Front Page Titles (by Subject) chapter x: Taxes on Rent1 - The Works and Correspondence of David Ricardo, Vol. 1 Principles of Political Economy and Taxation
Return to Title Page for The Works and Correspondence of David Ricardo, Vol. 1 Principles of Political Economy and Taxation
The Online Library of Liberty
A project of Liberty Fund, Inc.
Search this Title:
chapter x: Taxes on Rent1 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 1 Principles of Political Economy and Taxation 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 1 Principles of Political Economy and Taxation.
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
First published by Cambridge University Press in 1951. Copyright 1951, 1952, 1955, 1973 by the Royal Economic Society. This edition of The Works and Correspondence of David Ricardo is published by Liberty Fund, Inc., under license from the Royal Economic Society.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
Taxes on Rent1
A tax on rent would affect rent only; it would fall wholly on landlords, and could not be shifted to any class of consumers. The landlord could not raise his rent, because he would leave unaltered the difference between the produce obtained from the least productive land in cultivation, and that obtained from land of every other quality. Three sorts of land, No. 1, 2, and 3, are in cultivation, and yield respectively with the same labour, 180, 170, and 160 quarters of wheat; but No. 3 pays no rent, and is therefore untaxed: the rent then of No. 2 cannot be made to exceed the value of ten, nor No. 1, of twenty quarters. Such a tax could not raise the price of raw produce, because as the cultivator of No. 3 pays neither rent nor tax, he would in no way be enabled to raise the price of the commodity produced. A tax on rent would not discourage the cultivation of fresh land, for such land pays no rent, and would be untaxed. If No. 4 were taken into cultivation, and yielded 150 quarters, no tax would be paid for such land; but it would create a rent of ten quarters on No. 3, which would then commence paying the tax.
A tax on rent, as rent is constituted, would discourage cultivation, because it would be a tax on the profits of the landlord. The term rent of land, as I have elsewhere observed,2 is applied to the whole amount of the value paid by the farmer to his landlord, a part only of which is strictly rent. The buildings and fixtures, and other expenses paid for by the landlord, form strictly a part of the stock of the farm, and must have been furnished by the tenant, if not provided by the landlord. Rent is the sum paid to the landlord for the use of the land, and for the use of the land only. The further sum that is paid to him under the name of rent, is for the use of the buildings, &c., and is really the profits of the landlord’s stock. In taxing rent, as no distinction would be made between that part paid for the use of the land, and that paid for the use of the landlord’s stock, a portion of the tax would fall on the landlord’s profits, and would, therefore, discourage cultivation, unless the price of raw produce rose. On that land, for the use of which no rent was paid, a compensation under that name might be given to the landlord for the use of his buildings. These buildings would not be erected, nor would raw produce be grown on such land, till the price at which it sold would not only pay for all the usual outgoings, but also this1 additional one of the tax. This part of the tax does not fall on the landlord, nor on the farmer, but on the consumer of raw produce.
There can be little doubt but that if a tax were laid on rent, landlords would soon find a way to discriminate between that which is2 paid to them for the use of the land, and that which is3 paid for the use of the buildings, and the improvements which are4 made by the landlord’s stock. The latter would either be called the rent of house and buildings, or on5 all new land taken into cultivation, such buildings would be erected,6 and improvements would be made by the tenant, and not by the landlord. The landlord’s capital might indeed be really employed for that purpose; it might be nominally expended by the tenant, the landlord furnishing him with the means, either in the shape of a loan, or in the purchase of an annuity for the duration of the lease. Whether distinguished or not, there is a real difference between the nature of the compensations which the landlord receives for these different objects; and it is quite certain, that a tax on the real rent of land falls wholly on the landlord, but that a tax on that remuneration which the landlord receives for the use of his stock expended on the farm, falls, in a progressive country,1 on the consumer of raw produce. If a tax were laid on rent, and no means of separating the remuneration now paid by the tenant to the landlord under the name of rent were adopted, the tax, as far as it regarded the rent on the buildings and other fixtures, would never fall for any length of time on the landlord, but on the consumer. The capital expended on these buildings, &c., must afford the usual profit2 of stock; but it would cease to afford this profit on the land last cultivated, if the expenses of those buildings, &c., did not fall on the tenant; and if they did, the tenant would then cease to make his usual profits of stock, unless he could charge them on the consumer.
[1 ]In ed. 1 this chapter is numbered ‘VIII*’ both here and in the Contents. See above, p. 10, n.
[2 ]Above, p. 67.
[1 ]Ed. 1 ‘but also for this’.
[2 ]Ed. 1 ‘was’.
[3 ]Ed. 1 ‘was’.
[4 ]Ed. 1 ‘were’.
[5 ]Ed. 1 ‘in’.
[6 ]Ed. 1 does not contain ‘would be erected,’.
[1 ]Eds. 1–2 do not contain ‘, in a progressive country,’.
[2 ]Eds. 1–2 ‘profits’.