IV. The Sources

[The Budget of 1909, in general as outlined below, was introduced on April 29th.]

1. Edwin R. Seligman,

The English Budget Proposals,

England is henceforth to enforce both the differentiation and the graduation of the income tax. In other words, not only is a distinction made between earned and unearned incomes, whereby the unearned incomes are taxed at a higher rate than the to earned incomes; but the beginnings of progressive taxation are introduced by the introduction of the so-called super-tax. That is to say, whenever the total income exceeds £5,000, an additional duty of 6d. in the pound (over and above the normal rate 15 of 1s. 2d.) is charged for every pound of the amount by which the total income exceeds £3,000. Moreover, on the smaller incomes, in addition to the abatements that are already in force, it is provided that a reduction of £10 in the tax shall be made for each child. . . .

According to the new scheme the estate duty which begins at the rate of one per cent. when the estate amounts to from £ 100 to £ 500, now runs up, in a very sharp graduation, until it reaches ten per cent. on estates between £150,000 to £200,000, and fifteen per cent. on estates over £1,000,000. . . . We also have the legacy and succession duties, which apply to separate shares of the estates. . . . These, which are graduated according to relationship, run up to ten per cent. The result is that the English inheritance tax under its present form is graduated up to the point of twenty-five per cent. . . .

The Budget provides for what is known as an undeveloped land duty; that is, a tax of one halfpenny on the pound on the site value¹ of land. . . . . The tax should not be applied to any land where the site value should not exceed £50 per acre. This at once exempts most of the agricultural land. It is also provided that in the case of agricultural land where the site value exceeds £50 per acre, the tax shall be chargeable only on the amount by which the site value of the land exceeds its value for agricultural purposes. Other exemptions also are made for parks, gardens, open spaces, and in general for any land where the commissioners think that it is desirable for social purposes to keep the land free from buildings. In order to make this tax possible, provision is made for a survey and valuation of all the lands in the United Kingdom. . . .

The increment value duty is, in many respects, the most interesting part of the entire scheme. It provides that when any land is sold, or leased for a period of more than fourteen years, and the value of the site turns out to be greater than its value at the last transfer or at the beginning of the lease, a tax of twenty per cent. shall be imposed on the increase of land value over and above an increase of ten per cent. in the value. Agricultural land is exempt. . . .

As a supplement to this increment value duty there is . . . a so-called reversion duty at the rate of ten per cent. on the capital value. This reversion duty is payable on the termination of any lease of land, and is assessed on the value of the benefit¹ accruing to the lessor by reason of the termination of the lease. It is not charged on agricultural lands nor on leases less than twenty-one years. . . .

The Budget also provides for a so-called mineral rights duty, which is a tax of five per cent. on the rental value of all rights to work minerals. . . .

¹I.e., the value of the land apart from buildings, machinery, appurtenances, etc.

¹ The benefit is the sum by which the total value exceeds the value at the time of the original grant.