Page:Hull 1900 Petty's Place in the History of Economic Theory.djvu/17

Rh taxation. His general view is clear. People should pay "according to the share and interest they have in the Publick Peace; that is, according to their Estates or Riches: now there are two sorts of Riches, one actual, and the other potential. A man is actually and truly rich according to what he eateth, drinketh, weareth, or any other way really and actually enjoyeth; others are but potentially or imaginatively rich who, though they have power over much, make little use of it; these being rather Stewards and Exchangers for the other sort, than owners for themselves." This idea underlies and shapes all his discussions of taxation. But he makes very different uses of it in the Treatise of Taxes, written in 1662, and in the Verbum Sapienti, written three years later, and he arrives at widely divergent administrative conclusions in consequence. In 1662 he saw no way of distributing the burden of taxation in proportion to the citizens' expenditures save by taxing those expenditures themselves. Accordingly he demanded, in the name of "natural justice," a heavy, if not an exclusive excise. By 1665 he had made distinct progress beyond this naïve administrative notion. Reflection upon Graunt's calculations of the number of people in England had apparently suggested to him—at any rate, he had come to see—that the whole income of the nation could be estimated from the number of the people and their expenditures. The idea proved alluring. He expanded it at once, and returned to it again and again, working it out ingeniously and gliding over its difficulties.

The income of individuals is, of course, less than their expenditure by the amount of their savings; but if that objection occurred to him at all, he probably thought that his distinction between potential and actual riches met it well enough. He therefore considered that expenditure measured income. Now income must flow either from