12 THE OUTLOOK FOR CAPITAL

pared to take payment in factory chimneys, railway
sleepers, houses and fields, or the securities and
mortgages that are claims on their product, it is not
possible to tax capital. The only thing that the
Government can tax is the output, that is tŠ say, the
annual income of the people. In other words, a tax
on capital is simply a form of income tax assessed,
not according to a man's income, but according to
the assets of which he is possessed. The effect of
such a tax would be that he who has spent everything
that he has earned on his own enjoyment would go
scot free in the matter of the capital tax, and would
be rewarded for his improvidence by being asked to
make no sacrifice ; while his thrifty brother who, out
of a smaller income, has set aside a certain proportion
during the last twenty or thirty years, would have
to hand over a portion of his current income assessed
upon the value of the assets into which he has put
his savings. Incidentally, it may be remarked that
it would take years to make this necessary valuation,
and that it would probably be done in a very inequit-
able manner by untrained and incompetent officials.
But the important point is this, that if the Govern-
ment shows a tendency to take the possession of
assets as a basis for taxation it will be directly
encouraging those who spend their whole income in
riotous living and frivolous amusement, and dis-
couraging those who help to increase mankind's
output by adding to the capital available.

Finally, it may be added that the shyness of the
saver will be greatly diminished if he can feel that
there is a trustworthy machinery of company