ABSTRACT
It may be pointed out that taxes are paid by persons, not by things. When we speak of the taxation of goods, we mean that a tax is placed on some person or persons having dealings or relations with those goods, the amount of the tax being connected with the amount of the goods and the relation of the person to the goods. Thus, when an annual tax is collected from (say) owners of land or houses, the amount of the tax being proportioned to the capital value of, or to the annual revenue derived from, the land or houses, we commonly call such a tax by the name of a tax on the land or houses. This property, however, serves as the measure of the amount of tax which is levied on persons whose relation to the property is that of ownership. So with other varieties of taxation of commodities. The form of the tax must not hide the fact that the real interest of taxation is a personal interest, and the question which is of importance is whether each citizen bears his just share of the common burdens, rather than in what manner that share is secured from him, except in so far as the irksomeness of the tax burden may vary with the manner of its levy. Nevertheless, seeing that the total amount collected from any tax-payer must necessarily depend on the forms of taxation which are employed, it is very far from being a matter of indifference what those forms may be. There is one feature, connected with the selection of forms of taxation, which is of very great importance in this connection. It is that the tax may be collected from one person and its pressure be really made to rest on another. This has already received some illustration in the discussion of 264import and export duties (see p. 249, et seq.). In the case of a duty on tea imported into the country, it is somewhat obvious that the importer pays the duty, but that he has no intention of bearing the burden. He expects, and, speaking generally, contrives to pass on the charge to those to whom he sells, who pass it on in turn till the final resting-place of the burden of the tax is on the consumer. Some increase of the burden is, in fact, generally produced in such a course of transference from one to another. None of the dealers who advance, or become responsible for, the duty do so gratuitously, and the charges, made as a recompense for making such advances, are added to the burden which the duty imposes on the consumer. In distinguishing between the original person who pays a tax and those who finally bear the burden, it is convenient to refer to the former by speaking of the impact of the tax, the latter by speaking of its ultimate incidence. The incidence may or may not differ from the impact. Where it does differ the tax is called an indirect one, where it is the same the tax is called direct, as the levy is then made directly from the person who ultimately bears the burden of the tax. The problems connected with the determination of the real incidence of various forms of taxation are among the most difficult problems of economics. We shall only consider some of the most general features of this class of problems.
