ABSTRACT
Taxes are exactions extracted under the force of law; and here the word 'force' needs to be stressed, since it is crucially relevant to all consideration of the justice of particular forms of taxation and their purposes. Taxes may be direct or indirect; the distinguishing principle is whether they fall directly upon the capital possessed and the income received by individuals, or whether they diminish its value indirectly by increasing the prices of their purchases of goods and services. Direct taxes may be imposed upon either capital or income. This, however, is a distinction which may sometimes be hard to make. A capital gains tax, for instance, which may at first seem to be a tax on a special sort of income, will, if it is not in an inflationary period indexed to offset that inflation, become a kind of capital levy or wealth tax.
