Chapter VII: Fifth Period.--Police, or Taxation (1)

In positing its principles humanity, as if in obedience to a sovereign order, never goes backward. Like the traveller who by oblique windings rises from the depth of the valley to the mountain-top, it follows intrepidly its zigzag road, and marches to its goal with confident step, without repentance and without pause. Arriving at the angle of monopoly, the social genius casts backward a melancholy glance, and, in a moment of profound reflection, says to itself:

"Monopoly has stripped the poor hireling of everything,--bread, clothing, home, education, liberty, and security. I will lay a tax upon the monopolist; at this price I will save him his privilege.

"Land and mines, woods and waters, the original domain of man, are forbidden to the proletaire. I will intervene in their exploitation, I will have my share of the products, and land monopoly shall be respected.

"Industry has fallen into feudalism, but I am the suzerain. The lords shall pay me tribute, and they shall keep the profit of their capital.

"Commerce levies usurious profits on the consumer. I will strew its road with toll-gates, I will stamp its checks and indorse its invoices, and it shall pass.

"Capital has overcome labor by intelligence. I will open schools, and the laborer, made intelligent himself, shall become a capitalist in his turn.

"Products lack circulation, and social life is cramped. I will build roads, bridges, canals, marts, theatres, and temples, and thus furnish at one stroke work, wealth, and a market.

"The rich man lives in plenty, while the workman weeps in famine. I will establish taxes on bread, wine, meat, salt, and honey, on articles of necessity and on objects of value, and these shall supply alms for my poor.

"And I will set guards over the waters, the woods, the fields, the mines, and the roads; I will send collectors to gather the taxes and teachers to instruct the children; I will have an army to put down refractory subjects, courts to judge them, prisons to punish them, and priests to curse them. All these offices shall be given to the proletariat and paid by the monopolists.

"Such is my certain and efficacious will."

We have to prove that society could neither think better nor act worse: this will be the subject of a review which, I hope, will throw new light upon the social problem.

Every measure of general police, every administrative and commercial regulation, like every law of taxation, is at bottom but one of the innumerable articles of this ancient bargain, ever violated and ever renewed, between the patriciate and the proletariat. That the parties or their representatives knew nothing of it, or even that they frequently viewed their political constitutions from another standpoint, is of little consequence to us: not to the man, legislator, or prince do we look for the meaning of his acts, but to the acts themselves.

% 1.--Synthetic idea of the tax.--Point of departure and development of this idea.

In order to render that which is to follow more intelligible, I will explain, inverting, as it were, the method which we have followed hitherto, the superior theory of the tax; then I will give its genesis; finally I will show the contradiction and results. The synthetic idea of the tax, as well as its original conception, would furnish material for the most extensive developments. I shall confine myself to a simple announcement of the propositions, with a summary indication of the proofs.

The tax, in its essence and positive destiny, is the form of distribution among that species of functionaries which Adam Smith has designated by the word UNPRODUCTIVE, although he admits as much as any one the utility and even the necessity of their labor in society. By this adjective, UNPRODUCTIVE, Adam Smith, whose genius dimly foresaw everything and left us to do everything, meant that the product of these laborers is NEGATIVE, which is a very different thing from null, and that consequently distribution so far as they are concerned follows a method other than exchange.

Let us consider, in fact, what takes place, from the point of view of distribution, in the four great divisions of collective labor,-- EXTRACTION,[21] MANUFACTURES, COMMERCE, AGRICULTURE. Each producer brings to market a real product whose quantity can be measured, whose quality can be estimated, whose price can be debated, and, finally, whose value can be discounted, either in other services or merchandise, or else in money. In all these industries distribution, therefore, is nothing but the mutual exchange of products according to the law of proportionality of values.

[21] Hunting, fishing, mining,--in short, the gathering of all natural products.--Translator.

Nothing like this takes place with the functionaries called PUBLIC. These obtain their right to subsistence, not by the production of real utilities, but by the very state of unproductivity in which, by no fault of their own, they are kept. For them the law of proportionality is inverted: while social wealth is formed and increased in the direct ratio of the quantity, variety, and proportion of the effective products furnished by the four great industrial categories, the development of this same wealth, the perfecting of social order, suppose, on the contrary, so far as the personnel of police is concerned, a progressive and indefinite reduction. State functionaries, therefore, are very truly unproductive. On this point J. B. Say agreed with A. Smith, and all that he has written on this subject in correction of his master, and which has been stupidly included among his titles to glory, arises entirely, it is easy to see, from a misunderstanding. In a word, the wages of the government's employees constitute a social DEFICIT; they must be carried to the account of LOSSES, which it must be the object of industrial organization to continually diminish: in this view what other adjective could be used to describe the men of power than that of Adam Smith?

Here, then, is a category of services which, furnishing no real products, cannot be rewarded in the ordinary way; services which do not fall under the law of exchange, which cannot become the object of private speculation, competition, joint-stock association, or any sort of commerce, but which, theoretically regarded as performed gratuitously by all, but entrusted, by virtue of the law of division of labor, to a small number of special men who devote themselves exclusively to them, must consequently be paid for. History confirms this general datum. The human mind, which tries all solutions of every problem, has tried accordingly to submit public functions to exchange; for a long time French magistrates, like notaries, etc., lived solely by their fees. But experience has proved that this method of distribution applied to unproductive laborers was too expensive and subject to too many disadvantages, and it became necessary to abandon it.

The organization of the unproductive services contributes to the general welfare in several ways: first, by relieving producers of public cares, in which all must participate, and to which, consequently, all are more or less slaves; secondly, by establishing in society an artificial centralization, the image and prelude of the future solidarity of industries; and, finally, by furnishing a first attempt at balance and discipline.

So we admit, with J. B. Say, the usefulness of magistrates and the other agents of public authority; but we hold that this usefulness is wholly negative, and we insist, therefore, on describing these functionaries by the adjective unproductive which A. Smith applied to them, not to bring them into discredit, but because they really cannot be classed in the category of producers. "Taxation," very well says an economist of Say's school, M. J. Garnier,--"taxation is a PRIVATION which we should try to reduce to the furthest point of compatibility with the needs of society." If the writer whom I quote has reflected upon the meaning of his words, he has seen that the word PRIVATION which he uses is synonymous with NON-PRODUCTION, and that consequently those for whose benefit taxes are collected are very truly UNPRODUCTIVE laborers.

I insist upon this definition, which seems to me the less questionable from the fact that, however much they may dispute over the word, all agree upon the thing, because it contains the germ of the greatest revolution yet to be accomplished in the world,--I mean the subordination of the unproductive functions to the productive functions, in a word, the effective submission, always asked and never obtained, of authority to the citizens.

It is a consequence of the development of the economical contradictions that order in society first shows itself inverted; that that which should be above is placed below, that which should be in relief seems sunken, and that which should receive the light is thrown into the shadow. Thus power, which, in its essence, is, like capital, the auxiliary and subordinate of labor, becomes, through the antagonism of society, the spy, judge, and tyrant of the productive functions; power, whose original inferiority lays upon it the duty of obedience, is prince and sovereign.

In all ages the laboring classes have pursued against the office-holding class the solution of this antinomy, of which economic science alone can give the key. The oscillations--that is, the political agitations which result from this struggle of labor against power--now lead to a depression of the central force, which compromises the very existence of society; now, exaggerating this same force beyond measure, give birth to despotism. Then, the privileges of command, the infinite joy which it gives to ambition and pride, making the unproductive functions an object of universal lust, a new leaven of discord penetrates society, which, divided already in one direction into capitalists and wage-workers, and in another into producers and non-producers, is again divided as regards power into monarchists and democrats. The conflicts between royalty and the republic would furnish us most marvellous and interesting material for our episodes. The confines of this work do not permit us so long an excursion; and after having pointed out this new branch in the vast network of human aberrations, we shall confine ourselves exclusively, in dealing with taxation, to the economic question.

Such, then, in succinctest statement, is the synthetic theory of the tax,--that is, if I may venture to use the familiar comparison, of this fifth wheel of the coach of humanity, which makes so much noise, and which, in governmental parlance, is styled the State. The State, the police, or their means of existence, the tax, is, I repeat, the official name of the class designated in political economy as nonproducers,--in short, as the domestics of society.

But public reason does not attain at a single bound this simple idea, which for centuries had to remain in the state of a transcendental conception. Before civilization can mount to such a height, it must pass through frightful tempests and innumerable revolutions, in each of which, one might say, it renews its strength in a bath of blood. And when at last production, represented by capital, seems on the point of thoroughly subordinating the unproductive organ, the State, then society rises in indignation, labor weeps at the prospect of its immediate freedom, democracy shudders at the abasement of power, justice cries out as if scandalized, and all the oracles of the departing gods exclaim with terror that the abomination of desolation is in the holy places and that the end of the world has come. So true is it that humanity never desires what it seeks, and that the slightest progress cannot be realized without spreading panic among the peoples.

What, then, in this evolution, is the point of departure of society, and by what circuitous route does it reach political reform,--that is, economy in its expenditures, equality in the assessment of its taxes, and the subordination of power to industry? That is what we are about to state in a few words, reserving developments for the sequel.

The original idea of the tax is that of REDEMPTION.

As, by the law of Moses, each first-born was supposed to belong to Jehovah, and had to be redeemed by an offering, so the tax everywhere presents itself in the form of a tithe or royal prerogative by which the proprietor annually redeems from the sovereign the profit of exploitation which he is supposed to hold only by his pleasure. This theory of the tax, moreover, is but one of the special articles of what is called the social contract.

Ancients and moderns all agree, in terms more or less explicit, in regarding the juridical status of societies as a reaction of weakness against strength. This idea is uppermost in all the works of Plato, notably in the "Gorgias," where he maintains, with more subtlety than logic, the cause of the laws against that of violence,--that is, legislative absolutism against aristocratic and military absolutism. In this knotty dispute, in which the weight of evidence is equal on both sides, Plato simply expresses the sentiment of entire antiquity. Long before him, Moses, in making a distribution of lands, declaring patrimony inalienable, and ordering a general and uncompensated cancellation of all mortgages every fiftieth year, had opposed a barrier to the invasions of force. The whole Bible is a hymn to JUSTICE,--that is, in the Hebrew style, to charity, to kindness to the weak on the part of the strong, to voluntary renunciation of the privilege of power. Solon, beginning his legislative mission by a general abolition of debts, and creating rights and reserves,--that is, barriers to prevent their return,--was no less reactionary. Lycurgus went farther; he forbade individual possession, and tried to absorb the man in the State, annihilating liberty the better to preserve equilibrium. Hobbes, deriving, and with great reason, legislation from the state of war, arrived by another road at the establishment of equality upon an exception,--despotism. His book, so much calumniated, is only a development of this famous antithesis. The charter of 1830, consecrating the insurrection made in '89 by the plebeians against the nobility, and decreeing the abstract equality of persons before the law, in spite of the real inequality of powers and talents which is the veritable basis of the social system now in force, is also but a protest of society in favor of the poor against the rich, of the small against the great. All the laws of the human race regarding sale, purchase, hire, property, loans, mortgages, prescription, inheritance, donation, wills, wives' dowries, minority, guardianship, etc., etc., are real barriers erected by judicial absolutism against the absolutism of force. Respect for contracts, fidelity to promises, the religion of the oath, are fictions, osselets,[22] as the famous Lysander aptly said, with which society deceives the strong and brings them under the yoke.

[22] Little bones taken from the joints of animals and serving as playthings for children.--Translator.

The tax belongs to that great family of preventive, coercive, repressive, and vindictive institutions which A. Smith designated by the generic term police, and which is, as I have said, in its original conception, only the reaction of weakness against strength. This follows, independently of abundant historical testimony which we will put aside to confine ourselves exclusively to economic proof, from the distinction naturally arising between taxes.

All taxes are divisible into two great categories: (1) taxes of assessment, or of privilege: these are the oldest taxes; (2) taxes of consumption, or of quotite,[23] whose tendency is, by absorbing the former, to make public burdens weigh equally upon all.

[23] A tax whose total product is not fixed in advance, but depends upon the quantity of things or persons upon whom it happens to fall.-- Translator.

The first sort of taxes--including in France the tax on land, the tax on doors and windows, the poll-tax, the tax on personal property, the tax on tenants, license-fees, the tax on transfers of property, the tax on officials' fees, road-taxes, and brevets--is the share which the sovereign reserves for himself out of all the monopolies which he concedes or tolerates; it is, as we have said, the indemnity of the poor, the permit granted to property. Such was the form and spirit of the tax in all the old monarchies: feudalism was its beau ideal. Under that regime the tax was only a TRIBUTE paid by the holder to the universal proprietor or sleeping-partner (commanditaire), the king.

When later, by the development of public right, royalty, the patriarchal form of sovereignty, begins to get impregnated by the democratic spirit, the tax becomes a quota which each voter owes to the COMMONWEALTH, and which, instead of falling into the hand of the prince, is received into the State treasury. In this evolution the principle of the tax remains intact; as yet there is no transformation of the institution; the real sovereign simply succeeds the figurative sovereign. Whether the tax enters into the peculium of the prince or serves to liquidate a common debt, it is in either case only a claim of society against privilege; otherwise, it is impossible to say why the tax is levied in the ratio of fortunes.

Let all contribute to the public expenses: nothing more just. But why should the rich pay more than the poor? That is just, they say, because they possess more. I confess that such justice is beyond my comprehension. . . . One of two things is true: either the proportional tax guarantees a privilege to the larger tax-payers, or else it is a wrong. Because, if property is a natural right, as the Declaration of '93 declares, all that belongs to me by virtue of this right is as sacred as my person; it is my blood, my life, myself: whoever touches it offends the apple of my eye. My income of one hundred thousand francs is as inviolable a the grisette's daily wage of seventy-five centimes; her attic is no more sacred than my suite of apartments. The tax is not levied in proportion to physical strength, size, or skill: no more should it be levied in proportion to property.--What is Property: Chapter II.

These observations are the more just because the principle which it was their purpose to oppose to that of proportional assessment has had its period of application. The proportional tax is much later in history than liege-homage, which consisted in a simple officious demonstration without real payment.

The second sort of taxes includes in general all those designated, by a sort of antiphrasis, by the term INDIRECT, such as taxes on liquor, salt, and tobacco, customs duties, and, in short, all the taxes which DIRECTLY affect the only thing which should be taxed,--product. The principle of this tax, whose name is an actual misnomer, is unquestionably better founded in theory and more equitable in tendency than the preceding: accordingly, in spite of the opinion of the mass, always deceived as to that which serves it as well as to that which is prejudicial to it, I do not hesitate to say that this tax is the only normal one, barring its assessment and collection, with which it is not my purpose now to deal.

For, if it is true, as we have just explained, that the real nature of the tax is to pay, according to a particular form of wages, for certain services which elude the usual form of exchange, it follows that all producers, enjoying these services equally as far as personal use is concerned, should contribute to their payment in equal portions. The share for each, therefore, would be a fraction of his exchangeable product, or, in other words, an amount taken from the values delivered by him for purposes of consumption. But, under the monopoly system, and with collection upon land, the treasury strikes the product before it has entered into exchange, even before it is produced,--a circumstance which results in throwing back the amount of the tax into the cost of production, and consequently puts the burden upon the consumer and lifts it from monopoly.

Whatever the significance of the tax of assessment or the tax of quotite, one thing is sure, and this is the thing which it is especially important for us to know,--namely, that, in making the tax proportional, it was the intention of the sovereign to make citizens contribute to the public expenses, no longer, according to the old feudal principle, by means of a poll-tax, which would involve the idea of an assessment figured in the ratio of the number of persons taxed, and not in the ratio of their possessions, but so much per franc of capital, which supposes that capital has its source in an authority superior to the capitalists. Everybody, spontaneously and with one accord, considers such an assessment just; everybody, therefore, spontaneously and with one accord, looks upon the tax as a resumption on the part of society, a sort of redemption exacted from monopoly. This is especially striking in England, where, by a special law, the proprietors of the soil and the manufacturers pay, in proportion to their incomes, a tax of forty million dollars, which is called the poor-rate.

In short, the practical and avowed object of the tax is to effect upon the rich, for the benefit of the people, a proportional resumption of their capital.

Now, analysis and the facts demonstrate:

That the tax of assessment, the tax upon monopoly, instead of being paid by those who possess, is paid almost entirely by those who do not possess;

That the tax of quotite, separating the producer from the consumer, falls solely upon the latter, thereby taking from the capitalist no more than he would have to pay if fortunes were absolutely equal;

Finally, that the army, the courts, the police, the schools, the hospitals, the almshouses, the houses of refuge and correction, public functions, religion itself, all that society creates for the protection, emancipation, and relief of the proletaire, paid for in the first place and sustained by the proletaire, is then turned against the proletaire or wasted as far as he is concerned; so that the proletariat, which at first labored only for the class that devours it,--that of the capitalists,--must labor also for the class that flogs it,--that of the nonproducers.

These facts are henceforth so well known, and the economists--I owe them this justice--have shown them so clearly, that I shall abstain from correcting their demonstrations, which, for the rest, are no longer contradicted by anybody. What I propose to bring to light, and what the economists do not seem to have sufficiently understood, is that the condition in which the laborer is placed by this new phase of social economy is susceptible of no amelioration; that, unless industrial organization, and therefore political reform, should bring about an equality of fortunes, evil is inherent in police institutions as in the idea of charity which gave them birth; in short, that the STATE, whatever form it affects, aristocratic or theocratic, monarchical or republican, until it shall have become the obedient and submissive organ of a society of equals, will be for the people an inevitable hell,--I had almost said a deserved damnation.

% 2.--Antinomy of the tax.

I sometimes hear the champions of the statu quo maintain that for the present we enjoy liberty enough, and that, in spite of the declamation against the existing order, we are below the level of our institutions. So far at least as taxation is concerned, I am quite of the opinion of these optimists.

According to the theory that we have just seen, the tax is the reaction of society against monopoly. Upon this point opinions are unanimous: citizens and legislators, economists, journalists, and ballad-writers, rendering, each in their own tongue, the social thought, vie with each other in proclaiming that the tax should fall upon the rich, strike the superfluous and articles of luxury, and leave those of prime necessity free. In short, they have made the tax a sort of privilege for the privileged: a bad idea, since it involved a recognition of the legitimacy of privilege, which in no case, whatever shape it may take, is good for anything. The people had to be punished for this egoistic inconsistency: Providence did not fail in its duty.

From the moment, then, of the conception of the tax as a counter-claim, it had to be fixed proportionally to means, whether it struck capital or affected income more especially. Now, I will point out that the levying of the tax at so much a franc being precisely that which should be adopted in a country where all fortunes were equal, saving the differences in the cost of assessment and collection, the treasury is the most liberal feature of our society, and that on this point our morals are really behind our institutions. But as with the wicked the best things cannot fail to be detestable, we shall see the equalitarian tax crush the people precisely because the people are not up to it.

I will suppose that the gross income in France, for each family of four persons, is 1,000 francs: this is a little above the estimate of M. Chevalier, who places it at only 63 centimes a day for each individual, or 919 francs 80 centimes for each household. The tax being today more than a thousand millions, or about an eighth of the total income, each family, earning 1,000 francs a year, is taxed 125 francs.

Accordingly, an income of 2,000 francs pays 250 francs; an income of 3,000 francs, 375; an income of 4,000 francs, 500, etc. The proportion is strict and mathematically irreproachable; the treasury, by arithmetic, is sure of losing nothing.

But on the side of the taxpayers the affair totally changes its aspect. The tax, which, in the intention of the legislator, was to have been proportioned to fortune, is, on the contrary, progressive in the ratio of poverty, so that, the poorer the citizen is, the more he pays. This I shall try to make plain by a few figures.

According to the proportional tax, there is due to the treasury: for an income of 1,000 2,000 3,000 4,000 5,000 6,000 francs, etc. a tax of 125 250 375 500 625 750

According to this series, then, the tax seems to increase proportionally to income.

But when it is remembered that each annual income is made up of 365 units, each of which represents the daily income of the taxpayer, the tax will no longer be found proportional; it will be found equal. In fact, if the State levies a tax of 125 francs on an income of 1,000 francs, it is as if it took from the taxed family 45 days' subsistence; likewise the assessments of 250, 375, 500, 625, and 750 francs, corresponding to incomes of 2,000, 3,000, 4,000, 5,000, and 6,000 francs, constitute in each case a tax of 45 days' pay upon each of those who enjoy these incomes.

I say now that this equality of taxation is a monstrous inequality, and that it is a strange illusion to imagine that, because the daily income is larger, the tax of which it is the base is higher. Let us change our point of view from that of personal to that of collective income.

As an effect of monopoly social wealth abandoning the laboring class to go to the capitalistic class, the object of taxation has been to moderate this displacement and react against usurpation by enforcing a proportional replevin upon each privileged person. But proportional to what? To the excess which the privileged person has received undoubtedly, and not to the fraction of the social capital which his income represents. Now, the object of taxation is missed and the law turned into derision when the treasury, instead of taking its eighth where this eighth exists, asks it precisely of those to whom it should be restored. A final calculation will make this evident.

Setting the daily income of each person in France at 68 centimes, the father of a family who, whether as wages or as income from his capital, receives 1,000 francs a year receives four shares of the national income; he who receives 2,000 francs has eight shares; he who receives 4,000 francs has sixteen, etc. Hence it follows that the workman who, on an income of 1,000 francs, pays 125 francs into the treasury renders to public order half a share, or an eighth of his income and his family's subsistence; whereas the capitalist who, on an income of 6,000 francs, pays only 750 francs realizes a profit of 17 shares out of the collective income, or, in other words, gains by the tax 425 per cent.

Let us reproduce the same truth in another form.

The voters of France number about 200,000. I do not know the total amount of taxes paid by these 200,000 voters, but I do not believe that I am very far from the truth in supposing an average of 300 francs each, or a total of 60,000,000 for the 200,000 voters, to which we will add twenty-five per cent. to represent their share of indirect taxes, making in all 75,000,000, or 75 francs for each person (supposing the family of each voter to consist of five persons), which the electoral class pays to the State. The appropriations, according to the "Annuaire Economique" for 1845, being 1,106,000,000, there remains 1,031,000,000, which makes the tax paid by each non-voting citizen 31 francs 30 centimes,--two-fifths of the tax paid by the wealthy class. Now, for this proportion to be equitable, the average welfare of the non-voting class would have to be two-fifths of the average welfare of the voting class: but such is not the truth, as it falls short of this by more than three-fourths.

But this disproportion will seem still more shocking when it is remembered that the calculation which we have just made concerning the electoral class is altogether wrong, altogether in favor of the voters.

In fact, the only taxes which are levied for the enjoyment of the right of suffrage are: (1) the land tax; (2) the tax on polls and personal property; (3) the tax on doors and windows; (4) license-fees. Now, with the exception of the tax on polls and personal property, which varies little, the three other taxes are thrown back on the consumers; and it is the same with all the indirect taxes, for which the holders of capital are reimbursed by the consumers, with the exception, however, of the taxes on property transfers, which fall directly on the proprietor and amount in all to 150,000,000. Now, if we estimate that in this last amount the property of voters figures as one-sixth, which is placing it high, the portion of direct taxes (409,000,000) being 12 francs for each person, and that of indirect taxes (547,000,000) 16 francs, the average tax paid by each voter having a household of five will reach a total of 265 francs, while that paid by the laborer, who has only his arms to support himself, his wife, and two children, will be 112 francs. In more general terms, the average tax upon each person belonging to the upper classes will be 53 francs; upon each belonging to the lower, 28. Whereupon I renew my question: Is the welfare of those below the voting standard half as great as that of those above it?

It is with the tax as with periodical publications, which really cost more the less frequently they appear. A daily journal costs forty francs, a weekly ten francs, a monthly four. Supposing other things to be equal, the subscription prices of these journals are to each other as the numbers forty, seventy, and one hundred and twenty, the price rising with the infrequency of publication. Now, this exactly represents the increase of the tax: it is a subscription paid by each citizen in exchange for the right to labor and to live. He who uses this right in the smallest proportion pays much; he who uses it a little more pays less; he who uses it a great deal pays little.

The economists are generally in agreement about all this. They have attacked the proportional tax, not only in its principle, but in its application; they have pointed out its anomalies, almost all of which arise from the fact that the relation of capital to income, or of cultivated surface to rent, is never fixed.

Given a levy of one-tenth on the income from lands, and lands of different qualities producing, the first eight francs' worth of grain, the second six francs' worth, the third five francs' worth, the tax will call for one-eighth of the income from the most fertile land, one-sixth from that a little less fertile, and, finally, one-fifth from that less fertile still.[24] Will not the tax thus established be just the reverse of what it should be? Instead of land, we may suppose other instruments of production, and compare capitals of the same value, or amounts of labor of the same order, applied to branches of industry differing in productivity: the conclusion will be the same. There is injustice in requiring the same poll-tax of ten francs from the laborer who earns one thousand francs and from the artist or physician who has an income of sixty thousand.--J. Garnier: Principles of Political Economy.

[24] This sentence, as it stands, is unintelligible, and probably is not correctly quoted by Proudhon. At any rate, one of Garnier's works contains a similar passage, which begins thus: "Given a levy of one on the area of the land, and lands of different qualities producing, the first eight, the second six, the third five, the tax will call for one- eighth," etc. This is perfectly clear, and the circumstances supposed are aptly illustrative of Proudhon's point. I should unhesitatingly pronounce it the correct version, except for the fact that Proudhon, in the succeeding paragraph, interprets Garnier as supposing income to be assessed instead of capital.--Translator.

These reflections are very sound, although they apply only to collection or assessment, and do not touch the principle of the tax itself. For, in supposing the assessment to be made upon income instead of upon capital, the fact always remains that the tax, which should be proportional to fortunes, is borne by the consumer.

The economists have taken a resolve; they have squarely recognized the iniquity of the proportional tax.

"The tax," says Say, "can never be levied upon the necessary." This author, it is true, does not tell us what we are to understand by the necessary, but we can supply the omission. The necessary is what each individual gets out of the total product of the country, after deducting what must be taken for taxes. Thus, making the estimate in round numbers, the production of France being eight thousand millions and the tax one thousand millions, the necessary in the case of each individual amounts to fifty-six and a half centimes a day. Whatever is in excess of this income is alone susceptible of being taxed, according to J. B. Say; whatever falls short of it must be regarded by the treasury as inviolable.

The same author expresses this idea in other words when he says: "The proportional tax is not equitable." Adam Smith had already said before him: "It is not unreasonable that the rich man should contribute to the public expenses, not only in proportion to his income, but something more." "I will go further," adds Say; "I will not fear to say that the progressive tax is the only equitable tax." And M. J. Garnier, the latest abridger of the economists, says: "Reforms should tend to establish a progressional equality, if I may use the phrase, much more just, much more equitable, than the pretended equality of taxation, which is only a monstrous inequality."

So, according to general opinion and the testimony of the economists, two things are acknowledged: one, that in its principle the tax is a reaction against monopoly and directed against the rich; the other, that in practice this same tax is false to its object; that, in striking the poor by preference, it commits an injustice; and that the constant effort of the legislator must be to distribute its burden in a more equitable fashion.

I needed to establish this double fact solidly before passing to other considerations: now commences my criticism.

The economists, with that simplicity of honest folk which they have inherited from their elders and which even today is all that stands to their credit, have taken no pains to see that the progressional theory of the tax, which they point out to governments as the ne plus ultra of a wise and liberal administration, was contradictory in its terms and pregnant with a legion of impossibilities. They have attributed the oppression of the treasury by turns to the barbarism of the time, the ignorance of princes, the prejudices of caste, the avarice of collectors, everything, in short, which, in their opinion, preventing the progression of the tax, stood in the way of the sincere practice of equality in the distribution of public burdens; they have not for a moment suspected that what they asked under the name of progressive taxation was the overturn of all economic ideas.

Thus they have not seen, for instance, that the tax was progressive from the very fact that it was proportional, the only difference being that the progression was in the wrong direction, the percentage being, as we have said, not directly, but inversely proportional to fortunes. If the economists had had a clear idea of this overturn, invariable in all countries where taxation exists, so singular a phenomenon would not have failed to draw their attention; they would have sought its causes, and would have ended by discovering that what they took for an accident of civilization, an effect of the inextricable difficulties of human government, was the product of the contradiction inherent in all political economy.

The progressive tax, whether applied to capital or to income, is the very negation of monopoly, of that monopoly which is met everywhere, according to M. Rossi, across the path of social economy; which is the true stimulant of industry, the hope of economy, the preserver and parent of all wealth; of which we have been able to say, in short, that society cannot exist without it, but that, except for it, there would be no society. Let the tax become suddenly what it unquestionably must sometime be,--namely, the proportional (or progressional, which is the same thing) contribution of each producer to the public expenses, and straightway rent and profit are confiscated everywhere for the benefit of the State; labor is stripped of the fruits of its toil; each individual being reduced to the proper allowance of fifty-six and a half centimes, poverty becomes general; the compact formed between labor and capital is dissolved, and society, deprived of its rudder, drifts back to its original state.

It will be said, perhaps, that it is easy to prevent the absolute annihilation of the profits of capital by stopping the progression at any moment.

Eclecticism, the golden mean, compromise with heaven or with morality: is it always to be the same philosophy, then? True science is repugnant to such arrangements. All invested capital must return to the producer in the form of interest; all labor must leave a surplus, all wages be equal to product. Under the protection of these laws society continually realizes, by the greatest variety of production, the highest possible degree of welfare. These laws are absolute; to violate them is to wound, to mutilate society. Capital, accordingly, which, after all, is nothing but accumulated labor, is inviolable. But, on the other hand, the tendency to equality is no less imperative; it is manifested at each economic phase with increasing energy and an invincible authority. Therefore you must satisfy labor and justice at once; you must give to the former guarantees more and more real, and secure the latter without concession or ambiguity.

Instead of that, you know nothing but the continual substitution of the good pleasure of the prince for your theories, the arrest of the course of economic law by arbitrary power, and, under the pretext of equity, the deception of the wage worker and the monopolist alike! Your liberty is but a half-liberty, your justice but a half-justice, and all your wisdom consists in those middle terms whose iniquity is always twofold, since they justify the pretensions of neither one party nor the other! No, such cannot be the science which you have promised us, and which, by unveiling for us the secrets of the production and consumption of wealth, must unequivocally solve the social antinomies. Your semi- liberal doctrine is the code of despotism, and shows that you are powerless to advance as well as ashamed to retreat.

If society, pledged by its economic antecedents, can never retrace its steps; if, until the arrival of the universal equation, monopoly must be maintained in its possession,--no change is possible in the laying of taxes: only there is a contradiction here, which, like every other, must be pushed till exhausted. Have, then, the courage of your opinions,-- respect for wealth, and no pity for the poor, whom the God of monopoly has condemned. The less the hireling has wherewith to live, the more he must pay: qui minus habet, etiam quod habet auferetur ab eo. This is necessary, this is inevitable; in it lies the safety of society.

Let us try, nevertheless, to reverse the progression of the tax, and so arrange it that the capitalist, instead of the laborer, will pay the larger share.

I observe, in the first place, that with the usual method of collection, such a reversal is impracticable.

In fact, if the tax falls on exploitable capital, this tax, in its entirety, is included among the costs of production, and then of two things one: either the product, in spite of the increase in its selling value, will be bought by the consumer, and consequently the producer will be relieved of the tax; or else this same product will be thought too dear, and in that case the tax, as J. B. Say has very well said, acts like a tithe levied on seed,--it prevents production. Thus it is that too high a tax on the transfer of titles arrests the circulation of real property, and renders estates less productive by keeping them from changing hands.

If, on the contrary, the tax falls on product, it is nothing but a tax of quotite, which each pays in the ratio of his consumption, while the capitalist, whom it is purposed to strike, escapes.

Moreover, the supposition of a progressive tax based either on product or on capital is perfectly absurd. How can we imagine the same product paying a duty of ten per cent. at the store of one dealer and a duty of but five at another's? How are estates already encumbered with mortgages and which change owners every day, how is a capital formed by joint investment or by the fortune of a single individual, to be distinguished upon the official register, and taxed, not in the ratio of their value or rent, but in the ratio of the fortune or presumed profits of the proprietor?

There remains, then, a last resource,--to tax the net income of each tax-payer, whatever his method of getting it. For instance, an income of one thousand francs would pay ten per cent.; an income of two thousand francs, twenty per cent.; an income of three thousand francs, thirty per cent., etc. We will set aside the thousand difficulties and annoyances that must be met in ascertaining these incomes, and suppose the operation as easy as you like. Well! that is exactly the system which I charge with hypocrisy, contradiction, and injustice.

I say in the first place that this system is hypocritical, because, instead of taking from the rich that entire portion of their income in excess of the average national product per family, which is inadmissible, it does not, as is imagined, reverse the order of progression in the direction of wealth; at most it changes the rate of progression. Thus the present progression of the tax, for fortunes yielding incomes of a thousand francs and UNDER, being as that of the numbers 10, 11, 12, 13, etc., and, for fortunes yielding incomes of a thousand francs and OVER, as that of the numbers 10, 9, 8, 7, 6, etc.,-- the tax always increasing with poverty and decreasing with wealth,--if we should confine ourselves to lifting the indirect tax which falls especially on the poorer class and imposing a corresponding tax upon the incomes of the richer class, the progression thereafter, it is true, would be, for the first, only as that of the numbers 10, 10.25, 10.50, 10.75, 11, 11.25, etc., and, for the second, as 10, 9.75, 9.50, 9.25, 9, 8.75, etc. But this progression, although less rapid on both sides, would still take the same direction nevertheless, would still be a reversal of justice; and it is for this reason that the so-called progressive tax, capable at most of giving the philanthropist something to babble about, is of no scientific value. It changes nothing in fiscal jurisprudence; as the proverb says, it is always the poor man who carries the pouch, always the rich man who is the object of the solicitude of power.

I add that this system is contradictory.

In fact, ONE CANNOT BOTH GIVE AND KEEP, say the jurisconsults. Instead, then, of consecrating monopolies from which the holders are to derive no privilege save that of straightway losing, with the income, all the enjoyment thereof, why not decree the agrarian law at once? Why provide in the constitution that each shall freely enjoy the fruit of his labor and industry, when, by the fact or the tendency of the tax, this permission is granted only to the extent of a dividend of fifty-six and a half centimes a day,--a thing, it is true, which the law could not have foreseen, but which would necessarily result from progression? The legislator, in confirming us in our monopolies, intended to favor production, to feed the sacred fire of industry: now, what interest shall we have to produce, if, though not yet associated, we are not to produce for ourselves alone? After we have been declared free, how can we be made subject to conditions of sale, hire, and exchange which annul our liberty?

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?

Accordingly we always see the legislator stopping, in his fiscal laws, before the subversive consequences of the progressive tax, and consecrating the necessity, the immutability of the proportional tax. For equality in well-being cannot result from the violation of capital: the antinomy must be methodically solved, under penalty, for society, of falling back into chaos. Eternal justice does not accommodate itself to all the whims of men: like a woman, whom one may outrage, but whom one does not marry without a solemn alienation of one's self, it demands on our part, with the abandonment of our egoism, the recognition of all its rights, which are those of science.

The tax, whose final purpose, as we have shown, is the reward of the non-producers, but whose original idea was a restoration of the laborer,--the tax, under the system of monopoly, reduces itself therefore to a pure and simple protest, a sort of extra-judicial act, the whole effect of which is to aggravate the situation of the wage-worker by disturbing the monopolist in his possession. As for the idea of changing the proportional tax into a progressive tax, or, to speak more accurately, of reversing the order in which the tax progresses, that is a blunder the entire responsibility for which belongs to the economists.