On the Influence of the various Kinds of Taxation upon National Prices.
If I mistake not, I have proved that it is indifferent to agriculture and industry, whether the prices rise or fall, provided it be always in a due and reciprocal proportion. Nor is it less indifferent, whether the increase proceeds from taxes, from monopoly, or from accession of wealth, and whether the decrease be brought about by the extirpation of monopoly, or by the triumph of smuggling; so long as the prices balance each other, no one can be injured however loud people may be in their clamours; it is impossible to shut one’s eyes against the evidence of such a point. Why then should we deny the consequence which naturally follows, of the harmlessness of taxes in themselves, the impossibility of their producing in any one’s situation, any thing beyond a momentary sensation, when they are laid with discernment; and the futility of either fears or hopes entertained of their ending at last in a national bankruptcy?
Yet, “to enjoy, is to obey,” says Pope:—To make the best use we can of the creation, is the thanksgiving the most worthy of the Creator.—There is not a man therefore who ought not to repine at seeing the general rate of prices increase in vain, since this very rise compels us to lavish, in coin, a considerable quantity of those two precious metals, gold and silver, which would prove more agreeable, if turned into plate, or even into small pocket-statues, designed for the private worship of those who would blush only in public, for this kind of idolatry. I should like therefore to examine, in regard to prices, what is natural, what necessary, and what forced; in order to find out what might be saved, if people would attend only to the necessary average.
In the first period of Societies, when they knew of no other want in the State but personal service when it was necessary and possible, the common price of the articles then in circulation, was determined by the quantity of coin then existing in the nation: this is what may be justly termed the natural price. At this present time, when money is substituted to personal service, and supplies so advantageously its place; when each representation of an extra service leaves on every article, the stamp of a seal, which, without adding to the real or relative value of any thing, increases nevertheless the nominal value of every thing;—at this present time, when every nation has all the industry necessary to procure the coin wanted for this over-charge, it is the price, which this very over-charge sets upon the different objects, that regulates and attracts the quantity of silver to correspond therewith; and this price, which may be called necessary, is often evidently forced: I say, evidently, because, in the state of general correspondence, or, if you will, of that happy dependence wherein all the States of Europe stand reciprocally towards each other at this hour, when we see in one country the same objects, of the same quality, wrought with equal skill, 15 per cent. dearer than any where else, who can doubt but a part of that difference, of that extraordinary price, proceeds from taxes, and the other from monopoly? But what part belongs to this, what part to the other? This is not so easily found out; 1st, because the part which is the work of monopoly, solely depends on the moderation of the monopolist, who never fails pleading the taxes for excuse; and, 2dly, because that part, which proceeds from the taxes, depends not only on the tax itself, but also on the manner of laying it, and on the effect which it is likely to produce in the minds of the people who are to support it. Such a tax as will make a slow, and only a trifling sensation in the prices of the French markets, will occasion all at once a considerable one in those of England: I shall hereafter state my reasons for this conjecture.
I am as little qualified to investigate all these different questions, as those which I have ventured hitherto to touch upon; I shall persevere, nevertheless, with that freedom which I derive from the purity of my intentions, and with that diffidence which must follow the consciousness of a capacity so unequal to the task.—I shall first of all adapt to England, and then to France, the reflexions suggested to me by some hundreds of suppositions, which had engrossed my time before I had perused Young’s Political Arithmetic, and the work of Mr. Necker, which has but lately fallen into my hands.
I shall begin with a general observation on taxes.
On the Object of all Ministers of Finance in laying Taxes.
In this indulgent age, wherein nothing more is required on any one subject, than a little decency, it would be a ridiculous and fruitless hypocrisy to propose a tax, as the means of encouraging virtue, or of discountenancing vice; it is not, at least in a country where a man convicted of smuggling wool, is by law sentenced to have his hand cut off, nor in another where a smuggler of salt is condemned for years to serve on board the gallies, that one should preach up the heart-felt concern he must experience at framing a law which would make it felony to drink spirituous liquors if he had really a mind to prevent intoxication; it is hoped on the contrary, nay, firmly believed, that the sweetness of the poison will make palatable the very bitterness of the tax, and its absurd disproportion to the real value of the taxed article: besides, it is too evident, that it is not the difference of a few pence more that will prevent a man from drinking to excess when he is so inclined, nor a few pence less that will occasion another to inebriate himself, when his only motive for drinking is a moderate pleasure, or the necessity of allaying his thirst. The object of every Minister, in laying a tax, is always to procure the sum at which he has rated its produce; if the tax should answer any other purpose, this additional one is considered merely with regard to the prospect it affords of making good another tax less productive than was at first expected. In fact, a minister of finance is not a præfectus morum—a moral censor: the State is in want of a certain sum; that’s enough, it must be found.—Let us then examine, what kind of taxation will be the least burdensome in its operation, give its first shock with the least violence, and be attended with inconveniences of the shortest duration.