts are given to local bodies, but this regulation is political rather than financial.


The general result is that this form of taxation is decaying. Its persistence is due to the financial conservatism that is so strong in most countries. It is altogether out of place in the modern financial system, and though it may for a time survive in some Swiss cantons or American States, its importance will, we believe, steadily diminish.


The incidence of personal taxes, especially in the form of capitations on day labourers, has been regarded by many writers as wholly on the employers, or through them ultimately on the consumers of the products they turn out, but this conclusion is not by any means certain. It is far more probable that a small tax on the poorer classes will lower, or prevent a rise in, their mode of living. Its action on population is far too indefinite to be used for laying down an absolute rule. Much will depend on the exact form of the tax, whether uniform or graduated, confined to the head of the family or extended to its other adult members. No proposition in finance has been more dangerous in its application than that which declares that the labourer cannot permanently suffer from taxation.*66

Notes for this chapter

It is significant that Adam Smith discusses the income tax under the title 'capitation taxes,' Wealth of Nations, 367.
Dowell, iii. 3-7.
Vignes, i. 40-1.
De Parieu, i. 139-151.
Seligman, Finance Statistics of American Commonwealths, 53; cp. Ely, Taxation, 209 11. This was the case in Massachusetts until the amendment of the Constitution in 1891, Massachusetts Tax Commission Report (1897), 5.
Lord Avebury (Statistical Journal, lxiv. 567) regards this passage as 'an admission which amounts almost to a surrender' of the position taken with respect to the theory of equal diffusion in an earlier part of this work (see Book iii. ch. 5, § 4). It is, however, merely a criticism of the exaggerated form of the doctrine held by the Physiocrats and Ricardo. To hold that labourers do not always, or even generally, shift capitation taxes is quite consistent with believing that taxes are not equally diffused.

Book IV, Chapter IV

End of Notes

28 of 46

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