and the principle on which it is based may be that of proportioning the burden to the pecuniary means of the individual, or that of equality of sacrifice in any of the forms which seek practically to embody that principle, or indeed any other. Then the question for us will be whether any special consideration, as compared with the normal man, can be claimed by aliens, by citizens or other residents deriving means from foreign sources, or by non-resident owners of property. The existence of such a question is mentioned by several writers on political economy, but they do not express themselves at any length on it. The fullest discussion of it which I have found is contained in the following passage from Professor Sidgwick's Principles of Political Economy, 2nd edition, p. 562.

"It seems clearly just that aliens residing or possessing property in any country should pay something towards the expenses of its government; and if so, unless aliens are to be fined as such, it is clearly just that they should pay proportionally less to their own government; and the only satisfactory way of determining the ratio in which their contribution ought to be divided between the two governments is by regarding it as a price paid for services rendered. An Englishman residing in France is much less concerned than a Frenchman with French expenditure on armaments, but he has as much interest as a Frenchman has in the expenditure for maintaining internal order and promoting well-being in France; and he is also benefited by this latter outlay if, without residing in France, he merely holds property there. It seems therefore most proper that at least a rough division should be made of the taxes ordinarily paid by an English capitalist into three parts; one part to be paid by him to the English government, wherever he may reside or hold property; another to the government of the country in which he resides; while the third should be proportioned to the property that he enjoys under the protection of his own, or any other, state."

There is no difficulty in granting that, if any of the classes of persons which have been contrasted above with the normal man is entitled to special consideration, that consideration must be reached by regarding the contribution of the class as a price for services rendered, the persons who combine fewer of the qualities of citizen, resident and owner of property paying less than those who combine more, because less service is rendered to them. It remains to enquire whether any such ground of less service really exists for the consideration claimed. The assertion that it exists appears at first sight to conflict with the doctrine now prevailing, which I would certainly not impugn, that the benefits received from government by different persons cannot be arithmetically compared in any way, whether in proportion to their property or otherwise, and that therefore government must be regarded as a common concern, to which those interested in it

must contribute on some other basis than that of benefit received. It is however conceivable that that doctrine may apply only within the class "normal man," and that there may be classes as between which, or as between them and normal men, it will not apply. In order that this should be so, I submit that some department or activity of government must be shown which is not a common concern to the normal man and the special class; something which the special class could dispense with, or which might be conducted on a smaller scale if there were no people but the special class. If what goes on would have to go on in any case and on the same scale for the sake of the special class as for that of the normal man, the benefit felt by them respectively from it, or the loss that would be felt by them respectively if the activity or expense in question were stopped or diminished, is not arithmetically comparable. We are then within the range of the arguments by which the prevailing doctrine is supported. We are asked to apply a yard measure to feelings, which we cannot do. It is therefore necessary to enquire whether any singling out of something which might be dispensed with is possible in the cases of the special classes concerned.

Let us first take aliens as a class. The resident alien is concerned in common with the resident citizen in the security of the country from external enemies and internal crime and disturbance. He is further concerned as a resident in whatever conduces to its amenity as a well governed country partaking in progressive civilisation, and I will venture to add in the maintenance of its greatness and empire, since these conduce both to its amenity and to the field which it supplies for the employment of his faculties and means. All that he is not concerned in is any armament undertaken for offence or aggression, and no government will admit that any part of its armaments have that object. M. Lehr, as a member of the committee of the Institute of International Law on our subject, has argued thus:

"On arrive à cette absurdité qu'un état prétend se faire payer un impôt parce qu'un étranger vient y dépenser sa fortune, au grand bénéfice des nationaux. L'assimilation de l'étranger aux indigènes quant à l'impôt ne se justifie que si au fait de la residence se joint l'exercice d'une industrie ou profession lucrative, et encore y aurait-il certaines réserves ou distinctions à faire. Pour moi, la seule règle comforme aux principes du droit international est que l'étranger ne soit passible d'un impôt que sur les biens, rentes, pensions ou allocations qu'il posséde dans le pays, à l'exclusion des biens ou droits de nature quelconque qu'il posséde dans son pays d'origine oudans une tierce contrée."-Annuaire de l'Institut de Droit International, vol. 16, p. 127.

Here we must note the admission that the exercise of a

lucrative industry or profession may render an alien justly liable to taxation, it is not said whether generally or only on the profit made by the industry or profession. But surely the expense which goes to make lucrative employment possible must be reckoned against those for whom it is made possible, whether or not they avail themselves of the opportunities which are provided for them in the country which they seek. If taxation of the non-resident citizen, which M. Lehr justifies, is to be defended on any but the bare legal ground that we have a right to tax him, the insufficiency of which as a reason for actually taxing him was well exposed by Burke when we tried to tax our American colonists, the ground for it must be found in the advantages which belong to him as a citizen; and I might ask my valued colleague whether the omission to use the advantages which belong to you is a better plea for the resident alien than for the non-resident citizen. In sum, I fail to see why foreign nationality should give a claim for special consideration to any who fall within the circumstances in which taxation is imposed on the normal man, and I think that the general practice of the world bears me out.

Property and residence remain to be discussed, and since we may be sure that the government of the country in which property is situated will not excuse it from taxation on the ground that its owner is an absentee, the only practical question is whether foreign property should be reckoned among the pecuniary means on which its owner ought to be taxed in the country in which he resides. The property which from the economical point of view can be localised as being in a given country includes, without attempting an exhaustive enumeration, land and mortgages on land, the public funds of the government or of local authorities, the profits from business carried on in the country, and the shares and securities of companies belonging to it. So much is clear in principle; for all these, and the industry engaged in creating or working them, are protected by the goverment of the country no less than land, and the capital engaged in them is employed in the country. Difficult questions arise in the application of the principle; as for instance, in some cases, as to the exact locality at which transactions ranging over different countries result in a net business profit. And sometimes legal considerations become. inevitably mixed up with economical ones, as for instance when we have to determine the degree of importance which ought to be attached to the fact that a company derives its corporate existence from the law of a given country, as compared with that due to the localities at which its transactions take place. But the No. 35.-VOL. IX.

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principle is broad enough and at the same time definite enough to serve as the foundation for legislation. It must unavoidably be taken as the basis for the taxation of property in the country where it is deemed to be situated, and there can be no greater difficulty in taking it as the basis for the exemption of a resident's foreign property from taxation, if that should be thought right. I do not therefore attach so much inportance as my valued colleague M. Stoerk to the international difficulties which, as above mentioned, he fears from the attempt to fix the situation of different kinds of movable property.

From the total of property which admits of being localised we must for our present purpose make one great deduction, that of land or immovable property. It is the established practice of the world not to tax any one, whether citizen or resident alien, on his foreign land; and our own fiscal system fully recognises this exemption, both for the income tax and for the death duties, and both for truly foreign land and that situated in British colonies or possessions. The origin of the difference thus made between land and movables must be sought in notions, and those feudal notions, of sovereignty. It belongs to what I have referred to as the legal argument on our subject, and yet during the last half century even the legal distinctions between movables and immovables for international purposes have been greatly weakened, while from the economic point of view it would seem that any difference between them is not in principle but only in the greater facility of localisation. In that opinion I am glad to have the support of Mr. Leonard Courtney who, in the discussions in the House of Commons on the Finance Bill of 1894, declared that he saw no reason to maintain the distinction between foreign real and personal property for the death duties; both might be treated on the ground of domicile. However, the exemption of foreign land from taxation must be accepted as a fact, and it is an infectious fact, for its anomalous character tends to confuse the ideas, and this must be ranked among the causes of the efforts made from time to time to extend the exemption more or less widely into the domain of foreign movable property. Especially is this the case among those who do not realise that, strictly speaking, property is never taxed; that persons are the only possible subjects of taxation, and that the question of the means in respect of which they ought to be taxed has little to do with that of the legal authority under which those means, considered in themselves, are placed. The exemption of land situated out of the country supplies a reason the more for carefully apply

ing economic considerations, including those of justice as economic considerations do include them, to the large field which remains, the taxation of residents in respect of movable property held by them out of the country.

It may be well to begin with a short statement of the mode in which the British Parliament has dealt with the matter, not trying to follow the words or the arrangement of the acts. Income tax is payable by persons of all descriptions on the income derived from any property, real or personal, that can be localised in the United Kingdom, including foreign public annuities payable in the United Kingdom and any business or avocation carried on within it. In respect of any movable property, business or avocation to be localised elsewhere, the income tax acts do not concern themselves with domicile, which may be described as a certain technical definition of residence, but affect those who are regular residents in the common understanding of the term, or who in fact reside in the United Kingdom for more than half the year even for some temporary purpose, and those as soon as they arrive who intend to establish their residence in the country. All these are equally affected although aliens, and no one else is affected although a subject. And the persons affected are liable to the tax on the income received by them in the United Kingdon from the sources in question. In some cases arrangements may be made for receiving abroad the income originating abroad, but this is not easy to ordinary persons, so there will be little error if we say that residents in the United Kingdom pay income tax on their income from all sources except land outside it. Next, the legacy duty, or that on the shares of an intestate's estate, is only payable when the deceased was domiciled in the United Kingdom, but then it is payable on all the movable property which after the payment of his debts he has left in any part of the world. For the succession duty, other than on land in the United Kingdom which is always subject to it, or than land out of the United Kingdom which is never subject to it, the principal test is whether the property, without regard to its situation, is held in trust under the law of some part of the United Kingdom. Thus we are introduced to a consideration belonging rather to the legal than to the economic argument, but few settlors would have established such a trust as brings movable property under the succession duty unless they were resident or domiciled in England, Scotland or Ireland. The estate duty falls on all property of any description in the United Kingdom, whatever the nationality or domicile of the deceased, as was the case with the old probate and adminis