The first is determined by the ordinary principles of rent. It is the remuneration given for the use of the portion of land occupied by the house and its appurtenances; and varies from a mere equivalent for the rent which the ground would afford in agriculture, to the monopoly rents paid for advantageous situations in populous thoroughfares. The rent of the house itself, as distinguished from the ground, is the equivalent given for the labor and capital expended on the building. The fact of its being received in quarterly or half yearly payments, makes no difference in the principles by which it is regulated. It comprises the ordinary profit on the builder's capital, and an annuity, sufficient at the current rate of interest, after paying for all repairs chargeable on the proprietor, to replace the original capital by the time the house is worn out, or by the expiration of the usual term of a building lease.

A tax of so much per cent. on the gross rent, falls on both these portions alike. The more highly a house is rented, the more it pays to the tax, whether the quality of the situation or that of the house itself is the cause. The incidence, however, of these two portions of the tax must be considered separately.

As much of it as is a tax on building-rent, must ultimately fall on the consumer, in other words the occupier. For as the profits of building are already not above the ordinary rate, they would, if the tax fell on the owner and not on the occupier, become lower than the profits of untaxed employments, and houses would not be built. It is probable, however, that for some time after the tax was first imposed, a great part of it would fall, not on the renter, but on the owner of the house. A large proportion of the consumers either could not afford, or would not choose, to pay their former rent with the tax in addition, but would content themselves with a lower scale of accommodation. Houses, therefore, would be for a time in excess of the

demand. The consequence of such excess, in the case of most other articles, would be an almost immediate diminution of the supply; but so durable a commodity as houses does not rapidly diminish in amount. New buildings indeed (at least of the more expensive class) would cease to be erected, except for special reasons; but in the mean time the temporary superfluity would lower rents, and the consumers would obtain, perhaps, nearly the same accommodation as formerly, for the same aggregate payment, rent and tax together. By degrees, however, as the existing houses wore out, or as increase of population demanded a greater supply, rents would again rise, until it became profitable to recommence building, which would not be until the tax was wholly thrown upon the occupier. In the end, therefore, the occupier bears that portion of a tax on rent, which falls on the payment made for the house itself, exclusively of the ground it stands on.

rent.

At first sight, one would be inclined to suppose the case to be different with the portion which is a tax on groundAs taxes on rent, properly so called, fall on the landlord, a tax on ground-rent, one would suppose, must fall on the ground landlord, at least after the expiration of the building lease. And such would really be the case, if with the tax on ground-rent there were combined an equivalent tax on agricultural rent; but not otherwise. The lowest rent of land let for building is very little above the rent which the same ground would yield in agriculture; since it is reasonable to suppose that land, unless in case of exceptional circumstances, is let or sold for building, as soon as it is decidedly worth more for that purpose than for agriculture. If, therefore, a tax were laid on ground-rents without being also laid on agricultural rents, it would, unless of quite trifling amount, reduce the return from the lowest ground-rents below the ordinary return from land, and would put a stop to further building quite as effectually

as if it were a tax on building-rents, until either the increased demand of a growing population, or a diminution of supply by wearing out, had raised the rent by a full equivalent for the tax. But whatever raises the lowest ground-rents, raises all others, since each exceeds the lowest by precisely the market value of its peculiar advantages. There is thus no difference between the two component elements of house-rent, in respect to the incidence of the tax. Both alike fall ultimately on the occupier; while in both alike, if the occupier in consequence reduces his demand by contenting himself with inferior accommodation, that is, if he prefers saving his tax from house-rent to saving it from other parts of his expenditure, he indirectly lowers ground-rent, or retards its increase; just as a diminished consumption of agricultural produce, by making cultivation retrograde, would lower ordinary rent.

A house-tax, if justly proportioned to the value of the house, is one of the fairest and most unobjectionable of all taxes. No part of a person's expenditure is a better criterion of his means, or bears, on the whole, more nearly the same proportion to them. A house-tax is a nearer approach to a fair income tax, than a direct assessment on income can easily be; having the great advantage, that it makes spontaneously all the allowances which it is so difficult to make, and so impracticable to make exactly, in assessing an income tax; for if what a person pays in house-rent is a test of anything, it is a test not of what he possesses, but of what he thinks he can afford to spend. To the equality of this tax, there are but two decided objections. The first is, that a miser may escape it. This objection applies to all taxes on expenditure; nothing but a direct tax on income can reach a miser. But this, though a real, is not a great defect; for there are few misers; and as they do not now hoard their treasure, but invest it in employments in which it feeds productive laborers, and adds to the national

wealth, and consequently to the general means of paying taxes, the inconvenience of its paying no taxes of its own is in some degree compensated for. The second objection is, that a person may require a larger and more expensive house, not from having greater means, but from having a larger family. Of this, however, he is not entitled to complain; since having a large family is at a person's own choice, and, so far as concerns the public interest, is a thing rather to be discouraged than promoted.*

Though the house-tax which formerly existed in this country has been repealed, a large portion of the taxation of the country is still raised by a house-tax; a parochial taxation of the towns entirely, and of the rural districts partially, consisting of an assessment on house-rent. The window-tax is also a house-tax, but of a bad kind, operating as a tax on light, and a cause of deformity in building. It would be a most advantageous exchange to abolish the window-tax and the present income-tax, and replace them by a house-tax of equivalent amount. In doing so, it would be necessary to avoid the unjust principle on which the old house-tax was assessed, and which contributed quite as much as the selfishness of the middle classes to produce the outcry against the tax in 1834. The public were justly scandalized on learning that residences like Chatsworth or Belvoir were only rated on an imaginary

It has been also objected that house-rent in the rural districts is much lower than in towns, and lower in some towns and in some rural districts than in others; so that a tax proportioned to it would have a corresponding inequality of pressure. To this, however, it may be answered, that in places where house-rent is low, persons of the same amount of income usually live in larger and better houses, and thus expend in house-rent more nearly the same proportion of their incomes than might at first sight appear. Or if not, the probability will be, that many of them live in those places precisely because they are too poor to live elsewhere, and have therefore the strongest claim to be taxed lightly. In some cases, it is precisely because the people are poor that house-rent remains low.

rent of perhaps £200 a year, under the pretext that owing to the great expense of keeping them up, they could not be let for more. Probably, indeed, they could not be let even for that; if the argument were a fair one, they ought not to have been taxed at all. But a house-tax is not intended as a tax on incomes derived from houses, but on expenditure incurred for them. The thing which it is wished to ascertain is, what a house costs to the person who lives in it, not what it would bring in if let to some one else. When the occupier is not the owner, the rent he pays is the measure of what it costs him; when he is the owner, some other measure must be sought. A valuation should be made of the house, not at what it would sell for, but at what would be the cost of rebuilding it, and this valuation might be corrected each year by an allowance for what it had lost in value by time, or gained by repairs and improvements. The amount of the amended valuation would form a principal sum, the interest of which, at the current price of the public funds, would form the annual value at which the building should be assessed to the tax.

As incomes below a certain amount ought to be exempt from income-tax, so ought houses below a certain value, from house-tax, on the universal principle of sparing from all taxation the absolute necessaries of healthful existence. In order that the occupiers of lodgings, as well as of houses, might benefit, as in justice they ought, by this exemption, it might be optional with the owners to have every portion of a house which is occupied by a separate tenant, valued and assessed separately, as is now usually the case with chambers.