Solutions: Tax Reform

⁶⁸ The revenue might be very much increased without increasing the burden on the people through:

• a more equal land-tax,
• a more equal tax on house rents, and
• changes in the current customs and excise system, as those mentioned in (Chapter 2n)

It would distribute the burden more equally on all. This increase would not totally liberate the public revenue.

Adam Smith’s World Government

⁶⁹ A much bigger revenue can be earmed by extending the British tax system to all the empire’s provinces inhabited by people of British or European descent.

This could only be done by admitting a fair and equal representation of all those different provinces into the British Parliament, consistent with the principles of the British constitution.

• The representation of each province would be proportional to the proceeds of its taxes in the same way as British representation is proportional to the proceeds of the taxes levied on Great Britain.

This change is presently opposed by:

• the private interest of many powerful individuals
• the prejudices of the people

These are obstacles which may be very difficult to surmount. We should consider:

• how far the British tax system can be applied to all the empire’s provinces,
• what revenue might be expected,
• how this kind of general union might affect the happiness and prosperity of those provinces.

At worst, such a speculation can be regarded as a new Utopia. It is less amusing but not more useless and chimerical than the old one.

British Taxes

⁷⁰ The 4 principal branches of the British taxes are:

1. Land-tax
2. Stamp-duties
3. Customs duties
4. Excise duties

Land-Tax on the Empire

⁷¹ Ireland is certainly as able to pay a land-tax as Great Britain.

Our American and West Indian plantations are more able to pay a land-tax than Great Britain.

Where the landlord is not subject to tithe nor poor-rate, he is more able to pay the land tax.

A tithe, that was paid in kind and had no modus, reduces the landlord’s rent more than a land-tax of 25% in money.

• In most cases, such a tithe is more than 1/4 of the real rent of the land.

If all moduses and all impropriations were removed, the complete church tithe of Great Britain and Ireland could not be less than £6-7 million.

• If there were no tithe in Great Britain or Ireland, the landlords could afford to pay £6-7 million additional land-tax without being more burdened than at present.

America pays no tithe and could therefore afford to pay a land-tax very well.

The lands in America and the West Indies are in general not tenanted nor leased out to farmers.

• They could not therefore be assessed according to any rent-roll.

The lands of Great Britain, in the 4th of William and Mary, also could not be assessed according to any rent-roll.

• They were assessed according to a very loose and inaccurate estimation.

The lands in America might be assessed according to:

• a very inaccurate estimations, and
• an equitable valuation from an accurate survey made in Milan, Austria, Prussia, and Sardinia.

Stamp and Customs Duties on the Empire

⁷² Stamp-duties might be levied without any variation in all countries where the following are nearly the same=

• the forms in the law process, and
• the deeds which transfer real and personal property.

⁷³ The extension of the custom-house laws of Great Britain to Ireland and the plantations would be the most advantageous to both provided it was accompanied with an extension of the freedom of trade, as in justice it should be.

All the invidious restraints which presently oppress the trade of Ireland and distinguish American enumerated and non-enumerated commodities would entirely end.

The countries north of Cape Finisterre would be as open to American produce as countries south of that Cape are to some American produce at present.

Because of this uniformity in the custom-house laws, the trade between all the parts of the British empire would be as free as its present coasting trade.

The British empire would thus afford within itself an immense internal market for the produce of all its provinces.

This great extension of market would soon compensate Ireland and the plantations all that they could suffer from the increase of the customs duties.

Excise Taxes on the Empire

⁷⁴ Only the excise would vary in its application in the empire’s different provinces.

It might be applied to Ireland without any variation because the produce and consumption of Ireland is exactly of the same nature with Great Britain’s.

The produce and consumption of America and the West Indies is so very different from those of Great Britain.

• The application of excise in those countries would require some modification in the same way as in its application to England’s cyder and beer counties.

⁷⁵ American beer is made from molasses and is different from British beer.

It makes a big part of the common drink of the Americans. Unlike British beer=

• it can be kept only for a few days,
• it cannot be prepared and stored up for sale in big breweries.

Every private family must brew it for their own use in the same way they cook their own food. Subjecting every private family to the odious visits and examination of tax-gatherers, in the same way we subject alehouses and public breweries, would be inconsistent with liberty.

If it were necessary to tax American beer for the sake of equality, it might be taxed by=

• taxing its raw materials at the place of manufacture, or
• laying a duty on the importation of its raw materials into the colony where it would be consumed

If neither of these methods was found convenient, the following could be adopted=

Each family might compound for its consumption of this liquor according to=

• the number of persons in the family, or
  • This is the same way as private families compounding for the malt-tax in England.
• the different ages and sexes of those persons,
  • This is the same way as how taxes are levied in Holland and How Sir Matthew Decker proposes that all taxes on consumable commodities should be levied in England.

I have shown that this mode of taxation not very convenient when applied to goods of speedy consumption, but it is still better than nothing.

Besides the duty of 1 penny a gallon imposed by the British Parliament on molasses importation of into America, there is=

• a provincial tax of 8-pence the hogshead on their importation into Massachusetts Bay in ships from any other colony,
• another tax of 5-pence the gallon on their importation from the northern colonies into South Carolina.

⁷⁶ Sugar, rum, and tobacco are not necessities. They are therefore extremely proper subjects of taxation.

If a union with the colonies were to take place, those commodities might be taxed=

• before they leave the manufacturer or grower, or
• before they are delivered to the consumer, merchant retailer, or merchant exporter

Those commodities would be deposited in public warehouses at the place of manufacture and at all their ports of destination.

• They will remain there under the joint custody of the owner and the revenue officer until they were to be sent out to the consumer, retailer, or exporter.
• Those commodities would go duty free when sent out for exportation after proper security is given that they will really be exported.

These are perhaps the main commodities to require a big change in the present British tax system after a union with the colonies.