yards of cloth, and the superintendent contrives to reduce the cost of production one mill per yard, how much will the profits thereby be increased, supposing prices are unchanged? Well 10. The cost of production remaining the same, suppose the market-price to advance one cent a yard: how much will the profits be increased? 2««xu 11. What effect on the efficiency of labor, and economy in the use of materials, may be expected from allowing laborers a share in the profits? 12. State the main features of any co-operative associa tion you know of, and its results. CHAPTER IV. REVENUES OF THE GOVERNMENT. GOOD government, efficiently administered, is essential to prosperous industry and social enjoyment. Every citizen derives a benefit from such a government, and may fitly be called on to contribute a portion of his wealth for its maintenance. The government represents a common public interest superior to any private interest: its claims therefore justly take precedence of all others. Since the public revenues must be drawn from the proceeds of a people's industry, the consideration of this topic. comes properly under this division of our science which treats of distribution. Taxation is the means employed to gather from a people the revenues of its government. To devise and apply an equitable system of taxation, is one of the most difficult problems of legislation, a problem which should be studied in the light of political economy, with reference to its one object; viz., the raising of a revenue for the state. In despotic governments, the will of the ruler determines arbitrarily both the measure and the methods of taxation, and great inequality and oppression prevail. It is a fundamental principle of free and just government, that taxes shall be imposed by representatives of the people through reasonable and proportional assessments on all estates, and that they shall be collected by agents acting under defined powers and direct accountability. Adam Smith's Maxims. The father of modern political economy laid down four rules of equitable taxation as follows: 1. "The subjects of every state ought to contribute toward the support of the government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. 2. "The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. 3. "Every tax ought to be levied at the time and in the manner in which it is most likely to be convenient for the contributor to pay it. 4. "Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state." These maxims embody leading principles of equity, by which all schemes of taxation may be tested. Direct and Indirect Taxation. According to Mr. Mill's definitions, "A direct tax is one which is demanded from the very persons who it is in tended or desired should pay it. Indirect taxes are those which are demanded from one person, in the expectation and intention that he shall indemnify himself at the expense of another." A poll-tax, a tax on land, live-stock, tools, furniture, &c., and an income tax, are examples of direct taxes. Duties on imported goods, and excises on home manufactures, are examples of indirect taxation; the importer or manufacturer who pays the tax, adding the amount of the tax to the price of the goods, to be ultimately paid by the consumers. Direct taxation fairly applied conforms most fully to the principles embodied in the maxims just stated. But it involves labor and expense in collection, prompts concealment and evasion, especially with respect to personal property, and provokes dissatisfaction, because men, when they pay the tax, know and feel the full force of the burden. Indirect taxation violates nearly all of Mr. Smith's maxims, and imposes the burden unequally, each one paying not according to his ability, but according to his necessities, so that a poor man with a large family often contributes in this way for the support of the government much more than his neighbor with ten times his wealth. But indirect taxes, being laid in gross on goods at the port of entry or at the manufactory, are easily collected, and are cheerfully submitted to, because no one thinks of the tax he pays when it is hidden in the price of the goods he buys. Direct taxes are certainly most in harmony with the genius of a republican government whose strength lies in the intelligent support of a free people. Such a people ought to know what taxes they pay, and when and how they pay them, that they may watch with becoming jealousy over the public expenditure, and make their voice heard in all legislation on matters of finance. It must be confessed, however, that no nation has yet attained to such a standard of general intelligence, honesty, and patriotism, as warrants the dispensing with the convenient and easy method of raising revenues by indirect taxation. We have need, therefore, to give it some further consideration. Tariffs. This term signifies strictly the lists of imported articles subject to tax, with the duties laid on each class. Protective tariffs, designed to encourage certain home manufactures, will be considered in another place. The tariff is noticed here only as a revenue measure, one form of indirect taxation. -- Duties are imposed in two forms, specific and ad-valorem. Specific duties are taxes laid on articles by the piece, the pound, the yard, the gallon, &c., without reference to their value. Ad-valorem duties are indicated by a defined percentage of the value of each class of goods. Specific duties are simple and clear. The collector needs to know only the quantity of the goods, and easily reckons the duty to be paid. But in this case the tax is unequal. Suppose a duty of ten cents per pound laid on tea. The value of the tea consumed by the poor is thirty cents a pound, while that used by the rich is valued at a dollar or more: hence the poor man pays a tax |