ABSTRACT
In the early stages after the imposition of the tax person will find it difficult to contract his expenditure below this customary level. The dis-saving of the rich, whom the tax causes in the short period, will be to some extent compensated by an increased— and therefore a positive, instead of a zero— rate of saving by the poor. In the uncertainty of the changing situation to which the tax gives rise—a situation in which demand schedules and the system of supplies of goods both undergo alteration—a considerable wastage of capital will take place. The total volume of capital in the community is going to begin to decline in the short period, and the decline will continue into the long period. This chapter argues that a necessary consequence of the tax will be to reduce the total national capital and the total national income of divisible goods.
