after the tax than before it, so, for the same
reason, a tax upon the interest of money could
not raise the rate of interest; the quantity of
stock or money in the country, like the quantity
of land, being supposed to remain the
same after the tax as before it. The ordinary
rate of profit, it has been shewn, in the
first book, is everywhere regulated by the
quantity of stock to be employed, in proportion
to the quantity of the employment, or of
the business which must be done by it. But
the quantity of the employment, or of the business
to be done by stock, could neither be
increased nor diminished by any tax upon the
interest of money. If the quantity of the
stock to be employed, therefore, was neither
increased nor diminished by it, the ordinary
rate of profit would necessarily remain the
same. But the portion of this profit, necessary
for compensating the risk and trouble of
the employer, would likewise remain the same;
that risk and trouble being in no respect altered.
The residue, therefore, that portion
which belongs to the owner of the stock, and
which pays the interest of money, would necessarily
remain the same too. At first sight,
therefore, the interest of money seems to be a
subject as fit to be taxed directly as the rent
of land.
There are, however, two different circumstances,
which render the interest of money a
much less proper subject of direct taxation
than the rent of land.
First, the quantity and value of the land
which any man possesses, can never be a secret,
and can always be ascertained with great
exactness. But the whole amount of the capital
stock which he possesses is almost always
a secret, and can scarce ever be ascertained
with tolerable exactness. It is liable, besides,
to almost continual variations. A year seldom
passes away, frequently not a month,
sometimes scarce a single day, in which it does
not rise or fall more or less. An inquisition
into every man's private circumstances, and
an inquisition which, in order to accommodate
the tax to them, watched over all the
fluctuations of his fortune, would be a source
of such continual and endless vexation as no
person could support.
Secondly, land is a subject which cannot be
removed; whereas stock easily may. The
proprietor of land is necessarily a citizen of
the particular country in which his estate lies.
The proprietor of stock is properly a citizen
of the world, and is not necessarily attached
to any particular country. He would be apt
to abandon the country in which he was exposed
to a vexatious inquisition, in order to
be assessed to a burdensome tax; and would
remove his stock to some other country, where
he could either carry on his business, or enjoy
his fortune more at his ease. By removing
his stock, he would put an end to all the
industry which it had maintained in the country
which he left. Stock cultivates land; stock
employs labour. A tax which tended to drive
away stock from any particular country, would
so far tend to dry up every source of revenue,
both to the sovereign and to the society.
Not only the profits of stock, but the rent
of land, and the wages of labour, would necessarily
be more or less diminished by its removal.
The nations, accordingly, who have attempted
to tax the revenue arising from
stock, instead of any severe inquisition of this
kind, have been obliged to content themselves
with some very loose, and, therefore, more or
less arbitrary estimation. The extreme inequality
and uncertainty of a tax assessed in
this manner, can be compensated only by its
extreme moderation; in consequence of
which, every man finds himself rated so very
much below his real revenue, that he gives
himself little disturbance though his neighbour
should be rated somewhat lower.
By what is called the land tax in England,
it was intended that the stock should be taxed
in the same proportion as land. When the
tax upon land was at four shillings in the
pound, or at one-fifth of the supposed rent,
it was intended that stock should be taxed at
one-fifth of the supposed interest. When the
present annual land tax was first imposed, the
legal rate of interest was six per cent. Every
hundred pounds stock, accordingly, was supposed
to be taxed at twenty-four shillings,
the fifth part of six pounds. Since the legal
rate of interest has been reduced to five per
cent. every hundred pounds stock is supposed
to be taxed at twenty shillings only. The
sum to be raised, by what is called the land
tax, was divided between the country and the
principal towns. The greater part of it was
laid upon the country; and of what was laid
upon the towns, the greater part was assessed
upon the houses. What remained to be
assessed upon the stock or trade of the towns
(for the stock upon the land was not meant
to be taxed) was very much below the real
value of that stock or trade. Whatever inequalities,
therefore, there might be in the original
assessment, gave little disturbance.
Every parish and district still continues to be
rated for its land, its houses, and its stock,
according to the original assessment; and
the almost universal prosperity of the country,
which, in most places, has raised very much
the value of all these, has rendered those
inequalities of still less importance now. The
rate, too, upon each district, continuing always
the same, the uncertainty of this tax,
so far as it might be assessed upon the stock
of any individual, has been very much diminished,
as well as rendered of much less
consequence. If the greater part of the lands
of England are not rated to the land tax at
half their actual value, the greater part of the
stock of England is, perhaps, scarce rated at