14S 
Chapter XI 
INHERITANCE AND INCOME TAXES* 
T HE proposed Presidential and Congressional plan 
of limiting fortunes and raising revenue by inheri 
tance 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 accumu 
lation, 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 considera 
tion 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 law- 
given 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.