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Full text of "War-time financial problems"

64                A LEVY ON CAPITAL

A levy on capital is, of course, merely a variation
of the tax on property, which has long existed in the
United States, and had been resorted to before now
by Governments, of which the German Government
is a leading example, in order to provide funds for a
special emergency. This it can very easily do as
long as the levy is not too high. If, for example, you
tax a man to the extent of i J per cent, to 2 per cent,
of the value of his property, on which he may be
earning an average of 5 to 6 per cent, in interest,
then the levy on capital becomes merely a form of
income tax, assessed not according to the income of
the taxpayer but according to the alleged value of
his property. It is thus, again, a variation of the
system long adopted in this country of a special rate
of income tax on what is called " unearned " income,
i.e. income from invested property. But it is only
when one begins to adopt the broadminded views
lately fashionable of the possibilities of a levy on
capital and to talk of taking, say, 20 per cent, of
the value of a man's property from him in the course
of a year, that it becomes evident that he cannot
be expected to pay anything like this sum, in cash,
unless either a market is somehow provided—which
seems difficult if all property owners at once are to
be mulcted of a larger amount than their incomes—
or unless the Government is prepared to accept part
at least of the levy in the shape of property handed
over at a valuation.

Before, however, we come to deal in detail with the
difficulties and drawbacks of the suggestion, it may
be interesting to trace the history of the movement