A Short Story from the March 2012 issue of the Socialist Standard
(The Socialist Standard Archives Department recently came across a hand-written document concerning William Pitt the Younger, Prime Minister and inventor of income tax, which appears to be part of the memoirs of some obscure 18th century official. We are unable to say whether the document is genuine, but the argument contained in it is plausible and may well have taken place in some form. We reproduce it here because it has some bearing on current debates about what ‘public money’ is used for.)
A Capital Notion
Being a true account of intercourse lately passed between Mr Pitt and one Edgar Crutchley, Comptroller in the Office of Customs and Excise, Whitehall, June 1796.
Mr Pitt (afterwards WP): I am informed that you wait upon me for purposes of discussing the war with our French brethren?
Mr Crutchley (EC): Indeed sir. I have an idea how you can raise the money to fight Napoleon.
WP: Pray enlighten me, I am all ears.
EC: Well, you know that whereas it is always easy to tax the poor, to separate the widow from her mite, as it were, the rich manage to squirm out of every tax you can concoct, and thus deprive the state of any meaningful revenue?
WP: Ah, t’is ever so, more’s the pity.
EC: You tax windows, they brick them up; you tax shoe buckles and hair powder, they adopt new fashions; you tax offices, they change the names…
WP: Yes, yes. The gentle classes are most assiduous in such evasions.
EC: And when you try to tax their land and business income directly, they cry pompously about invasion of privacy and then hide their money.
WP: Well? Get on with it, man. Now you are taxing my patience.
EC: There’s a form of purchase only the rich can make, and one they can’t hide or change like their wigs – that is when they hire workers. What if you create a tax on wages and force the workers, not the employers, to pay it?
WP: Tax the workers? What nonsense. Where will they find the money to pay a tax? They are destitute, with scarce enough to live on. Indeed, they are sucked as dry as they can be sucked!
EC: Precisely sir. So wages will have to go up, won’t they? It stands to reason.
WP: You mean, visit upon workers an insupportable tax which employers must needs supply the money for? And the point of this device, my good man?
EC: The point is, workers can’t get out of paying the tax, and employers can’t get out of increasing their wages to pay for it, or else they’ll get no workers. So it’s a tax on the rich, not by the front door but by the servants’ entrance, if you like. One they won’t be able to evade like they evade everything else.
WP: I suppose it might settle present accounts with Boney. But I could hardly make such a thing permanent. There would be pandemonium in the House, by God.
EC: Well then, sir, call it a temporary measure. Like as not, a man of your noble intellect can find reasons to keep introducing it every year. One day you may even make it permanent, and your revenue thus secured.
WP: Hmm. T’is true, an enforceable tax on the rich would answer our lamentable want of funds. We could have a proper civil service at last, an efficient administration of the state. Ah, but I perceive a problem.
EC: Problem, sir?
WP: The labouring classes will think that they are paying this tax, out of their own money, will they not?
EC: Yes sir, they certainly will believe it to be so. It will even say so on their payslips.
WP: Why then, they will think themselves entitled to parlay every purpose we put this tax money to. They will say that our institutions are really their institutions. We shall have a caterwauling mob every time we use the money to finance a war, build a government office, or bail out a bank. We shall have their damnable interference at every transaction, as if they were the true holders of the purse strings!
EC: That may be, sir. But you shall have a reliable source of revenue from the rich, which is no small thing. And it may be that a working class which believes itself to be the source of state money will tend to ally its interests with that state, instead of being arraigned as outsiders against it.
WP: Can such a working class, thus flattered above its degree, be kept in due station, I wonder?
EC: That is for history to unveil, sir. I merely cast accounts in the present. But I believe a class which thinks itself already in power will see no need to seize power. By such grand illusions is true power maintained.
WP: Are they all as smart as you in the Treasury? I shall have to watch out.
Transcribed by PJS