The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction.
• Taxation and Work.
• Chapter I.: Occupations. Distribution of Products.
• Chapter II.: Taxation Measured By Work.
• Chapter III.: Taxation Measured In Money.
• Chapter IV.: Principal Sources of Revenue.
• Chapter V.: How the Tariff Should Be Reformed.
• Chapter VI.: Taxation Which the Government Does Not Receive.
• Chapter VII.: British Tariff Reform.
• Chapter VIII.: Beggarly Compensation of United States Officials.
• Chapter IX.: What Is Protection?
• Chapter X.: Occupations That Cannot Be Protected By Duties On Imports.
• Chapter XI.: Method of Tariff Reform.
• Chapter XII.: Protection By Exemption From Taxation.
• Chapter XIII.: Free Trade the Objective Point.
• Chapter XIV.: Attempted Definition of the Principle of Protection By Senators Sherman, Hoar, and Aldrich.
• Chapter XV.: Hamilton’s Policy.
• Chapter XVI.: Tariff Protection Does Not Raise Wages.
• Chapter XVII.: Protection Promotes War; Free Trade Promotes Peace.
• Chapter XVIII.: Does Tariff Protection Promote Liberty?
• Chapter XIX.: Progressive Reduction of Duties.
• Chapter XX.: Cost of a High Tariff.
• Chapter XXI.: Development By Free Commerce.
• Chapter XXII.: High Wages and Low Cost.
• Chapter XXIII.: The Use of Machinery By Nations.
• Chapter XXIV.: The Waste of Armies.
• Chapter XXV.: Senator Morrill’s Report On Canada Received. Food and Wages.
• Chapter XXVI.: In the Matter of Silver, Bi-metallism, and Free Coinage.
• Chapter XXVII.: Volume of Trade.
• Chapter XXVIII.: Taxation By Bad Money.
• Chapter XXIX.: How to Maintain Silver Equal to Gold.
• Chapter XXX.: The Issue Joined.
• Chapter XXXI.: Personal Observations—conclusion.

CHAPTER II.

Taxation Measured by Work.

In the previous chapter an approximate computation was given of the value of our annual product. Given a certain measure of such product—then it follows that by so much as some persons secure a larger share of the whole—by so much must the share of the others be reduced. The share or proportion which must be assigned to the support of government is taken from those who do the work of the country in proportion to consumption and not in ratio to the work done. The case may be stated in other terms. A certain part of every person’s work must be devoted to the support of the government, and since the revenues are derived mainly from the taxation of articles of common consumption, therefore the cost of government is put upon the people in proportion to their consumption of the subjects of taxation rather than in proportion to their personal incomes.

THE CASE STATED.

In order to make this case of Taxation and Work clear, we will first give a statement of the expenditures of the government in the fiscal year ending June 30, 1891, measured by men’s work for one year of three hundred days at two dollars per day; we will then deal with the subject by the customary method in terms of money. It might be suitable to make this computation at a less rate per day, since national taxes upon articles of common consumption are paid in largest measure by people of moderate incomes of less than $600 for each working group of three, or less than $1,000 for each family of five. It is probable, to say the least, that the actual cost of government when stated in terms of work would be one-fifth greater in number of men occupied in each year, than the figures which are given in the subsequent tables. This will become apparent by recurring to the sorting of occupations in Chapter I., taking observation of the great proportions of laborers, mechanics, factory operators, and persons engaged in personal service as compared to all others.

The best way to put this case is in the customary form of an account current.

In other words, it required the full year’s work of about 765,000 men to support the President, Cabinet Officials, Legislators, Judges, Tax Gatherers, Postmasters, Soldiers, Sailors, and others who perform the actual work of the government; including also the pensioners and the claim agents who batten upon them, and all others who get their living out of or by direct payment from the government.

In addition to this sum, under present laws the government will tax the people in the next fiscal year for some other purposes, to wit:

Adding these last items the facts will show about eight hundred and sixty thousand men now working for the support of the government and for the support of those to whom bounties are to be paid; or, what is nearer the truth, every one who is at work in every occupation is forced to continue the effort so much longer, or to work so much harder, as the cost of the government is in ratio to the total consumption of taxed articles by every one who does any work—mental, manual, or mechanical.

This cost represents nearly four per cent. of all the work that is done by all the people. The work done to support State and municipal governments is somewhat less. It may come to two or three per cent. When we get the full census figures we may secure a more adequate measure. In 1880 the writer computed the ratio of all taxation to product at about seven per cent. Since then the product has increased, but taxation has somewhat diminished, in ratio to the product. If the taxes were rightly framed and rightly spent we might not complain. Compared to other countries the burden is very light, although in many ways we do not get as much for our money, especially in cities,—but that subject is aside from my present purpose.

According to the Blue Book lately issued by the government, the total number of persons employed in its service, omitting postmasters, was over 160,000, to whom must be added the men in the army and the navy, making a total of about 200,000. The number of mechanics and laborers who are employed upon public works cannot be computed.

In dealing with the cost of government in terms of work it will be observed that we may rightly compute the number occupied in the service itself and also the number occupied in making provision for their support. It is not held that the work of government is not necessary and conducive to production, but it represents so much energy diverted from actual production. If men actually governed themselves, then all who are now in the service would be producing something for personal use or exchange, and there would be no taxes to pay. The remission of work now exerted for and by the government would then be substantially that of a number of men considerably exceeding one million.

In other words, if there are now about 23,000,000 men, women, and children occupied for gain in all the arts of life, including the support of the government, we may very surely assume that very nearly if not quite five per cent. of the actual work or energy of the people is expended in the processes of the national government.