David Hume
Of Taxes
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 ...
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