14S

Chapter  XI

INHERITANCE  AND  INCOME  TAXES*
T HE  proposed  Presidential  and  Congressional  plan
of  limiting  fortunes  and  raising  revenue  by  inheritance ­
  and  income  taxes  may,  it  is  suggested,  be  greatly
improved  by  two  simple  modifications,  viz.:  (i)  Let
fortunes  be  taxed  chiefly  in  the  process  of  their  accumulation, ­
  rather  than  at  probation;  and  (2)  let  the  income
tax  be  limited  to  those  incomes  which  are  not  only
unearned,  but  which  are  now  untaxed.  I  ask  consideration ­
  for  a  few  of  the  arguments  upon  these  points.
It  is  substantially  correct  to  say  that  wealth,  as  fast
as  produced,  is  divided  into  two  parts:  one  part
goes  to  wages  of  hand  and  brain,  the  other  part  goes
to  privilege.  The  greater  the  part  that  goes  to  wages,
the  smaller  the  part  that  goes  to  privilege,  and  vice
versa.  The  prime  agency  in  determining  how  large
shall  be  the  part  that  goes  to  privilege  is  the  private
appropriation  of  ground  rent,  economic  rent,  in  its
various  forms.  The  essence  of  privilege  is  the  lawgiven
  power  of  one  man  to  profit  at  another  man’s
expense.  A  man  gets  rich,  not  out  of  his  earnings,
but  out  of  his  savings.  If  obliged  to  spend  all  his
earnings  it  is  not  possible  for  him  to  accumulate  riche:,
The  poor  man  rebels,  not  because  his  rich  neighbour

*  Address  before  the  Economic  Club  of  Boston.  Published  in  the  New
York  Evening  Post,  March  6,1907;  Harper’s  Weekly,  May  z?,  1907;  and  the
Outlook,  August  3,  1907.