THE INCIDENCE OF TAXATION 285

employment. This would increase the competition in such
lines and operate to reduce the general return to capital, and,
in the way already noticed, as a check to the rate of accumulation,
 with such consequences as have been suggested above.
The taxation of profits, therefore, except in the degree in
which they proceed from monopoly, or from rent-yielding
differential advantages in production, is not, in the long run,
taxation the burden of which remains where it first falls, It
is gradually diffused over the community as a whole.
Turning to the subject of taxes on wages, the same kind
of problem is again presented. If a reduction of the net
receipts of the wage-earner left unchanged the amount and
quality of his work, and had no influence on the increase of
numbers seeking to earn wages, the burden of the tax would
rest wholly on the wage-earner. He would, in that case,
give as much and receive less, that is to say, less for the use
of himself and his family, In general, however, the influence
of such a reduction in net remuneration would be found in a
reduction in efficiency of the worker. Thus the cost of his
product would be raised, and some share of the tax burden
thrown on other classes. The consumers of the goods would
have to pay more for them, without the entire additional
payment becoming available for raising the remuneration of
the labour. A part of such increased cost of commodities
might go to provide an addition to the labourer’s wages, thus
modifying the burden of the tax on the wages. In view, too,
of the fact that the net remuneration of labour influences, in
general, the rate of increase of the numbers of the population,
a gradual modification of the supply of labour might operate,
as in the case of capital, to produce the result contemplated
above, namely some increase of the rate paid for labour, thus
reducing the net burden of the tax so far as the labourer is
concerned, and distributing a share of it among other classes
than wage-earners. In so far as the diffusion of the burden
throws it on consumers as such, the wage-earning classes will
not escape the burden, since they include so large a part of the
consuming public. Whether they, or other classes, will be
most affected, will turn on what kind of commodities are
most affected. If it be commodities chiefly consumed by the