demand, voiced especially by Attwood,' that holders of terminable annuities be taxed at a lower rate, Peel asserted that "if he once began to make distinctions of this kind there would be no end to applications from particular interests to be exempted from the operation of the measure, and he would be obliged to abandon the original ground of the project altogether. If a distinction of this kind was to be made in behalf of a class who were notoriously powerful, wealthy, and affluent, it would be very easy to show that there were many other classes who were much more justly entitled to the exemptions which they claim." He made a fervid appeal to the property owners, expressing a hope "that the high and low were prepared, in a crisis of commercial difficulty, to pay a fair portion of the expense rendered necessary by the circumstances of the country."

The long debate was so heated that it involved not less than sixteen divisions, but the bill was finally passed by the House on May 31, by a majority of 106. The Act of 18423 which was popularly called the Property and Income Tax Act, was a reprint of the law of 1806, with a few notable alterations. In the first place, the deduction of £150, which in 1806 was restricted to incomes from trade, professions, and personal exertions, was again made applicable to all incomes. Secondly, the conditions of agriculture had so changed that the net profits of the tenant were now computed as amounting in England to only one-half the annual value and in Scotland to about one-third, instead of the old figures of two-thirds.

1 Attwood's speech was reprinted and widely circulated under the title of The Speech of M. Attwood, Esq., M.P., on the Income Tax, Committee of Ways and Means in the House of Commons, on Wednesday, March 23rd, 1842. Lon. don, 1842. See esp. pp. 3, 4.

2 Ibid., p. 10.

8

5

and 6 Vict., c. 35. "An Act for Granting to her Majesty Duties on Profits arising from Property, Professions, Trades and Offices." June 22, 1842. A summary of the act was issued by one of the officials and distributed by thousands under the title of The Income Tax Act, Epitomized and Simplified. By William Nicholson. London, 1842. A more comprehensive account was published in 178 pp. as The Income Tax Act, 5 and 6 Victoria, c. 35, with an Explanatory Introduction and Index. By John Paget. London, 1842.

and one-half respectively. In other words, in Schedule B the rate of the tax, in lieu of being 7d. in the pound, or about three per cent, was fixed at 31d. for England and 24d. for Scotland. The other alterations were of somewhat minor importance. In Schedule A, in the case of the so-called "concerns about lands," gas-works and railroads, which were of course unknown at the period of the previous income tax, were now included. In Schedule C, savings banks were now exempted, while, on the other hand, the exemption to foreign holders of the public debt, which, as we remember, had been introduced at the solicitation of Pitt, and which had remained throughout the entire period of the old war income tax, was now withdrawn. In Schedule D, the income of charitable institutions was exempted, while, on the contrary, the privilege of deduction for life insurance premiums was abolished. Finally, the old section permitting the acceptance of voluntary contributions was dropped.

In the administrative provisions only slight changes were made from the law of 1806. The most important, perhaps, was the provision affecting the Special Commissioners. The Special Commissioners appointed by the central authority (now known as the Commissioners of Stamps and Taxes) had their functions notably extended in the case of Schedule D. All persons liable under that schedule might, if they preferred, ask to be assessed by the Special Commissioners in lieu of making their returns to, or being assessed by, either the General or the Additional Commissioners. Both the General and the Additional Commissioners, it will be remembered, were supposed to live in the locality. If the taxpayer was averse to having his business affairs in any way known to neighborhood officials, he would naturally select the Special Commissioners appointed by the central government, and not coming from the neighborhood. These Special Commissioners were to have the ordinary powers of the General or Additional Commissioners. Furthermore, in case of an assessment by the Additional Commissioners, where the inspector or surveyor objected, appeals might also be

taken to the Special Commissioners. The final appeal in all such cases was to be to the Commissioners of Stamps and Taxes.

The other administrative changes were as follows: In Schedule A, the first assessment was to stand for three years, and not for two years, as in the old law. The penalties for erroneous returns, as well as the surcharges, were henceforth to be three times the amount of tax, and not, as before, twice the amount. Finally, the taxpayer was permitted in the case of assessment by the Special Commissioners in Schedule D to compound at once for a period of three years, the composition rendering any subsequent statements on his part unnecessary during that term. In all other respects, the provisions of the old income tax law were continued, with the ingenious combination of local self-government through the Commissioners of the Land Tax, and of control by the central government through the inspectors and surveyors. All these provisions, with a few changes that will be subsequently noted, are still in force to-day.

The reimposition of the income tax naturally gave rise to a discussion which swept over the country, and which lasted for a considerable period. Some writers were bitterly opposed. Whitock, for instance, declared that "the only thing original in the scheme is its introduction during a time of peace. It is most inquisitorial in its nature, and unequal in its application."1 Hilditch poured out a volume of protests in no less than three separate productions.2 He tells us

1 An Inquiry into the Cause of the present Depression of Trade, and a Remedy proposed, in a Measure calculated at the same time to obviate the Necessity of an Income Tax. By Richard Whitock. Edinburgh, 1842, p. 62. Whitock suggested as an alternative the enactment of a new usury law.

2 These were: (a) Aristocratic Taxation: Its present State, Origin, and Progress, with Froposals for Reform. [By R. Hilditch.] London, 1842, 52 pp. This was written while the discussion was still on. (b) Aristocratic Taxation, its present State, Origin and Progress, with Proposals for Reform: comprising Proofs of the Justice and Expediency of a Land Tax for Redemption of National Debt: Strictures on the Income Tax and the Idea of a System of Taxation not only without Burthen, but absolutely in itself Beneficial, By Richard Hilditch. London,

that "nothing enlarged or great-minded—nothing in fact beyond the most rickety accommodation and joinery of discrepant interests and parties was to be expected from Sir Robert Peel"; and he concludes that "no other tax is so objectionable as the income tax. No other is at the same nominal rate so really unequal; no other so imperiously felt; no other involves such odious, though ineffectual inquisition into private affairs; no other puts upright men of the productive classes to so much expense and inconvenience, or offers to the fraudulent such easy and successful evasion; finally, no other is collected by such bungling and dangerous arrangements, establishing secret and irresponsible tribunals, fomenting private cabals, using most harshly the best subjects, and unnecessarily inconveniencing all."2 Buchanan, the author of a large work on taxation, bitterly complained of "these inquisitorial proceedings, arbitrary as they are, — a practical inroad on the rights of freemen, to which there is no parallel, even under the most absolute governments in Europe, and truly an anomaly in a country long famous for its love of liberty." Others maintained that a property tax was preferable to an income tax, and that if an income tax was unavoidable, it should be levied only on the income from permanent property. Russell, for instance, declared an income tax to be "an awkward and cumbrous, unequal, inquisitorial way of raising the revenue." Defining permanent property as consisting only of land, he demanded that no tax be imposed on "fluctuating property, such as stock in trade." 4

1842, 70 pp. This appeared originally in the North of England Magazine. (c) The Income Tax criticised and epitomized, containing some Plain Statements on the Income and Property Tax, showing that it falls most heavily on the industrious Classes; with full Instructions for filling up the Tax Papers. By R. Hilditch. London, 1843.

1 The Income Tax criticised, p. 15; and Aristocratic Taxation, p. 60.

2 The Income Tax criticised, p. 7; Aristocratic Taxation, p. 54.

3 Inquiry into the Taxation and Commercial Policy of Great Britain; with Observations on the Principles of Currency and of Exchangeable Value. By David Buchanan. Edinburgh, 1844, p. 102.

4 Financial Reform. A Digest of the Reasons for and against a Tax upon

The tax, however, did not lack ardent defenders.1 The author of a Chartist work thought that "property has been in masquerade long enough, and the sooner the mask is removed from false pretences the better.” 2 "Whateverobloquy," he adds, "may belong to the income tax, the solvent and the honest will thank the Minister, who repudiates the odium unfairly cast on what is termed the inquisitorial, but really efficient, machinery, which can alone ensure its working."3 Another radical who declared that the income tax "is a tax upon the rich and upon those persons who being idle and comparatively useless members of the commonwealth, live upon small incomes" referred to "the talk of those radicals who oppose the income tax, about their 'love for the people, the masses,' etc., as just so much insincere blarney and balderdash."4 Makepeace, finally, defended the law, although he desired several amendments, stating "that parts thereof are good, and parts thereof are new; but those parts which are good are not new, and those which are new are not good."5 After refuting the ordinary current objections, he stated that he desired graduation, higher taxation for absentees, and exemption for children."

§ 4. The Development to 1851

The income tax turned out to be more productive than had been anticipated. Instead of yielding three and

Permanent Property, in lieu of some of the Present Taxes, especially those on Commodities. By R. W. Russell. London, 1842, pp. 20–21.

1 Cf. Three Letters to the Rt. Hon. Sir Robert Peel on the Repeal of the present System of Revenue and Protection Imports, Excise, Stamps, and the Adoption of a great System of Income Taxation. By W. Morris. Exeter, 1843.

2 Tory Taxes. London, 1842, p. 9.

8 Op. cit., p. 10.

Income Tax. A few Words to the Operative and Lower Classes of the People of England, upon Sir R. Peel's proposed Income Tax. By One of Themselves. London, 1842, pp. 6, 8.

5 Taxation, in its Operation by means of the Income and Assessed Taxes considered; together with Suggestions for its Alteration and Amendment. By William Makepeace. London, n. d. [1843], p. 5.

6 Op. cit., pp. 11-14.