Suppose that capital is employed on the land in this case under three degrees of productiveness: the mostproductive portion yielding 10 quarters, the second 8, and the last 6. A landlord who had landcultivated under these circumstances, would receive at the rate of 6 quarters of corn as rent. 4produced by the first portion, and 2 by the second. Suppose a tax imposed such as to raise theprice of corn 5 per cent.: it leaves the 6 quarters of corn, accruing to the landlord, the same asbefore; but the value of these 6 quarters is 5 per cent. higher; the landlord's rent, therefore, isincreased 5 per cent.
(4.xi.4) The difference between this case, and those treated of in the preceding section, is,that the landlord's portion of the produce is not taxed, when the profits of the farmer are taxed.
(4.xi.5) A tax upon the instruments of agriculture, is the same thing in effect, as a tax uponthe profits of the farmer. It raises the value of produce, without affecting the quantity which goes asrent to the landlord. Thus, if a tax is laid upon agricultural horses, it increases the expense ofproduction to the farmer, just as a tax upon coals would increase the cost of production to theiron-founder. For this cost the farmer can only be indemnified by a rise in the price of theproduce. The quantities, however, of the corn, the 10, the 8, the 6 quarters, yielded to thedifferent portions of his capital, are not affected. Six quarters of corn are the rent of the landlord,the same as before. Not only, therefore, does the whole of the tax fall upon the consumer, but heis charged with another burthen, the additional rent which is paid to the landlord. Thecommunity is taxed, in part for the use of the government, in part for the benefit of the landlords.
Section XII. Tithes and Poor Rates (4.xii.1) Tithes are a tax upon the produce of the land; a tenth of the produce, perfectly orimperfectly collected.
(4.xii.2) The operation, therefore, of this tax, has been already ascertained. It raises the priceof produce, and falls wholly upon the consumer.
(4.xii.3) If the poor rate were levied in proportion to profits upon farmers, manufacturers,and merchants, it would be a tax upon profits. If it were levied in proportion to the rent of land, itwould be a tax upon the rent of land. If it were levied upon the rent of houses, it would fall uponthe inmates, and be a tax upon income. From the mode in which it is levied, it is drawn in partfrom all these sources If it falls disproportionately upon the profits of any one class of capitalists,that class receives compensation. If the farmers, as is usually supposed, pay a higher rate for themaintenance of the poor than other producers, this, as far as the excess extends, is the same thingas a separate and additional tax upon them. But if a separate tax is laid upon the farmers, wehave already seen that it operates immediately to raise the price of corn sufficiently high toafford them compensation for the tax, and raises the rent of the landlords. It is to them a benefit,not a burthen.
(4.xii.4) Of all taxes which raise the price of corn, one effect is remarkable. As a certainquantity of corn is necessary to the subsistence of the labourer his wages must be competent to thepurchase of that quantity. They must often, therefore, rise as the price of that quantity rises. Butwe have already seen, that, in proportion as wages rise, profits fall. A tax upon corn, therefore,operates upon all men as consumers. Upon capitalists it is apt to operate in two ways; it is, first,a tax upon them as consumers; and, secondly, it has often the same effect upon them as a taxupon their profits.
Section XIII. A Tax per Acre on the Land (4.xiii.1) We have already considered in what manner a tax, laid upon the land, andproportioned to the rent; in what manner a tax laid upon the land, and proportioned to the produce; and inwhat manner a tax laid upon the land, and proportioned to the farmer's profits, would operate.
The first would be a tax upon the landlord; the second would be a tax upon the consumer, andwould not affect the landlord; the third would be a tax upon the consumer, and would benefit thelandlord. A tax may also be laid upon the land at so much per acre.
(4.xiii.2) We have seen that there is a portion of capital employed upon the land, the returnto which is sufficient to afford the ordinary profits of stock, but nothing more. If any addition ismade to the cost of producing, a rise of price must afford compensation. If no addition is madeto such cost, price will not be affected.
(4.xiii.3) If a tax is laid, at so much per acre, on land, both cultivated, and uncultivated, noaddition will be made to the cost of producing. There are two cases in which portions of capitalare employed on the land, without yielding more than the ordinary profits of stock; of courseyielding nothing for rent: the one is, where, after two or more doses of capital have beenbestowed upon land, each yielding less than the former, a third or a fourth comes to beemployed; the other is, where, after land of the second or third degree of fertility has beenexhausted, cultivation is forced upon land of a still inferior quality.
(4.xiii.4) It is evident, immediately, that a tax on the acre does not affect the cost ofproduction, when a subsequent dose of capital is employed upon the same land; because the tax is alreadypaid; and it is, therefore, the interest of the farmer to apply a second dose, as soon as the price ofproduce has risen sufficiently high to afford him a full profit and nothing more.
(4.xiii.5) When capital is applied to new land of inferior quality, upon which the tax waspreviously paid, the cultivator receives his remuneration the moment produce rises sufficientlyhigh to afford the profits of the stock which the cultivation may require; and no allowance is tobe made for a tax which does not depend upon the cultivation.
