"The purpose of Socialism is to transfer land and industrial capital to the people. There are two ways in which, simultaneously, this object may be carried out. The one way is by the municipal and national appropriation—with such compensation to the existing owners as the community may think fit to give—of the land and industrial concerns. The second method is by taxation. Taxation has its special sphere of usefulness in helping the community to secure some part of its own by diverting into the national purse portions of the rent, interest, and profit which now go to keep an idle class in luxury at the expense of the industrious poor."[451]
"The existence of a rich class, whose riches are the cause of the poverty of the masses, is the justification for the Socialist demand that the cost of bettering the condition of the people must be met by the taxation of the rich. The Socialist's ideas of taxation may be briefly summarised as follows: (1) Both local and national taxation should aim primarily at securing for the communal benefit all 'unearned' or 'social' increment of wealth. (2) Taxation should aim deliberately at preventing the retention of large incomes and great fortunes in private hands, recognising that the few cannot be rich without making the many poor. (3) Taxation should be in proportion to ability to pay and to protection and benefit conferred by the State. (4) No taxation should be imposed which encroaches upon the individual's means to satisfy his physical needs."[452]
"To the Socialist taxation is the chief means by which he may recover from the propertied classes some portion of the plunder which their economic strength and social position have enabled them to extract from the workers; to him, national and municipal expenditure is the spending for common purposes of an ever-increasing proportion of the national income. The degree of civilisation which a State has reached may almost be measured by the proportion of the national income which is spent collectively instead of individually. To the Socialist the best of Governments is that which spends the most. The only possible policy is deliberately to tax the rich, especially those who live on wealth which they do not earn; for thus, and thus only, can we reduce the burthen upon the poor."[453]
The Fabian Society suggests the following reform of national taxation: "In English politics successful ends must have moderate beginnings. Such a beginning might be an income-tax of 2s. 6d. in the pound. Unearned incomes above 5,000l. a year would pay 2s. 6d. in the pound, below 5,000l. a year 1s. 8d. in the pound. The estate duty might be handled upon similar principles. Estates between 500,000l. and 1,000,000l. would be charged twelve and a half per cent, instead of seven and a half, and estates exceeding 1,000,000l. fifteen per cent, instead of eight."[454] The Fabian Society does not disguise its aim in proposing the foregoing: "These suggestions are doubtless confiscatory, and that is why they should recommend themselves to a Labour party. But even so, the confiscation is of a timorous and a slow-footed sort. The average British millionaire dies worth about 2,770,000l., on which the death duty would be 415,500l., leaving the agreeable nest-egg of 2,254,500l. to the heirs. Even if we assume that the inheritance passes to one person only, so as to be subject to the highest rate of duty, it would not be until five more lives had passed that it would be reduced to a pitiful million. The most patient Labour party might not unreasonably demand something a trifle more revolutionary than this."[455]
According to the above proposals the income-tax would return 47,600,000l. per annum. This sum seems far too moderate to most Socialist writers. Councillor Glyde, for instance, gives in a widely read pamphlet elaborate tables in which the produce of a graduated income-tax is carefully calculated. The Fabian Society would make "a moderate beginning" by taxing large incomes 2s. 6d. in the pound. Councillor Glyde would begin by levying a 3s. income-tax on them. Taxation of incomes in accordance with his proposals would bring in 70,281,839l. per annum.[456]
Mr. Smart, of the Independent Labour Party, gives lengthy details of a taxation reform scheme in which figure a foundation-tax, a special property-tax, and a super-tax. Large incomes would have to pay 17-1/2 per cent., or 3s. 6d. in the pound, and his property and income tax would bring in 78,000,000l. per annum.[457]
Mr. Philip Snowden, M.P., submits a different scheme of taxation. There is to be an income-tax of 1s. in the pound and a graduated super-tax up to 6s. in the pound. Whilst the three authorities mentioned so far propose to take from the large incomes 2s. 6d., 3s., and 3s. 6d. in the pound as a "moderate beginning," Mr. Snowden would, presumably also as a "moderate beginning," take 7s. in the pound from them. He is quite touched with his own generosity and magnanimity, for might he not demand at once 17s. or 20s. in the pound? "To console the possessors of incomes in the higher grade, say 50,000l. a year, to the payment of an income-tax of 1s. in the pound, we may remind them that they still retain 33,500l. a year, which is a very generous payment by labour to them for the privilege of seeing them exist in gorgeous splendour and sumptuous idleness."[458]
The proposals regarding the estate duty to be charged also vary. The Fabian Society proposes a maximum of 15 per cent. Mr. Smart would be satisfied with a graduated estate duty with a maximum of 25 per cent, instead of the present maximum of 8 per cent.[459] Mr. Snowden proposes a scale of duties which ranges from 1 per cent, up to 50 per cent.[460]
Besides the very greatly increased income-tax and estate duty, there would be, according to Mr. Snowden, a land value tax of a penny in the pound of its capital value, which is equal to 10 per cent. annual value. It is to be the small beginning of the policy of taxing landowners out of existence, to be speedily followed by confiscation. "The annual value of land being 250,000,000l., the produce of the land value tax would be 25,000,000l. a year."[461] The author justifies the creation of that tax as follows: "Liverpool, London, Glasgow owe their existence and their prosperity to their respective situations, which are natural advantages and which ought not in justice to be enjoyed solely by those who live upon the sites. Every town and village in the country contributes to the prosperity of every other part. The nation is a unit; its resources and its obligations should be mutually shared."
"Land values are so obviously not created by individual effort that the justice of taking the increment for the use of the community appeals to those who may have some difficulty in grasping the working of the 'unearned increment' in commercial concerns, where, however, it operates just as truly though not so obviously. The imposition of an Imperial tax of one penny in the pound on the capital value of the site would be a beginning, but by no means the end, of the process of diverting socially-created rent of land into the public exchequer. Taxation will do something towards that end; but taxation would be a long, irritating, and untrustworthy way of trying to secure the whole annual value of the land for the community."[462] "The taxation of land values is not a land reform. To get the full usefulness and the full value of the land for the community there is no way but for the State to own the land."[463]