The Land Tax

As the land of every civilized and populous community constitutes the largest item of its property - is the main source of its annual income, and cannot be withdrawn from the reach of the tax-gatherers - it is a general object of taxation, and source of public revenue.

This tax should vary in its rate, according to the value of the land. This rule is, in some measure, necessary as well as just. An uniform tax, if not very low, would be more than poor lands could pay; and, if it were low, it could not yield much.

Nor would it be right to apportion this tax according to the income yielded by the land; since city lots and unimproved lands, though they might yield no direct income, might compensate their proprietors by the steady increase of their value, and property, although thus productive, would escape taxation. The fairest rule, then, would be to tax land according to its market value, which would comprehend its obvious future as well as its present capabilities. But here again injustice may be done. It is not unusual for one person to have a life estate in landed property, and another the reversion; and although the former, who receives the present profit, ought to pay the largest share, the other ought not to be wholly exempt. To adjust the tax equitably between them would be a matter of some difficulty, and would probably admit of no rule that would not be sometimes unjust to one of the parties. The foregoing considerations seem to make a land tax ineligible, unless it is a very light one.

But another objection to this tax in the United States is that, as the value of land is greatly increased by the increased density of population, it is liable to very great and rapid changes here; so as for it to have any foundation in justice, there must be frequent valuations, which occasion a heavy expense, and one of frequent occurrence. The land tax, however the landed proprietor may appear to succeed in throwing it on his tenant, must always fall upon himself, and must be deducted from the annual profits of the land.

Tax On Houses

This tax falls wholly or principally on their tenants. Houses must yield the ordinary profits of capital, or they will not be supplied - and if their annual charge is raised, whether by a tax or in any other way, the rent must rise in proportion, except in those cities and towns that are going to decay, when the supply of houses may exceed the demand - in which case the tax must fall upon the proprietor, and be taken from the rent.

Tax On Imports

This tax is recommended by so many considerations, that by far the greater part of the revenue of the General Government is raised in this way. As it is laid on articles of general con-sumption, such as sugar, coffee, tea, wine, and every species of woven goods, it is in general paid by the citizens according to their ability, because according to their ordinary expenses. It is more productive than any other tax could be, since by reason of the large amount of our imports, a moderate impost will yield a large revenue. It being collected by the respective custom-houses at the places of import, and paid in large sums by the importing merchant, it costs less to collect it than any other tax; and lastly, it encourages the domestic production of many commodities, by subjecting the fabrics of their foreign rivals to an additional cost. Without this tax, many branches of domestic manufacture, and some few of raw produce, which are now thriving and profitable, would be greatly diminished, and some would be abandoned altogether. Whether this is a national advantage or not, is another question, which has been discussed in another place.*

Its disadvantages, though small, compared with its benefits, must also be noticed. First, the tax invites to smuggling, which, as it can be carried on in retired creeks and inlets, can be prevented, or rather checked, only by revenue cutters, maintained at a great expense - or by officers placed along the line which separates the United States from the British colonies on this continent. Secondly, by unduly encouraging particular branches of industry, it causes capital and labor to be diverted from a more profitable employment, and thus causes a loss of the national capital;

* See page 116.

and lastly, because all those who abstain from the use of imported merchandise may exempt themselves from the payment of any portion of the tax.