MR. HUBBARD ON THE INCOME-TAX.
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R. HUBBARD might be a Cabinet Minister in the pre- sent Government, his propositions are so pulpy. He intends to re-open in Parliament the old discussion as to the fairness of taxing temporary income like permanant income, and in letters to the Times and the Pall Mall Gazette hints that he has solved the problem which has puzzled so many Chancellors of the Exchequer. Houses are assessed to the rates after deductions for repairs, tenure, and so on, and if in- come is calculated like the rental of houses, the existing in- justice may in the rough be remedied. He might just as well say that if the value of a piece of old china were calculated like the value of an ingot of gold, it would be easy to put a tax on the value of old china. Who is to do it, and how, and when is it to be done, and is popular favour to be taken into consideration, and how much is to be added when Lord Dudley is in the auction-room ? We have not the least fault to find with Mr. Hubbard's principles, and we do not suppose Sir Stafford Northcote will reject them ; but if they are accepted by the whole world, what is the practical use of the acceptance ? No theory, however popular, will work a sum in unknown factors. It is quite true that in rating houses a deduction is made for repairs sufficient to make it just to treat houses as permanent property, and quite true also that many incomes ought to have an allowance for repairs before it is fair to treat them like incomes from realised property, land, Consols, and so forth, but how is the allowance to be calculated so as to preserve any fairness among taxpayers ? Mr. Hubbard says a man with a life income must either save or insure his life, and that a fair amount to be so saved or insured ought to be deducted for repairs,—that is, to make it just to treat the income as if it were a rental. That is true, but so true that nobody seriously denies it ; and it is of no use to make the House of Commons affirm a truism. Having affirmed it, what does Mr. Hubbard propose to do with it ? Nothing that we can see, except to allow the Commissioners of Inland Revenue to think out his resolution, as they have done a hundred times, and see if they can find a working rule which will content the country, which they certainly will fail to discover. Mr. Hubbard indeed hints that a deduction of a third under Schedule D would be the right deduction, and if he can per- suade the country to believe that, he will have made a great addition to practical finance, but how is he to do it ? The parish officials can deduct twelve per cent. from rental for repairs, because long-continued experience shows them that an average house can be kept in average repair for that sum, but who is to tell what sum a mortal being dependent for income, say, on public taste, ought to lay aside for repairs ? There is no reason that anybody can use for deducting 331 per cent., any more than for deducting 50 or 171 per cent. It is a mere shot at the just figure, and if it went home in one ease out of ten, it would miss the mark in nine others. To begin with, even among incomes earned by intelligence and industry there is this immense difference, that half their owners have only to save for their children and the other half for their children and their own old age besides. A Judge and a journalist are both under Schedule D, but their need for saving is not equally proportioned. If Mr. Hubbard can show that a saving of one- third is usual among careful people under Schedule D, he will have laid the foundation of a case ; but he could not do that, for Schedule D covers 'occupations as various as civilised life. Prudent men in practice save what they can, not any pre- determined proportion of their receipts, and are guided by their own idea of the safety of their occupation, and of what they and their children will want. The great majority, in fact, of saving men fix their expenditure at the lowest rate they deem expedient, and heap up the re- mainder, which may be, and in some cases is, ninety per cent. of their income. One well-known banker is said to save a hundred per cent., living, and living well, on the interest of his income. Mr. Hubbard may disclaim this idea of self- assessment, and say every man in business ought to save a third of his gettings, but how does he propose to himself to prove that? A barrister, we will say, is making £3,000 a year, and a solicitor the same sum, and Mr. Hubbard affirms that each ought to save £1,000 a year. Why so, when the solicitor, owing to the mere fact that he can take partners, that his business can be conducted by a firm instead of an individual, is two, three, or four times as safe as his rival in the legal profession ? There is no " ought " in the matter, or rather there is one varying according to conditions, which no assessor, however clever or however experienced, could possibly estimate to the satisfaction of the public. An actor in weak health and full favour " ought " to save nine-tenths of his income, where a Civil servant with a good constitution might well be content with one-tenth, the comparative cer- tainty, wear and tear, and proportion left for use having all to be taken into account, and making up together a sum in com- pound proportion which only Providence could work honestly out. Of course, a rough rule could be made, allowing people under Schedule D to deduct a third, but the only effect of that would be to load land and Consols with a special taxation. There would be no real fairness, for the poor owner of Consols wants deductions a great deal more than the rich owner of mash-tubs ; and no real content, for the men who live by their brains, which wear out, would be treated just like the men who live by capital employed in trade, which does not necessarily wear out at all. People do not hate house-owners, and land- owners, and fundholders to such an extent, that if only these classes pay most they will bear any other kind of injustice. On the contrary, the majority of mankind would much rather bleed the banker with his " insecure " £10,000 a year than the little freeholder with his £500 a year, so secure and so inadequate to his needs. What is the use of proposing a scheme under which the RothschiMs are to deduct one-third from their incomes, while the widow with 200 acres and three children is to pay on her whole receipts ?
We do not believe that any system of deductions can be worked out which does not assume as its basis that every tax- payer wants, in order to be an efficient citizen, a certain fixed sum a year. If a man with a household cannot perform all the duties of citizenship, including payment of rates and taxes, on less than so much a year, then exempt that sum ; and if the state of the Treasury will allow it, make it a fairly high one. What that sum should be is a matter for Parliament to con-
sider, but we doubt if it has been reached yet, doubt indeed whether, regard being had to the incidence of our direct national and local taxes, to the cost of food, to the laws forcing education, to the rise in sanitary expenses, and to the excessive competition around us which makes all small incomes insecure, whether £300 a year would be at all too high a figure. Nobody is so badly off as the man who wears a black coat and has less than that. He has not in reality a shilling of enjoyable income, of income over which he has practical control, and to exempt him from the tax-gatherer, if it be possible, would be as just as it would be con- venient to the Revenue service, which benefits directly by every reduction in the number of applications it has to make. But any deductions not based on poverty, or graduated according to a scale which must be almost end- less, would, we are convinced, create more discontent than they soothed. If Income-tax payers are robbed now—and we quite agree with Mr. Hubbard that they are robbed, till the law becomes partly answerable for a great demoralisation.-- they are at least robbed alike ; and those who are plundered most would, if the poor were exempt, be those best able to bear it. After all, the injustice is not half so great as is in- volved in the system which sells civil justice to all alike, but charges the poor man a prohibitory price which the rich man easily pays.
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