POOR RATES.
We have seen that taxes on raw produce, and on the profits of the
farmer, will fall on the consumer of raw produce; since unless he had
the power of remunerating himself by an increase of price, the tax would
reduce his profits below the general level of profits, and would urge
him to remove his capital to some other trade. We have seen too that he
could not, by deducting it from his rent, transfer the tax to his
landlord; because that farmer who paid no rent, would, equally with the
cultivator of better land, be subject to the tax, whether it were laid
on raw produce, or on the profits of the farmer. I have also attempted
to shew, that if a tax were general, and affected equally all profits,
whether manufacturing or agricultural, it would not operate either on
the price of goods or raw produce, but would be immediately, as well as
ultimately, paid by the producers. A tax on rent, it has been observed,
would fall on the landlord only, and could not by any means be made to
devolve on the tenant.
The poor rate is a tax which partakes of the nature of all these taxes,
and under different circumstances falls on the consumer of raw produce
and goods, on the profits of stock, and on the rent of land. It is a tax
which falls with peculiar weight on the profits of the farmer, and
therefore may be considered as affecting the price of raw produce.
According to the degree in which it bears on manufacturing and
agricultural profits equally, it will be a general tax on the profits of
stock, and will occasion no alteration in the price of raw produce and
manufactures. In proportion to the farmer's inability to remunerate
himself, by raising the price of raw produce, for that portion of the
tax which peculiarly affects him, it will be a tax on rent, and will be
paid by the landlord. To know then the operation of the poor rate at any
particular time, we must ascertain whether at that time it affects in
an equal or unequal degree the profits of the farmer and manufacturer;
and also whether the circumstances be such as to afford to the farmer
the power of raising the price of raw produce.
The poor rates are professed to be levied on the farmer in proportion to
his rent; and accordingly, the farmer who paid a very small rent, or no
rent at all, should pay little or no tax. If this were true, poor rates,
as far as they are paid by the agricultural class, would entirely fall
on the landlord, and could not be shifted to the consumer of raw
produce. But I believe that is not true; the poor rate is not levied
according to the rent which a farmer actually pays to his landlord; it
is proportioned to the annual value of his land, whether that annual
value be given to it by the capital of the landlord or of the tenant.
If two farmers rented land of two different qualities in the same
parish, the one paying a rent of 100_l._ per annum for 50 acres of the
most fertile land, and the other the same sum of 100_l._ for 1000 acres
of the least fertile land, they would pay the same amount of poor
rates, if neither of them attempted to improve the land; but if the
farmer of the poor land, presuming on a very long lease, should be
induced at a great expense to improve the productive powers of his land,
by manuring, draining, fencing, &c., he would contribute to the poor
rates, not in proportion to the actual rent paid to the landlord, but to
the actual annual value of the land. The rate might equal or exceed the
rent; but whether it did or not, no part of this rate would be paid by
the landlord. It would have been previously calculated upon by the
tenant; and if the price of produce were not sufficient to compensate
him for all his expenses, together with this additional charge for poor
rates, his improvements would not have been undertaken. It is evident
then that the tax in this case is paid by the consumer; for if there had
been no rate, the same improvements would have been undertaken, and the
usual and general rate of profits would have been obtained on the stock
employed, with a lower price of corn.
Nor would it make the slightest difference in this question, if the
landlord had made these improvements himself, and had in consequence
raised his rent from 100_l._ to 500_l._; the rate would be equally
charged to the consumer; for whether he should expend a large sum of
money on his land, would depend on the rent, or what is called rent,
which he would receive as a remuneration for it; and this again would
depend on the price of corn, or other raw produce, being sufficiently
high not only to cover this additional rent, but also the rate to which
the land would be subject. But if at the same time all manufacturing
capital contributed to the poor rates, in the same proportion as the
capital expended by the farmer or landlord in improving the land, then
it would no longer be a partial tax on the profits of the farmer's or
landlord's capital, but a tax on the capital of all producers; and
therefore it could no longer be shifted either on the consumer of raw
produce or on the landlord. The farmer's profits would feel the effect
of the rate no more than those of the manufacturer; and the former could
not, any more than the latter, plead it as a reason for an advance in
the price of his commodity. It is not the absolute, but the relative
fall of profits, which prevents capital from being employed in any
particular trade: it is the difference of profit which sends capital
from one employment to another.
It must be acknowledged however, that in the actual state of the poor
rates, a much larger amount falls on the farmer than on the
manufacturer, in proportion to their respective profits; the farmer
being rated according to the actual productions which he obtains, the
manufacturer only according to the value of the buildings in which he
works, without any regard to the value of the machinery, labour, or
stock, which he may employ. From this circumstance it follows, that the
farmer will be enabled to raise the price of his produce by this whole
difference. For since the tax falls unequally, and peculiarly on his
profits, he would have less motive to devote his capital to the land,
than to employ it in some other trade, unless the price of raw produce
were raised. If on the contrary, the rate had fallen with greater weight
on the manufacturer than on the farmer, he would have been enabled to
raise the price of his goods by the amount of the difference, for the
same reason that the farmer, under similar circumstances, could raise
the price of raw produce. In a society therefore, which is extending its
agriculture, when poor rates fall with peculiar weight on the land, they
will be paid partly by the employers of capital in a diminution of the
profits of stock, and partly by the consumer of raw produce in its
increased price. In such a state of things, the tax may, under some
circumstances, be even advantageous rather than injurious to landlords;
for if the tax paid by the cultivator of the worst land, be higher in
proportion to the quantity of produce obtained, than that paid by the
farmers of the more fertile lands, the rise in the price of corn, which
will extend to all corn, will more than compensate the latter for the
tax. This advantage will remain with them during the continuance of
their leases, but it will afterwards be transferred to their landlords.
This then would be the effect of poor rates in an advancing society; but
in a stationary, or in a retrograde country, so far as capital could not
be withdrawn from the land, if a further rate were levied for the
support of the poor, that part of it which fell on agriculture would be
paid, during the current leases, by the farmers, but at the expiration
of those leases it would almost wholly fall on the landlords. The
farmer, who during his former lease, had expended his capital in
improving his land, if it were still in his own hands, would be rated
for this new tax according to the new value which the land had acquired
by its improvement, and this amount he would be obliged to pay during
his lease, although his profits might thereby be reduced below the
general rate of profits; for the capital which he has expended may be so
incorporated with the land, that it cannot be removed from it. If indeed
he, or his landlord, (should it have been expended by him) were able to
remove this capital, and thereby reduce the annual value of the land,
the rate would proportionably fall, and as the produce would at the same
time be diminished, its price would rise; he would be compensated for
the tax, by charging it to the consumer, and no part would fall on rent;
but this is impossible, at least with respect to some proportion of the
capital, and consequently in that proportion the tax will be paid by the
farmers during their leases, and by landlords at their expiration. This
additional tax, as far as it fell unequally on manufacturers, would
under such circumstances be added to the price of their goods; for there
can be no reason why their profits should be reduced below the general
rate of profits, when their capitals might be easily removed to
agriculture.[26]