The British income tax, correctly called "the property and income tax," mayserve as another illustration, but it differs very muchfrom the Prussian. Logically, this tax mighthave been treated in the previous chapter, but it is as well to discuss it here.

In the first place, as has already been stated, it is rather a system of taxes on revenue than a tax on the aggregate income of each person. It is a system of modified property taxes, with a wage and salary tax appended. In Prussia the intention is to make the total income the base irrespective of the source, and reference to the sources is called for in the declaration merely as a means of getting at the total with greater accuracy. In England the different sources are kept strictly apart, and there is a difference made in the treatment of each kind of income : the tax being in some cases " stopped at the source." The total income is only called into use in estimating the exemptions and abatements. The tax-payer has the right by summing up his whole income to show that he has been taxed too much, or is entitled to exemption. In that case he is reimbursed. In 1895 such abatements amounted under schedule A (see below) to 800,000 ; on small incomes the amount returned was 840,000. So separate are the different parts of this tax that Mr. Wilson says of it :1 " To the bulk of the people, it is known in its most obnoxious (?) form as a tax upon ordinary incomes, salaries, professional earnings, profits of trading, etc." Bastable (p. 449) says : " Inequalities are, however, removed by the comprehensiveness of the tax."

The various revenues are taxed in five "schedules," known as schedules A to E.

1 P. 115, National Budget.

Under schedule A, Great Britain taxes the revenues received from property by owners of rented lands or houses (tenements), proceeds from tithes (not commuted), royalties, etc. Mortgages are taxed in this schedule, owners being allowed to deduct what they advance in taxes from the interest they pay. By a change recently made in the income tax, in consideration of the burden of the inheritance tax, revenue assessed in schedule A may receive an abatement of one-eighth in the case of that from farms, and one-sixth in the case of that from buildings.

Under schedule B is taxed the income gained by occupiers of land (tenements and hereditaments) except where the land is used as the means of carrying on some trade ; as, for example, nursery gardens. Owners in occupation pay under this head.

Under Schedule C is taxed the income from annuities, dividends, etc., not paid from the public funds. The banks are required to deduct the amount of the tax from the interest paid.

Under schedule D are taxed salaries, professional earnings, profits of trading, etc. (railways, canals, mines, gas-works, water-works, etc.), and all gains not included in the other schedules. Most wage-earners evade the tax, or are exempt on account of the smallness of their incomes.

Schedule E includes public salaries and pensions of employees of the State, or of the corporate bodies. This tax is stopped at the source.

Incomes of less than 400 are assessed at 150 less than they really are. Between 400 and 500 at 100 less. These abatements exempt all persons with less than $750 annual income and lessen the burden for all up to $2500. It is, therefore, a tax on large incomes.

This tax is the variable element in the English system, the rate being changed from time to time according to the estimated requirements. The indirect taxes, the excise and the customs duties, being necessarily of fixed rate, yield a steady return, which grows slowly. And any variation in the probable expenditure can be met by changing the rate of the income tax. The annual yield is now about 15,000,000, or about one-sixth of the total revenue of the government. A rather large change in the rate of this tax, would, therefore, not result in a very great change in the total income.

The assessment of wages, business profits, and the like, is said to be very lax. But this is tolerable because the indirect taxes, which, together, are more than one-half the public income, may be said to fall on that. Life-insurance premiums may be deducted from the taxable income.