Thomas Paine and Income Taxes

Thomas Paine and Income Taxes

A far more powerful attack upon systems of taxation in Eng­land during the 18th century was delivered by Thomas Paine (1737-1809). Paine has never been identified as political scien­tist, philosopher, or economist. For the most part he is recognized as a pamphleteer; but his work in the American and French revolutions will be cherished forever. His basic contention was that the enormous increase in taxation suffered by the people of England in the past few centuries was due to "extravagance, corruption, and intrigue." Maintaining that of the total annual tax bill of 17 million pounds, only one million and a half was necessary, he proceeded to show how the remaining taxes should be disposed of. First of all his plan provided subsidies for children so they might be sent to school, provision for aged persons, payment to families for childbirths and marriages, funeral payments, and accident benefits.

Paine said that the tax on houses and windows should be abolished, and also the commutation tax because these placed heavy burdens upon persons least able to bear them. Instead of the small indirect taxes which lay so heavily on the poor, he thought the principle of the luxury tax should be applied to in­comes. He said, "Admitting that any annual sum, say, for in­stance, a thousand pounds, is necessary to support a family, consequently the second thousand is in the nature of a luxury, the third still more so, and by proceeding on we shall arrive at a sum that may not improperly be called a prohibitable luxury. It would be impolitic to set bounds to property acquired by in­dustry, and therefore it is right to place the prohibition beyond the probable acquisition to which industry can extend; but there ought to be a limit to property or the accumulation of it by bequest." He then proposed a system of graduated taxes upon incomes. The object of such a tax in Paine's mind was twofold: It would first of all eliminate those arduous duties imposed on the poor by the rich which has been screened too much, and secondly it would break up the large estates and return their substance to all the heirs and heiresses which "hitherto the Aris­tocracy have quartered . . . upon the public in useless posts, places and offices."