284 ECONOMIC PRINCIPLES

not contended that no part of the burden would remain on
the owners of capital as such, or that, as consumers, they
would not bear some part of the diffused burden, but that
the chief part of the tax placed on owners of capital, as
receivers of interest, would not permanently remain on that
class of the community.
It is further to be noted that, if the tax on interest do not
fall equally on the interest yield of all kinds of capital, there
will result a preferential investment of capital in forms which
escape taxation, and an avoidance of taxed forms. This will
tend to lower the marginal productivity of untaxed forms of
capital and raise that of the taxed forms, till the net yield to
the owners approaches equality. Further, if land, and the
revenues from land ownership, remained unaffected by a tax
which fell on revenues from capital, and no corresponding
burden were placed on the revenues from land, land values
would rise relative to capital, and the ownership of land would
gain in attractiveness from the investment point of view, so
long as the rise of its value had not counterbalanced the freedom
 from taxation of the revenues derived from it. Inasmuch
as it is practically impossible to subject to equal taxation the
revenues from trade capital, estimated in money, and those
derived from the use of consumption capital, which are, for the
most part, not estimated in that form, the effect of taxes on
interest might be, in part, to encourage the creation and
ownership of consumption capital rather than of trade capital,
Taxation of interest must, in practice, take the form of
taxation of revenues derived from the ownership of capital,
and is likely, therefore, to touch some other classes of revenue
in addition to interest. In the degree in which this occurs,
the practical problem is but partly covered by the above
considerations,
The particular class of revenue most likely to be included
with interest is the remuneration for risk-taking. In so far
as a reduction, in the gains derivable from undertaking the
tisks of industrial and other business operations, would
operate to diminish the willingness of owners of capital to
accept the risks, the taxation of profits would tend to divert
capital and enterprise to the less risky openings for their