SECTION CCV.. Distribution of the National Income.--Healthy Distribution.

DISTRIBUTION OF THE NATIONAL INCOME.--HEALTHY DISTRIBUTION.

Hence a harmony of the large, medium and small incomes may be considered the indispensable condition of the economic prosperity of a people.[205-1] This prosperity is best secured when the medium-class income prevails, when no citizen is so rich that he can buy the others, and no one so poor that he might be compelled to sell himself. (J. J. Rousseau.)[205-2] Where there is not a numerous class of citizens who have time enough to serve the state even gratis, as jurymen, overseers of the poor, municipal officers, representatives of the people etc. (compare § 63), and property enough to be independent of the whims and caprices of others, and to maintain themselves and the state in times of need, even the most excellent of constitutions must remain a dead letter. Nor should there be an entire absence of large fortunes, and even of inherited large fortunes. The changes of ministry which accompany constitutional government are fully possible only when the choice of men who would not lose their social position by a cessation of their salaries as public functionaries is not altogether too limited.[205-3] Thus the transaction of the most important political business, especially that which relates to foreign affairs, requires a peculiar elasticity of mind, and a capacity for routine on the grandest scale, which with very rare exceptions, can be acquired only by habituation to them from childhood, and which are lost as soon as the care for food is felt. The bird's-eye-view of those who are born "great" does not, by any means, embrace the whole truth of human things, but it does a very important side of it. Among this class, as a rule, it is easiest to find great party leaders, while leaders who have to be paid by their party, generally become in the long run, mere party tools.[205-4] It is true that it requires great intellectual and moral power to resist the temptations which a brilliant hereditary condition presents; temptations especially to idleness, to pride and debauchery. For ordinary men, it is a moral and, in the end, an economic blessing, that they have to eat their bread in the sweat of their brow,[205-5] and that they can grow rich only by long-continued frugality.[205-6] However, the distribution of the national income, and every change in that same distribution, constitute one of the most important but at the same time one of the most obscure departments of statistics.[205-7] When inequality increases because the lower classes absolutely decline, there is no use in talking any longer about the prosperity of the nation.[205-8] It is different, of course, when only the higher classes become, relatively speaking, higher yet. But even this latter kind of inequality may operate disastrously, inasmuch as it nourishes the most dangerous tendency of democracy, that of envy towards those who are better off.

If we compare these numbers with the corresponding ones of the income tax of 1812, the numbers of those who returned an income of £150 to £500 increased 196 per cent.; of those with an income of from £500 to £1,000, 148 per cent.; of from £1,000 to £2,000, 148 per cent.; of from £2,000 to £5,000, 118 per cent.; of from £5,000 and more, 189 per cent.; while the population in general had increased by about 60 per cent. Compare Athenæum, August, 1850; Edinburgh Rev., April, 1857. Between 1848 and 1857, the development was less favorable, so that the incomes of from £150 to £500 subject to taxation, increased only 7 per cent.; those from £500 to £1,000 about 9.56 per cent.; those from £10,000 to £50,000, by 42.4, and those over £50,000, 142.1 per cent. Between 1858 and 1864, the incomes derived from industry and commerce, subject to taxation below £200, had increased about 19.4 per cent.; those over £10,000, 59 per cent.; while the aggregate amount of all taxed incomes in this category increased 19 per cent. (Stat. Journal, 1865, 546.) According to Baxter, The National Income of the United Kingdom, 1868, there are now 8,500 persons with a yearly income of £5,000 and more, who draw in the aggregate 15.6 per cent. of the national British income, and on the average nearly £15,000 each. There are, further, 48,800 persons with a yearly income of from £1,000 to £5,000; 178,300 with from £300 to £1,000; 1,026,400 with from £100 to £300; and 1,497,000 with less than £100 a year from their property. In addition to this, 10,961,000 workmen on wages, with an aggregate income of £324,600,000. Compare §§ 172, 230.

In France, the number of so-called électeurs, who paid direct taxes to at least the amount of 200 francs was, in 1831, 166,583, and increased uninterruptedly until 1845, when it was 238,251, while the population had increased only 8.5 per cent.

In Prussia, the revenue from class-taxation up to 1840, increased, unfortunately, in a smaller proportion than the population: hence the lowest classes must have increased relatively more than the others. (Hoffmann, Lehre von den Steuern, 176 ff.) Between 1852 and 1873, according to the statistical returns from class-taxation and of the classified income tax, the growth of large incomes in the provinces of old Prussia, seems to have been much more rapid than that of the smaller ones. Thus, for every 100 taxpayers, with an income of from 400 to 1,000 thalers, there was an increase to 175.5; of from 1,000 to 1,600 thalers, for every previous 100, 210.2; from 1,600 to 3,200 thalers, 232.3; of from 3,200 to 6,000, 253.9; of from 6,000 to 12,000 thalers, 324.8; of from 12,000 to 24,000, 470.6; of from 24,000 to 52,000 thalers, 576.3; of from 52,000 to 100,000 thalers, 568.4; of from 100,000 to 200,000 thalers, 533.3; of over 200,000, 2,200. Hence, probably, a greater growth towards the top, than the general increase in the population will account for.

This concentration of property took place most noticeably in Berlin, where for instance, between 1853 and 1875 the incomes of from 1,000 to 1,600 thalers increased 212.2 per cent.; those from 24,000 to 52,000, 994.1 per cent. There are now in the whole state 2.24 per cent. of the population (including those dependent on them) subject to the income tax; that is, estimated as having a yearly income of 1,000 thalers. Of the remaining 97.76 per cent., more than a quarter, and probably more than one-half, are as a class free from taxation, because their income is presumably less than 140 thalers (6,049,699 against 532,367, exempt for other reasons and 4,850,791 belonging to classes subject to taxation: these three numbers probably not including dependents). Among the payers of an income tax, there are 79,464 with an average income of 1,237 thalers per annum; 41,366 with 2,171 thalers; 12,305 with 4,279 thalers; 4,030 with 8,383 thalers; 1,655 with 16,527 thalers; 513 with 32,428 thalers; 163 with 65,595 thalers; 39 with 137,692 thalers; 21 with 427,142 thalers; and one with 1,700,000 thalers per annum. (Preuss. statist. Ztschr., 1875, 116, 132, 142, 145, 149.) As the reverse of this picture, we may take the fact that, in 1870, of 1,047,974 cases of guardianship, there were only 208,614 in which there was any property to be looked after. (Justiz-Minist-Blatt, 1872, No. 6.)

The figures from Bremen are very favorable. The incomes subject to taxation amounted, in 1847, to 71.6 thalers per capita; in 1869, to 131.2. The incomes subject to taxation in class No. 1, that is from 250 to 399 thalers, increased 78 per cent.; in class No. 2, 400 to 499 thalers, 45 per cent.; in class No. 3, 500 thalers and more, by 57 per cent. The average income of the third class amounted, in 1847-50, to 1,952 thalers; 1866-69, to 2,439 thalers. In 1848, there were, of estates of over 3,000 thalers subject to taxation, only 38 to every 1,000 inhabitants; in 1866, 49. (Jahrb. f. amtl. Statistik Bremens, 1871, Heft 2, p. 185 seq.)]