THE POSSIBILITIES OF TAXATION IN THE UNITED STATES.

Southland Times, Volume I, Issue 59, 15 October 1864, Page 5

THE POSSIBILITIES OF TAXATION IN THE UNITED STATES.

(From The Economist.) English politicians are beginning to understand Mr. Chase's ideas on finance, and to -view them consequently with less of the contemptuous surprise which they at first excited. Consciously or ignofantly, from a deep-laid plan or mere good luck, he is drilling an untaxed people to bear a searching taxation, drilling in a cruel but probably a very efficient way. Unable or unwilling to impose the necessary burdens at once, he has gradually raised the internal revenue until it. already exceeds [ the receipt from . Customs, and for the rest has taxed the people through the hard, wasteful, and demoralising but effective machinery of an inconvertible paper currency, If that currency is ever redeemed, he will still have spent twice as much as he need, but then he will have raised the money, the nation required, arid it is by no means proved that he could have raised it iri any other way, and he will have raised ifc without destroying the natibnal credit. -Supposing the Government honest; and the war to cease next year, the* result of his operations on the return of peace will be simply a needlessly heavy debt, not, unless that debt is swollen to improbable figures/national ruin and disaster. It ia assumed in England very widely that the postulate is not true, that the currency will not be redeemed, American politicians being neither holiest enough to impose crushing burdens ori themselves, nor rich enough to pay the needful sums without severe suffering. The first of these doubts we are not about/ tb "discuss just, now, merely, remarking . -, that Mr. Chase's course in exchanging currency for State debt, and selhn^ /that debt; in minute, morsels, seems to iridiciit* horiesfc purpose,; but on the second we have a word to say. / We Very much doubt whether Englsh financiers, even those who have shghtly studied the subject, have formed a sufficiently * favorable opinion of the tax-jpaying powers of the American people. We are so accustomed in Europe, and imore especially in England, to a prosperous middle class, and a comparatively poor population, that we hardly realise to ourselves' the financial position, of a- country in which the whole population is well to do. We raise large sums from the masses, it is true/ by indirect taxation • but "when pushed beyond that resource, we habitually think of our imposts as falling on a very few thousands of people. We do .not perceive, certainly do nofc appreciate, the possibilities of revenue contained in ' a four-fifths of which would in England bo within tho income tax limit;. Suppose, for example, that in this country -the income tax fell upon everybody, amd everybody had a huidred year. Such » elmng* would Wa &um Y#wßsm ti tedSw -wST im ,? fin

to the paying list. The tax then would fall, speaking roughly,' on 750,000,000/. a year instead of 280,000,000/. thafc is, instead of producing a million and a quarter for every penny, it would produce some three times that sum. and a shilling tax would yield us more than forty millions a year. Something very liko that is tho permanent condition of the United States, and, if 'the people are .fiuti mllwg, it" is difficult to fix any pvobable ; limit to their tax-paying power. The history of the wai* seems to' show that the' American middle class, though much poorer than bur own in .property— having enjoyed less than a century of accumulation— is much nearer Our own position in respect to aggregate income than any one previously expected. It includes no body of men so rich as, for example, the members of the two Houses of Parliament, but it includes Tery considerable numbers who are extremely well -off, much better off, for instance, than any similar class in any Continental State. In addition to these, the Union possesses millions of families who, though not- rich, are rich enough to make taxation worth while, a state of affairs quite without precedent in political finance. Suppose, for the sake . of illustration, that Americans are willing to pay fdr their nationality, or their grandeur, or their imperial dominion, or their safety, as much as an English banker's' clerk pays for nearly similar objects, and let -us see what they would raise. The clerk being in point of means just above the artisan, pays all the indirect taxes as he does, and all the direct taxes levied on, men of income, or, on a rough calculation, about three shillings in the pound, Taking the tax-paying income of the country roughly at 280,000,000/, a year, less than the truth, and the non-paying income as about thej same, we pay 80,000,000/. in taxes, imperial and local, out of 560,000,000/. giving about that average. Now without entering into confused local details, it is pretty certain thafc an unskilled laboring man in the States who will work hard can earn as a minimum average a dollar a day, and considering the high proportion of skilled laborers, and the quantity of land which belongs to the laboring class, and the great temptation to industry at such wages, we must be beneath the truth when we take an average of a dollar and a half, or 97/. a year.. In other words the wages income of the Union, taking its population afc five and a half millions of famiilies, is not less than twice our property income, and tliere remains the middle class income equal in all probability to our own. Three shillings in the pound, our own average on the whole, gives a revenue of 120,000,000/. or a sum entirely. beyond the probable wants of the, country, both for Federal and State taxation. This estimate is of course conjectural, bufc we really believe ifc to be as regards the wage income quite witliin the truth, and it will, as emigration increases and property accu*mulates from industry, be greatly below the reality. There is, therefore, some justification for those boasts of American capacity to bear taxation which seem to us so wild. It may be argued that it will be impossible to get at the income, but willingness to pay being conceded, the difficulty of collection is nofc quite so certain. If the peoplo once choose to pay, a house tax can with the masses be made a very effctive substitute for an income tax, for the real obstacle — the small value of each payment as compared with the cost of collection, does nofc exist. Our ratepaying machinery in towns goes down very low, and in America no man need be below our ratepaying class. Even an income tax itself, if there is no resistance, is nofc beyond collection where you can divide the masses into classes of payers, and ask, therefore, no process of self-assessment. Of course, willingness to pay is a very large postulate indeed ; but the French and Belgian peasant proprietors do pay direct taxes — one of them an exceedingly severe one — and in our own towns ifc ifc astonishing how lifcte resistance is ever made to the rates which fall on very poor people indeed. We have no means of ascertaining the degree of American willingness, but the people hold the debt, and we strongly suspect will feel about the taxes much as our poorer ranepayers do, that they are a great burden, and a great annoyance, and a " great shame," but as inevitable as destiny. Moreover, we have confined om* remarks purposely- to the aggregated taxation, leaving out of view altogether the proportion which may bo extracted from a race so rich by indirect and unresisted taxes. Nobody knows what a people whose average wages are 30s a week could or would pay, without fighting, for liquour, or sugar, or tobacco, or tea, or lucifer matches, or what they would endure without wrath in the way of stamps — a resourse we ourselves are only begining to comprehend. Tiie probability is, that being raised to the point at which men begin to be interested in politics, they would bear very high charges iudeed, and expend their irritation in protests against the way in which the revenue was employed. At all events, it seems to us clear that in calculating the probabilities, we all underrate the American tax- paying power.