comes" found in Pitt's scheme, and compared it to Paine's plan of graduated taxation.1

Pitt's project, however, was ably supported in a notable address by Lord Auckland, who considered that the bill had been, "anxiously calculated and ably and accurately framed to prevent inequality, fraud, embarrassment, and injury.”2 Auckland addressed himself particularly to two objections. It was claimed in the first place that the system of abatements on the lower incomes, which Auckland accepted, ought logically to lead to what he called the "principle of gradual rise" on the higher incomes. This Auckland denied, maintaining that progression was out of the question on account of its "levelling tendencies." The other objection was that incomes like those derived from life annuities, which were supposed to be worth only ten years' purchase, ought not to be taxed at the same rate as incomes from estates in fee which were deemed to be worth thirty years' purchase. According to Auckland, however, this objection, although plausible, was equally unsound, the difficulty arising, in his opinion, entirely "from a confusion in terms, and from blending together the ideas of income and of capital." 4

8

1 "Tom Paine and Mr. Pitt are more nearly united to each other in their financial schemes, than either would be willing to acknowledge. The one is unjust to the higher, the other to the middle classes, and both affect an equal regard to the poor. The one would bring the poor and the rich together by levelling the rich; the other would increase the distance between the poor and the rich by demolishing the middle class. The one injures the mill by impairing the head of water, the other by demolishing the cogs in the smaller wheels; neither the one nor the other seems to have taken a comprehensive view of the whole machine."-Op. cit., pp. iv, v.

2 The Substance of a Speech made by Lord Auckland in the House of Peers, on Tuesday, the 8th day of January, 1799, on the third Reading of the "Bill for Granting Certain Duties upon Income.” — London, 1799, p. 19.

3 Graduation "would be contrary to all the safety and rights of property"; it would "be worthy only of the French Council of Five Hundred "; and it "would amount to neither more nor less than the introduction of a plan for equallizing fortunes; and to the implied inference, that because a man possesses much, therefore more shall be taken from him than is proportionably taken from others."

5.1

§ 4. The Act of 1799

The supporters of the bill finally triumphed, and it was enacted into law on January 9, 1799, to come into operation on April 5. It was a comprehensive enactment of 124 sections, covering 152 pages. So formidable did it seem that the government thought it wise to prepare a compendium in order to make it intelligible to the general public.2 It was this compendium which formed the subject of one of Gillray's caricatures,3 where John Bull is represented at his studies, attended by his guardian angel with a harp in hand, who sings,

"Cease, rude Boreas, blustering railer;

Trust thy fortune's care to me."

The tax was imposed upon all residents of Great Britain in respect of their entire income, irrespective of whether this originated in Great Britain or elsewhere, and also on all absentees,i.e., British subjects not resident in Great Britain, -in respect of income from property in Great Britain. The rates, exemptions, and general abatements remained virtually the same as in the triple assessment. The abatements for children, however, were altered as follows:

On incomes of £ 60-400 the abatement for each child was 5%

On incomes of 400-1000 the abatement for each child was 4% when over 6,3% when under 6.

1 39 George III, c. 13. "An Act to Repeal the Duties imposed by an Act made in the last Session of Parliament for granting an Aid and Contribution for the prosecution of the War; and to make more effectual Provision for the like Purpose, by granting certain duties upon Income, in lieu of the said Duties."

2 A plain, short, and easy Description of the different Clauses of the Income Tax so as to render it familiar to the meanest Capacity. London, 1799. Various other compendiums were issued, under private auspices. One which ran through many editions was entitled: Taxes on Income. A Correct Abridgement of the Act imposing a Tax on all Income, containing those Clauses which principally affect Landlords, Tenants, etc., exhibited in a clear and methodical Manner, etc., with a Schedule for estimating the Income of Persons liable to be Assessed. London, n. d. [1799]. The most elaborate publication was the one mentioned in note 3 on the next page.

3 Dowell The History of Taxation and Taxes in England, 2d ed., 1888, ii,

On incomes of £1000-5000 the abatement for each child was 3% when over 6, 2% when under 6.

On incomes over £5000 the abatement for each child was 2% when over 6, 1% when under 6.

Provision was also made for the deduction of premiums paid for life insurance, while in the case of incomes from buildings an allowance for repairs was granted, varying from three to ten per cent, according to their nature.1

The great change, however, consisted in the fact that the tax, instead of being calculated according to expenditure, was now imposed directly upon the entire income of the individual. The returns were required to be made under four heads,2 comprising nineteen so-called cases, of which the first fourteen were included under head I, the next two under head II, the two following under head III, and the last under head IV.3

The reasons for the important change from expenditure to income as the test of taxable ability are well set forth in the semi-official publication referred to above, which explains the shortcomings of the triple assessment. "The criterion taken last year, as the means of ascertaining income, was expenditure, as evidenced by certain articles of general establishment only, and was even then admitted to be in many respects imperfect. It was fallacious, inasmuch as it included

1 Three per cent in the case of farm buildings; eight per cent in the case of a farm with a principal messuage; ten per cent in the case of houses and buildings not occupied with a farm.

2 The four heads were:

I. Income from real estate.

II. Income from personal property and from trades, professions, offices, pensions, stipends, employments, and vocations.

III. Income arising out of Great Britain.

IV. Income not falling under any of the foregoing rules.

3 The cases are printed in full in Observations etc. upon the Act for Taxing Income; in which the Principle and Provisions of the Act are fully considered, with a View to facilitate the Execution, both with respect to Persons chargeable, and the Officers chosen to carry it into Effect. With the Act at large. Together with the Substance of the Clauses of the Assessed Tax Act that have a Reference to this, and a copious Index, referring both to the Act and Observations. London, 1799, 220 pp. A reprint of the cases may also be found in Dowell, op. cit., iii, p. 96.

some, and wholly excluded others; as it included some in different proportions to their respective means; and as from the nature of the criterion it did not embrace a large portion of the property of the community enjoyed by political bodies or persons not objects of those assessments which constituted the basis of that contribution. It was also fallacious, inasmuch as, from a regard to antecedent prejudices, it failed to enforce its principle, by compelling a disclosure of income: it left each individual to interpret the rules, and to estimate his income, without controul, according to his private bias; it involved the honest and loyal, whilst the dishonest or disaffected escaped under their own interpretation." The legislature, we are told, was aided in its new task "by an almost universal conviction having pervaded the public mind of the necessity of meeting the exigencies of the times by personal taxation, in proportion to the means of the individual; and by a similar determination to suffer the prejudice, arising from the apprehension of a disclosure of circumstances to subside in favor of an effective and certain mode of enforcing the just principle of equal taxation." 2

The administrative machinery of the act is worthy of particular mention, as much of it is still in force to-day. The revenue authorities who had been in charge of the assessed taxes, and who were then known as the Assessors for the Affairs of Taxes, were required to make lists of the Land Tax Commissioners of each locality, and to appoint a day of meeting, The Land Tax Commissioners were to appoint commissioners for the general purposes of executing the income tax act, who came to be known as the General Commissioners. In the City of London the Mayor, Aldermen, and Common Council were empowered to name six persons from whom the Mayor and Aldermen were to select three to serve as Commissioners, while others were to be chosen by the Bank of England, the East India Company, the Royal Exchange Insurance Company, and the London Insurance Company. Commissioners

1 Observations upon the Act for Taxing Income. London, 1799, pp. 2, 3. 2 Ibid., p. 3.

of Appeal were to be appointed by the Grand Jurors in each locality, with similar exceptions for the City of London.

The General Commissioners were to appoint and summon the assessors or, in their default, the justices of the peace were to do so, and these assessors were to serve notice on every householder to send in lists of the people living with him. The assessors were also instructed to post notices of assessment on the church doors. Every person chargeable with the tax was to state the assessment which he “means to pay as being not less than the just rate or proportion of his income." The assessors were to make up the lists and statements, together with their own comments, and then return them to the clerks of the General Commissioners, who were to hold their meetings within a period of from fourteen to twenty-one days.

Thus far it will be seen that the entire machinery was virtually in the hands of the gentry known as the Land Tax Commissioners and their appointees. Now, however, the central government interposed with its officials known as surveyors or inspectors, appointed by the Crown. These had the right of looking at the assessment lists, of suggesting revision, and of making preliminary changes, called surcharges. The taxpayers, also, were given the right to correct any errors in their statements. If the General Commissioners found any reason to question the returns or the changes made by the surveyors or inspectors, they were empowered to examine the taxpayer or anybody else who had knowledge of the facts. The questions, however, had to be put in writing, and no taxpayer was compelled to answer any question, Moreover, the provision about calling in outsiders remained, and has remained up to the present time, a dead letter.

The General Commissioners then fixed the assessment, which might, however, still be amended by the surveyor, and in that case it went to the Commissioners of Appeal. Any taxpayer, moreover, might appeal, but he could secure no relief on appeal unless he answered the questions and volunteered to show his books. A refusal to make any lists at all was visited with a penalty of £20. The tax was pay.

G