REVIEWS
| DOI | http://doi.org/10.1111/j.1468-2230.1952.tb02113.x |
| Date | 01 January 1952 |
| Published date | 01 January 1952 |
REV1
E
W
S
ADDINGTON,
AUTHOR
OF
THE
MODERN
INCOME
TAX.
By
A.
FARNS-
xii
and
140
pp.
WORTH,
LL.D.,
PH.D.
[Stevens
&
Sons, Ltd.
21s.l
IN
this interesting work,
Dr.
Fnrnswortli publishes the results of some
Of
his
recent researches into the early history of income tax in tlie United Kingdom.
He observes that several Iiistorians, including some who have dealt in detail
with the period
and
personnlities involved, have regarded William
Pitt
as
the
finirncinl genius to whose inventive mind we owe
our
system of income tax,
and
his conternporory Henry Addington, who wns Prime Minister and Cliancellor
of the Exchequer from
1801
to
1804,
has
equally been looked upon
as
incom-
petent in finirncial matters and
as
having contributed little
or
nothing of merit
to the system of taxation’and the conduct of the nation’s finnnces, but rather
brought them near ruin.
Dr.
Farnswortli
has
had
access to Henry Addington’s
personal papers, surviving in the hnnds of the present Viscount Sidrriouth,
whicli appear
not
to have been previously drawn
upon
by historians in dealing
with tlie finnncinl history of these times,
and
his book contains
an
enlightening
account of the early history of income tax from
its
inception in
1799
until
1805
based entirely
upon
original contemporary documents.
He shows that Pitt in his Acts of
1799
first introduced the idea of
a
general
tax
on
income of every form. Pitt’s scheme was, however, too idealised to
work well particularly
as
such
a
tax was novel and received with gretit hostility.
This tax was at the rate of two shillings in the pound
upon
the aggregate
income of each person after deduction of any annual interest
upon
his debts,
any nnnuities ptryuble by him and nny iillowances rnnde by him to relatives.
Pitt considered, apparently rightly, tlint public prejudice would not allow him.
to require detailed returns of income, in particular ones revpaling tlie extent of
the indebtedness of the taxpayer. Accordingly his Acts provided that each
person should make
n
return to Coniniissioners dcclaring his willingness to pny
11
sum
specified by him
and
certifying that
sum
to be not less tlinn one-tenth
of his income calculated in accordance with the rules and after making the
deductions allowed in the Acts. If the Commissioners had reason to believe
such
n
return inaccurate
or
fraudulent they were enipowered to call for
a
detailed return, but in practice although
a
lnrge proportion of the returns
understated income the Commissioners were reluctnnt to call for these detailcd
returns except where there were demonstrable grounds for doubt. In any event
fictitious debts bearing interest were readily invented by taxpayers who could
not be coiripelled to disclose tlie idcntity of their supposed creditorg.
Shortly after lie entered into
ofice, the Peace of Amiens brought
a
temporary respite in the war with France,
and in Addington’s first budget in tlie spring of
1802
he announcecl his inten-
tion of repealing the income tax. The tax which he reintroduced
on
the rcncwal
of the war in May of the following year was founded
on
a
much more effective
principle. This was the principle that wlierever possible tnx
should
be collected
and
deducted by the person pnying the income.
It
wns
a
principle found in
the
Land
Tax, wliicli in its inception in
1692
wns a form of income tax
upnn
certain kinds of income, not only income from land. The Innguiige of some of
the provisions of the Income Tax Act,
1918,
is, in consequence, virtually the
same
as
that of the seventeenth-century Acts imposing that tnx.
Addington introduced the division of income into Scliedules
A
to
E
and
the six Cases of Schedule
D
with wliicli we are familiar todny, nnd wished
to
105
Addington succeeded Pitt in March,
1801.
106
THE MODERN LAW REVIEW
VOL.
1s
apply deduction at source to income from land, interest, dividends, govern-
mental ofices and pensions. This accounted then and in
1919
for about
70
per
cent. of the income charged with tax. Deduction at source avoided requiring
a
return of any income except those forms not
so
taxed,
or
of interest on debts,
since the taxpayer obtained relief on account of such outgoings by keeping the
tux he had deducted in paying them. Owing to Pitt’s opposition, Addington
was compcllcd to abandon the taxation at source of income from the funds,
but this was made Inwfd in
180G.
Iiis Act of
1803
has
been the model for
the main provisions of rill subsequent income tax legislation, including the
Income Tax Act,
1918,
and the Consolidating Bill now before Parliament.
Its Innguiige has, some would say unfortunately, been copied with but
little variatjon.
Dr.
Farnsworth
shows
that Addington’s scheme produced
ii
yield ulrnost as lurye as Pitt’s though with half the rate of tax.
It
was
ndoptcd with only minor changes by I’itt himself in his Act of
1805.
Other
countries have found that without
a
system of deduction at source there
is,
even at the present clay, much evasion
of
incomc tax upon, for instance,
company dividends.
It is to be hoped that Dr. Farnsworth will be rewarded by the absence froni
future liternturc
of
misnttributions, sucli
as
tliosc he quotes,
of
the
1803
Act
to Pitt or its scheme to Pitt’s
1806
Act.
P.
W.
E.
T.
INTERNATIONAL
LAW
AND
HUMAN
RIQHTS.
By
H. LAUTERPACHT.
[London: Stevens.
1050.
xvi and
475
pp.
22
10s.
net.]
Tim
two niain objects of Professor Lauterpacht’s book are clearly indicated
et the outset. The first is the “exposition of the existing law, as enshrined in
the Charter of the United Nations, relating to the international recognition
and protection of human rights and fundnmentul freedoms. The second
is
the
consideration
of
the problems arising out of the proposals made for the exten-
sion of the existing law,
.
.
.
tlirougli the adoption of an International Bill
of
the Rights
of
Man.”
But thc real clue to the whole work
is
probably to be found in another
passage in the book, where the author expresses the view that
:
I‘
It
is not likely
that
the gradual integration of international society in the direction of
a
supra-
national Fcderution of the World-a development which must be regarded
as
the ultimate rational postulate of thc political organisation of man-will
be achieved by sudden and drastic changes in the legal organisation of man-
kind. But it may be brought nearer to realisation by the gradual adoption of
the fundnmentiil principles of
a
federid government, Of these, the direct
subordination of the individual to fcdcral law, in his capacity
as
a
subject of
the law of the Fcderution, is
a
vital link. Here lies the deeper significance of
thc affirmation
of
the principle that the individual is
a
subject of international
law in the domain both of rights and of duties”
(p.
4G).
The author believes
that the “idea of an all-embracing Federation of States must be regarded not
as
an infinite ideal but as an object
of
a
moral duty of positive action and
as
(L
practical standard
of
Iiuman endeavour
”
(p.
MG).
It
seems, therefore, that there is for the learned author
a
moral duty to
advnncc the idea of
a
world federation. The discussion of the problems of
international protection of human riglits and especially the
I‘
affirmation of the
principle that thc individual
is
a
subject
of
international law” are but steps
towards that goal
(cf.
pp.
462-8).
Such an approach appears to have
a
definite influence upon the
author’s
“exposition of the existing law.”
Thus
the
author,
with great learning and
ingenuity, puts forth the view that having regard to the inherent purposes of
international law, of which the individual
is
the ultimate unit, he is in that
capacity a subject of international law
”
(p.
01);
that, furthermore,
‘I
the
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