WEIGHT OF TAXATION

Evening Post, Volume CXXIII, Issue 49, 27 February 1937, Page 8

WEIGHT OF TAXATION

(To the Editor.) Sir,—While greatly appreciating your publication of my letter, and the note of explanation given, I would like to add a few words. As you mention, in ascertaining the burden of taxation the size of taxed incomes must also be considered; but I think it is wrong to say that unless the rise in taxed incomes balances the fall in money value,'the same taxation is more oppressive. It

must be clear that in the same degree as the py.-chasing. power of the taxpayer's income falls, the value of the money he pays in taxation also falls, and thus we must conclude tliat, since the burden of taxation varies with the relation of the income to the tax paid, if both these latter remain constant, the decreased value of money imposes no further burden.

To return to my original point; the Associated Chambers of Commerce, in making up their table showing the increase in taxation during the last few years, which increase they denounce as uneconomic and unjust, have omitted two very important and necessary factors. Firstly, money value has decreased. Therefore a tax of £76 per family is by no means such a real increase as their figures would lead the people to believe. Secondly, incomes have also shown a decided increase, which, of course, is likewise offset to some extent by the decreased value of money. A simple method to assess the comparative burden of taxation- over a period of years is to., compare the amount of purchasing power given to the taxpayer in income, and the amount taken from him in.taxation. The ratio of the latter-to the former would, I think, show clearly the burden of taxation and would not be so misleading as the method criticised.— I am, etc., DON. [The point of our explanation was this: if the purchasing power of money, has fallen and the income remains the same, the taxpayer must spend more to buy the necessai'ies and comforts he had formerly. It therefore becomes harder for him to' pay the same sum in taxation, as many persons with fixed incomes are discovering.—Ed.]