for making a chimney be without it for two.' He considered the house tax to be a species of excise, or tax on the consumption and use of an article, a house, and to be the easiest and clearest and fittest to ground a certain revenue upon.[1]
The poll tax had, in his opinion, the advantage of being easily collected; but the great objection to it was that it was very unequal, and fell severely on the poorest class, while the attempts which had recently been made at introducing distinctions between different classes of persons in order to obviate these evils had only ended in such a mass of 'confusion, arbitraries, irregularities and hotch pot of qualifications,' that nobody knew where he stood.[2] It is evident that he gradually came to the conclusion that a just poll or capitation tax was an impossibility, and that, if it was desired to tax proportionally the income of the mass of the people, it could only be done, as in Holland, by taxing their expense, through an excise or tax on commodities; though, as already pointed out, the articles taxed were to be few and the tax light.
The risk of relying too much on this species of taxation had not been fully realised by the political economists of the seventeenth century, who were mainly familiar with the evils of a clumsy system of direct taxation. Sir William Petty was indeed fully aware that there were taxes the incidence of which was not on the person who paid them in the first instance; but he did not sufficiently realise the dangers arising from the fatal facility with which the system could be extended. It was left to Adam Smith to point out, with unanswerable force, that such taxes, especially when levied upon necessaries, were calculated to diminish the reward of labour, and therefore either raised wages in proportion or reduced employment, and that their ultimate burden was either on the land in the shape of diminished rent, or on the capitalist in reduced profits; and that, by their complicating and disturbing effects on trade and employment, they diminished the volume of trade and took far more out of the pockets of the taxpayers than they brought into the coffers of the State. By the time of Adam Smith,
