Of Taxes
David Hume
[17--]
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
encrease of public burdens encreases 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 encrease their industry, perform more
work, and live as well as before, without demanding more for their
labour. 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 laboured 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
enterprizing people, who remarked the riches acquired by such of the
neighbouring 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 favourable 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
natural 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
labour, 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 labour, 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 labour, than
from constant labour 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.
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 chuse
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 expence; 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 encrease of the impost
is no encrease 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 substituting 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 expence, or he may encrease his labour.
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 labours more, or employs both these
expedients 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 publick, which gives him protection. By what contrivance
can he raise the price of his labour? 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 contest. And why the landed
gentleman should be the victim of the whole, and should not be able
to defend himself, as well as others are, I cannot readily imagine.
All tradesmen, indeed, would willingly prey upon him, and divide him
among them, if they could: But this inclination they always have,
though no taxes were levied; and the same methods, by which he
guards against the imposition of tradesmen before taxes, will serve
him afterwards, and make them share the burden with him. They must
be very heavy taxes, indeed, and very injudiciously levied, which
the artizan will not, of himself, be enabled to pay, by superior
industry and frugality, without raising the price of his labour.
I shall conclude this subject with observing, that we have, with
regard to taxes, an instance of what frequently happens in political
institutions, that the consequences of things are diametrically
opposite to what we should expect on the first appearance. It is
regarded as a fundamental maxim of the TURKISH government, that the
Grand Signior, though absolute master of the lives and fortunes of
each individual, has no authority to impose a new tax; and every
OTTOMAN prince, who has made such an attempt, either has been
obliged to retract, or has found the fatal effects of his
perseverance. One would imagine, that this prejudice or established
opinion were the firmest barrier in the world against oppression;
yet it is certain, that its effect is quite contrary. The emperor,
having no regular method of encreasing his revenue, must allow all
the bashaws and governors to oppress and abuse the subjects: And
these he squeezes after their return from their government. Whereas,
if he could impose a new tax, like our EUROPEAN princes, his
interest would so far be united with that of his people, that he
would immediately feel the bad effects of these disorderly levies of
money, and would find, that a pound, raised by a general imposition,
would have less pernicious effects, than a shilling taken in so
unequal and arbitrary a manner.