Our Productions Are Overloaded With Taxes
This is but a new wording of the last Sophism. The demand made is, that
the foreign article should be taxed, in order to neutralize the effects
of the tax, which weighs down national produce. It is still then but the
question of equalizing the facilities of production. We have but to say
that the tax is an artificial obstacle, which has exactly the same
effect as a natural obstacle, i.e. the increasing of the price. If this
increase is so great that there is more loss in producing the article in
question than in attracting it from foreign parts by the production of
an equivalent value, let it alone. Individual interest will soon learn
to choose the lesser of two evils. I might refer the reader to the
preceding demonstration for an answer to this Sophism; but it is one
which recurs so often in the complaints and the petitions, I had almost
said the demands, of the protectionist school, that it deserves a
If the tax in question should be one of a special kind, directed against
fixed articles of production, I agree that it is perfectly reasonable
that foreign produce should be subjected to it. For instance, it would
be absurd to free foreign salt from impost duty; not that in an
economical point of view France would lose any thing by it; on the
contrary, whatever may be said, principles are invariable, and France
would gain by it, as she must always gain by avoiding an obstacle
whether natural or artificial. But here the obstacle has been raised
with a fiscal object. It is necessary that this end should be attained;
and if foreign salt were to be sold in our market free from duty, the
treasury would not receive its revenue, and would be obliged to seek it
from some thing else. There would be evident inconsistency in creating
an obstacle with a given object, and then avoiding the attainment of
that object. It would have been better at once to seek what was needed
in the other impost without taxing French salt. Such are the
circumstances under which I would allow upon any foreign article a duty,
not protecting but fiscal.
But the supposition that a nation, because it is subjected to heavier
imposts than those of another neighboring nation, should protect itself
by tariffs against the competition of its rival, is a Sophism, which it
is now my purpose to attack.
I have said more than once, that I am opposing only the theory of the
protectionists, with the hope of discovering the source of their errors.
Were I disposed to enter into controversy with them, I would say: Why
direct your tariffs principally against England and Belgium, both
countries more overloaded with taxes than any in the world? Have I not
a right to look upon your argument as a mere pretext? But I am not of
the number of those who believe that prohibitionists are guided by
interest, and not by conviction. The doctrine of Protection is too
popular not to be sincere. If the majority could believe in freedom, we
would be free. Without doubt it is individual interest which weighs us
down with tariffs; but it acts upon conviction.
The State may make either a good or a bad use of taxes; it makes a good
use of them when it renders to the public services equivalent to the
value received from them; it makes a bad use of them when it expends
this value, giving nothing in return.
To say in the first case that they place the country which pays them in
more disadvantageous conditions for production, than the country which
is free from them, is a Sophism. We pay, it is true, twenty millions for
the administration of justice, and the maintenance of the police, but we
have justice and the police; we have the security which they give, the
time which they save for us; and it is most probable that production is
neither more easy nor more active among nations, where (if there be
such) each individual takes the administration of justice into his own
hands. We pay, I grant, many hundred millions for roads, bridges,
ports, railways; but we have these railways, these ports, bridges and
roads, and unless we maintain that it is a losing business to establish
them, we cannot say that they place us in a position inferior to that of
nations who have, it is true, no taxes for public works, but who
likewise have no public works. And here we see why (even while we accuse
internal taxes of being a cause of industrial inferiority) we direct our
tariffs precisely against those nations which are the most taxed. It is
because these taxes, well used, far from injuring, have ameliorated the
conditions of production to these nations. Thus we again arrive at the
conclusion that the protectionist Sophisms not only wander from, but are
the contrary--the very antithesis of truth.
As to unproductive imposts, suppress them if you can; but surely it is a
most singular idea to suppose, that their evil effect is to be
neutralized by the addition of individual taxes to public taxes. Many
thanks for the compensation! The State, you say, has taxed us too much;
surely this is no reason why we should tax each other!
A protective duty is a tax directed against foreign produce, but which
returns, let us keep in mind, upon the national consumer. Is it not then
a singular argument to say to him, Because the taxes are heavy, we will
raise prices higher for you; and because the State takes a part of your
revenue, we will give another portion of it to benefit a monopoly?
But let us examine more closely this Sophism so accredited among our
legislators; although, strange to say, it is precisely those who keep up
the unproductive imposts (according to our present hypothesis) who
attribute to them afterwards our supposed inferiority, and seek to
re-establish the equilibrium by further imposts and new clogs.
It appears to me to be evident that protection, without any change in
its nature and effects, might have taken the form of a direct tax,
raised by the State, and distributed as a premium to privileged
Let us admit that foreign iron could be sold in our market at eight
francs, but not lower; and French iron at not lower than twelve francs.
In this hypothesis there are two ways in which the State can secure the
national market to the home producer.
The first, is to put upon foreign iron a duty of five francs. This, it
is evident, would exclude it, because it could no longer be sold at less
than thirteen francs; eight francs for the cost price, five for the tax;
and at this price it must be driven from the market by French iron,
which we have supposed to cost twelve francs. In this case the buyer,
the consumer, will have paid all the expenses of the protection given.
The second means would be to lay upon the public a tax of five francs,
and to give it as a premium to the iron manufacturer. The effect would
in either case be equally a protective measure. Foreign iron would,
according to both systems, be alike excluded; for our iron manufacturer
could sell at seven francs, what, with the five francs premium, would
thus bring him in twelve. While the price of sale being seven francs,
foreign iron could not obtain a market at eight.
In these two systems the principle is the same; the effect is the same.
There is but this single difference; in the first case the expense of
protection is paid by a part, in the second by the whole of the
I frankly confess my preference for the second system, which I regard as
more just, more economical and more legal. More just, because, if
society wishes to give bounties to some of its members, the whole
community ought to contribute; more economical, because it would banish
many difficulties, and save the expenses of collection; more legal,
lastly, because the public would see clearly into the operation, and
know what was required of it.
But if the protective system had taken this form, would it not have been
laughable enough to hear it said, We pay heavy taxes for the army, the
navy, the judiciary, the public works, the schools, the public debt,
etc. These amount to more than a thousand million. It would therefore be
desirable that the State should take another thousand million, to
relieve the poor iron manufacturers; or the suffering stockholders of
coal mines; or those unfortunate lumber dealers, or the useful
This, it must be perceived, by an attentive investigation, is the result
of the Sophism in question. In vain, gentlemen, are all your efforts;
you cannot give money to one without taking it from another. If you
are absolutely determined to exhaust the funds of the taxable community,
well; but, at least, do not mock them; do not tell them, We take from
you again, in order to compensate you for what we have already taken.
It would be a too tedious undertaking to endeavor to point out all the
fallacies of this Sophism. I will therefore limit myself to the
consideration of it in three points.
You argue that France is overburthened with taxes, and deduce thence the
conclusion that it is necessary to protect such and such an article of
produce. But protection does not relieve us from the payment of these
taxes. If, then, individuals devoting themselves to any one object of
industry, should advance this demand: We, from our participation in the
payment of taxes, have our expenses of production increased, and
therefore ask for a protective duty which shall raise our price of
sale; what is this but a demand on their part to be allowed to free
themselves from the burthen of the tax, by laying it on the rest of the
community? Their object is to balance, by the increased price of their
produce, the amount which they pay in taxes. Now, as the whole amount
of these taxes must enter into the treasury, and the increase of price
must be paid by society, it follows that (where this protective duty is
imposed) society has to bear, not only the general tax, but also that
for the protection of the article in question. But it is answered, let
every thing be protected. Firstly, this is impossible; and, again,
were it possible, how could such a system give relief? I will pay for
you, you will pay for me; but not the less, still there remains the
tax to be paid.
Thus you are the dupes of an illusion. You determine to raise taxes for
the support of an army, a navy, the church, university, judges, roads,
etc. Afterwards you seek to disburthen from its portion of the tax,
first one article of industry, then another, then a third; always adding
to the burthen of the mass of society. You thus only create interminable
complications. If you can prove that the increase of price resulting
from protection, falls upon the foreign producer, I grant something
specious in your argument. But if it be true that the French people paid
the tax before the passing of the protective duty, and afterwards that
it has paid not only the tax, but the protective duty also, truly I do
not perceive wherein it has profited.
But I go much further, and maintain that the more oppressive our taxes
are, the more anxiously ought we to open our ports and frontiers to
foreign nations, less burthened than ourselves. And why? In order that
we may share with them, as much as possible, the burthen which we bear.
Is it not an incontestable maxim in political economy, that taxes must,
in the end, fall upon the consumer? The greater then our commerce, the
greater the portion which will be reimbursed to us, of taxes
incorporated in the produce, which we will have sold to foreign
consumers; whilst we, on our part, will have made to them only a lesser
reimbursement, because (according to our hypothesis) their produce is
less taxed than ours.
Again, finally, has it ever occurred to you to ask yourself, whether
these heavy taxes which you adduce as a reason for keeping up the
prohibitive system, may not be the result of this very system itself? To
what purpose would be our great standing armies, and our powerful
navies, if commerce were free?