800

Tilt NATURE AND CAUSES OF

part which is over and above what is necessary for payingthe interest.

This latter part of profit is evidently a subject not taxabledirectly. It is the compensation, and in most cases it is nomore than a very moderate compensation, for the risk andtrouble of employing the stock. The employer must have thiscompensation, otherwise he cannot, consistently with hisown interest, continue the employment. If he was taxed di-rectly, therefore, in proportion to the whole profit, he wouldbe obliged either to raise the rate of his profit, or to chargethe tax upon the interest of money; that is, to pay less in-terest. If he raised the rate of his profit in proportion to thetax, the whole tax, though it might be advanced by him,would be finally paid by one or other of two different sets ofpeople, according to the different ways in which he mightemploy the stock of which he had the management. If lieemployed it as a farming stock in the cultivation of land, hecould raise the rate of his profit only by retaining a greaterportion, or, what comes to the same thing, the price of agreater portion of the produce of the land ; and as this couldbe done only by a reduction of rent, the final payment of thetax would fall upon the landlord. If he employed it as amercantile or manufacturing stock, he could raise the rate ofhis profit only by raising tlie price of his goods; in whichcase the final payment of the tax would fall altogether uponthe consumers of those goods. If he did not raise the rate ofhis profit, he would be obliged to charge the whole tax uponthat part of it which was allotted for the interest of money.He could afford less interest for whatever stock he borrowed,and the whole weight of the tax would in this case fall ulti-mately upon the interest of money. So far as he could notrelieve himself from the tax in the one way, he would beobliged to relieve himself in the other.

The interest of money seems at first sight a subject equallycapable of being taxed directly as the rent of land. Like therent of land, it is a neat produce which remains after com-pletely compensating the whole risk and trouble of employ-ing the stock. As a tax upon the rent of land cannot raiserents ; because the neat produce which remains after replac-ing the stock of the farmer, together with his reasonableprofit, cannot be greater after the tax than before it: so, forthe same reason, a tax upon the interest of money could notraise the rate of interest; the quantity of stock or money in