A man possesses government securities which bring him an income of twenty thousand francs.The tax, under the new system of progression, will take fifty per cent.of this from him.At this rate it is more advantageous to him to withdraw his capital and consume the principal instead of the income.Then let him be repaid.What! repaid! The State cannot be obliged to repay; and, if it consents to redeem, it will do so in proportion to the net income.Therefore a bond for twenty thousand francs will be worth not more than ten thousand to the bondholder, because of the tax, if he wishes to get it redeemed by the State: unless he divides it into twenty lots, in which case it will return him double the amount.Likewise an estate which rents for fifty thousand francs, the tax taking two-thirds of the income, will lose two- thirds of its value.But let the proprietor divide this estate into a hundred lots and sell it at auction, and then, the terror of the treasury no longer deterring purchasers, he can get back his entire capital.So that, with the progressive tax, real estate no longer follows the law of supply and demand and is not valued according to the real income which it yields, but according to the condition of the owner.The consequence will be that large capitals will depreciate in value, and mediocrity be brought to the front; land-owners will hasten to sell, because it will be better for them to consume their property than to get an insufficient rent from it; capitalists will recall their investments, or will invest only at usurious rates; all exploitation on a large scale will be prohibited, every visible fortune proceeded against, and all accumulation of capital in excess of the figure of the necessary proscribed.Wealth, driven back, will retire within itself and never emerge except by stealth; and labor, like a man attached to a corpse, will embrace misery in an endless union.
Does it not well become the economists who devise such reforms to laugh at the reformers?
After having demonstrated the contradiction and delusion of the progressive tax, must I prove its injustice also? The progressive tax, as understood by the economists and, in their wake, by certain radicals, is impracticable, I said just now, if it falls on capital and product: consequently I have supposed it to fall on incomes.But who does not see that this purely theoretical distinction between capital, product, and income falls so far as the treasury is concerned, and that the same impossibilities which we have pointed out reappear here with all their fatal character?
A manufacturer discovers a process by means of which, saving twenty per cent of his cost of production, he secures an income of twenty-five thousand francs.The treasury calls on him for fifteen thousand.He is obliged, therefore, to raise his prices, since, by the fact of the tax, his process, instead of saving twenty per cent, saves only eight per cent.
Is not this as if the treasury prevented cheapness? Thus, in trying to reach the rich, the progressive tax always reaches the consumer; and it is impossible for it not to reach him without suppressing production altogether:
what a mistake!
It is a law of social economy that all invested capital must return continually to the capitalist in the form of interest.With the progressive tax this law is radically violated, since, by the effect of progression, interest on capital is so reduced that industries are established only at a loss of a part or the whole of the capital.To make it otherwise, interest on capital would have to increase progressively in the same ratio as the tax itself, which is absurd.Therefore the progressive tax stops the creation of capital; furthermore it hinders its circulation.Whoever, in fact, should want to buy a plant for any enterprise or a piece of land for cultivation would have to consider, under the system of progressive taxation, not the real value of such plant or land, but rather the tax which it would bring upon him; so that, if the real income were four per cent., and, by the effect of the tax or the condition of the buyer, must go down to three, the purchase could not be effected.After having run counter to all interests and thrown the market into confusion by its categories, the progressive tax arrests the development of wealth and reduces venal value below real value; it contracts, it petrifies society.What tyranny!
What derision!
The progressive tax resolves itself, then, whatever may be done, into a denial of justice, prohibition of production, confiscation.It is unlimited and unbridled absolutism, given to power over everything which, by labor, by economy, by improvements, contributes to public wealth.
But what is the use of wandering about in chimerical hypotheses when the truth is at hand.It is not the fault of the proportional principle if the tax falls with such shocking inequality upon the various classes of society; the fault is in our prejudices and our morals.The tax, as far as is possible in human operations, proceeds with equity, precision.
Social economy commands it to apply to product; it applies to product.
If product escapes it, it strikes capital: what more natural! The tax, in advance of civilization, supposes the equality of laborers and capitalists:
the inflexible expression of necessity, it seems to invite us to make ourselves equals by education and labor, and, by balancing our functions and associating our interests, to put ourselves in accord with it.The tax refuses to distinguish between one man and another: and we blame its mathematical severity for the differences in our fortunes! We ask equality itself to comply with our injustice! Was I not right in saying at the outset that, relatively to the tax, we are behind our institutions?
