within safe limits. An affirmative answer may probably be given to both questions; but we must first revert for a moment to the theory of taxation upon which the principle of progression is based.

The chaos of speculation and of practice in which the art of taxation remains is not a little remarkable when it is remembered that the raising of money has been in all ages the first care and the most essential function of government; but two rival theories clearly emerge from the discussion which has of late years been almost entirely abandoned to foreign economists-the one being that the citizen should be taxed according to the benefits or protection he enjoys from the State, the other that he should be taxed according to his ability to pay. It is the last-named which modern economists agree in considering, in respect of imperial as opposed to local taxation, the most applicable to present conditions; and it was stated by Mill in the following terms:

The subjects of a State ought to contribute as nearly as possible in proportion to their respective abilities, i.e. in proportion to the resources which they respectively enjoy under the protection of the State. In other words, equality of taxation means equality of sacrifice. It means apportioning the contribution of each person towards the expenses of government, so that he shall feel neither more nor less inconvenience from his share of the payment than every other person does from his.'

It will be noticed at once that this seemingly clear statement of the ideal to be aimed at leaves us completely in the dark as to how it is to be attained. Every man will place his own interpretation on the formula 'equality of sacrifice.' It rests, in fact, rather on sentiment than on reason, on the prevailing idea of justice than on any abstract economical principle. The standard varies with every generation. In this country, for instance, at the time when Adam Smith wrote, the labouring classes, owing to the system of indirect taxation, undoubtedly paid a far larger proportion of the revenue than they do now. It has been gradually recognized that what has been described as 'the old

idea of taxation according to ability contained for centuries in laws and constitutions,' was not realized under a system which taxed the necessaries of life. The total exemption of these, and the taxation of articles of luxury, although to a certain extent a recognition of the principle of progression, was soon found inadequate to the needs of a modern State; and a system of property and income taxes was accordingly devised to bring under contribution the different sources of wealth.

The convenient principle of equality of sacrifice was next invoked to give sanction to proposals for a system of progressive taxation, proposals to which several circumstances have combined for the first time to give importance in this country.

It is characteristic of English methods that the principle of graduation should have found its way into legislation before it has been accepted by theory. It is hardly necessary to state that the actual fiscal system of this country contains in every part an indirect recognition of the idea of progression, which, however, though often quoted by the socialistic press as a direct sanction, has hitherto been defended on quite other grounds as being merely one of the devices to remedy the obvious unfairness of the pressure of indirect taxation on the poorer classes. Students of politics will not need to be reminded that we are probably destined to witness further experiments in the same direction.

But more important than any possible official patronage of the idea is its prevalence and popularity for other than purely fiscal reasons among the masses of the people, in whom political power is now so largely vested, and who are naturally desirous of placing still further upon the wealthier but less powerful classes the chief burden of taxation. Besides the fiscal, political or social reasons in favour of the proposal, there is a widespread feeling that it is only in accordance with justice that wealth should contribute more largely to the common needs than it has done in the past. The question how much the individual should be asked to contribute to the collective wants of society is indeed

a complex one, and no one would deny that the existing handto-mouth systems are far from reaching any ideal standard. We need not endorse a recent dictum, studiously indefinite as it is, 'that society should take of the realized riches of those who benefit by the advantages of civilization such a share as the best of the wealthy classes already give of their own accord for the benefit of the victims of our social system;' but there can be little question that the public opinion of a generation, sensitively alive to the evils of poverty and to the inequalities in the distribution of wealth, is favourable to the idea that wealth has obligations towards society which it is well able to fulfil without imposing upon itself an undue burden, and that something more than the exact proportion may be demanded from its possessors, without imposing a penalty on people for having worked harder and saved more than their neighbours. How far such a sentiment is based upon reason, and how far it may be just and politic to meet it, are questions which must be faced by practical men, and the following observations upon one proposed method of doing so may at least serve to bring out a few of the points which will have to be kept in view in further controversies.

Mill, whose position as a philosopher and economist has of late years been so fiercely, and in some respects so successfully, assailed, has yet had so great a practical influence in shaping ideas and legislation in this country that his remarks on the question we are considering are worth quoting, especially as they clearly state the issue.

He begins by inquiring whether an equal sacrifice is demanded from all by making each contribute the same percentage on his pecuniary means. 'Many persons,' he says, ' maintain the negative, saying that a tenth part taken from a small income is a heavier burden than the same fraction deducted from one much larger; and on this is grounded the very popular scheme of what is called a graduated property tax, in which the percentage rises with the amount of the income.'

His answer is in the following words: 'On the best consideration that I am able to give to this question, it appears to me that the portion of truth which the doctrine contains

arises principally from the difference between a tax which can be saved from luxuries and one which trenches, in ever so small a degree, upon the necessaries of life.' He therefore proceeds to advocate the method of adjusting these inequalities of pressure recommended by Bentham and adopted in our income tax, viz. of leaving a certain minimum of income sufficient to provide the necessaries of life untaxed. I shall return to this subject in a later part of this paper.

Mill further combats the idea of mitigating the inequalities of wealth by means of graduation by saying: 'To tax the larger incomes at a higher percentage than the smaller is to lay a tax on industry and economy, to impose a penalty on people for having worked harder and saved more than their neighbours. It is not the fortunes which are earned, but those which are unearned, that it is for the public good to place under limitation.'

It may be at once observed that a scientific view of the case will not support either the distinction between luxuries and necessaries, or the unearned increment theory, Mill's advocacy of which has probably given a more powerful impulse to socialistic ideas than an advocacy even of a 'penal' income tax which he so emphatically condemns, certainly more than a well grounded and carefully argued defence of the principle of the 'impôt progressif' would have done.

But Mill does not attempt seriously to argue the question in the foregoing passages; and it is impossible not to feel that his objection to taxing the larger incomes at a higher percentage than the smaller ones does not go to the root of the matter. We may therefore proceed to a more fruitful manner of approaching the problem, and inquire how far a justification of the principle of progression may be found in Jevons' theory of value. For the sake of clearness it will be necessary to give the argument at some length, quoting as far as possible the economist's own language1.

1 It is perhaps unnecessary to say that the following application of Jevons' final utility theory to the doctrine of progression has no pre

tension to novelty, but it was noticed by the present writer before he had the advantage of knowing that he had been anticipated in his conS

(i) The foundation of this theory lies in the distinction between utility and value-Adam Smith's 'value in use and 'value in exchange,' or, as we shall see, Jevons with greater clearness describes it, 'total utility' and 'final utility.'

(ii) Utility for the purpose of economics must be considered,' he says, ' as measured by, or even as actually identified with, the addition made to a person's happiness.' 'It is a convenient term for the aggregate of the favourable balance of feeling produced-the sum of the pleasure created, and the pain prevented 1.'

(iii) 'Utility is not proportioned to commodity. A quart of water per day has the high utility of saving a person from dying in a most distressing manner. Several gallons a day may possess much utility for such purposes as cooking and washing; but after an adequate supply is secured for these uses, every additional quantity is, or may in fact become, negative; further supplies may even become inconvenient and hurtful (e.g. in case of a flood)2.'

one.

(iv) Jevons endeavours to show3, by dividing into ten parts a quantity of food consumed by a person in twenty-four hours, that each of the one-tenth parts or increments is less and less necessary or possesses less utility than the preceding He then distinguishes between the ‘total utility of any commodity and the degree of utility of the commodity at any point.'. . . For the purposes of the theory, it is not necessary to consider the degree of utility except as regards the last increment which has been consumed, or, what comes to the same thing, the next increment which is about to be consumed.' He therefore adopts the expression 'final degree of utility' as meaning 'the degree of utility of the last addition or the next possible addition of a very small or infinitely small quantity to the existing stock.'

clusion by the very elaborate investigations of certain Dutch economists. Professor Seligman, in his learned and exhaustive article in the Political Science Quarterly for June, 1893, summarizes their results and covers the

whole ground of the discussion.

Jevons' Theory of Political Economy, 2nd edition, p. 49.

2 Ibid. p. 43. 3 Ibid. p. 49. Ibid. p. 55.