money in the two cases being of a
different value.

But although, if money be not taxed, and do not alter in value, all
commodities will rise in price, they will not rise in the same
proportion; they will not after the tax bear the same relative value to
each other which they did before the tax. In a former part of this work,
we discussed the effects of the division of capital into fixed and
circulating, or rather into durable and perishable capital, on the
prices of commodities. We shewed that two manufacturers might employ
precisely the same amount of capital, and might derive from it precisely
the same amount of profits, but that they would sell their commodities
for very different sums of money, according as the capitals they
employed were rapidly, or slowly, consumed and reproduced. The one might
sell his goods for 4000_l._, the other for 10,000_l._, and they might
both employ 10,000_l._ of capital, and obtain 20 per cent. profit, or
2000_l._ The capital of one might consist for example of 2000_l._
circulating capital, to be reproduced, and 8000_l._ fixed, in buildings
and machinery; the capital of the other on the contrary might consist of
8000_l._ of circulating, and of only 2000_l._ fixed capital in machinery
and buildings. Now if each of these persons were to be taxed 10 per
cent. on his income, or 200_l._, the one, to make his business yield him
the general rate of profit, must raise his goods from 10,000_l._ to
10,200_l._; the other would also be obliged to raise the price of his
goods from 4000_l._ to 4200_l._ Before the tax, the goods sold by one of
these manufacturers were 2-1/2 times more valuable than the goods of the
other; after the tax they will be 2.42 times more valuable: the one kind
will have risen 2 per cent.; the other 5 per cent.: consequently a tax
upon income, whilst money continued unaltered in value, would alter the
relative prices and value of commodities. This is true, if the tax
instead of being laid on the profits were laid on the commodities
themselves: provided they were taxed in proportion to the value of the
capital employed on their production, they would rise equally, whatever
might be their value, and therefore they would not preserve the same
proportion as before. A commodity, which rose from ten to eleven
thousand pounds, would not bear the same relation as before, to another
which rose from 2 to 3000_l._ If under these circumstances money rose in
value, from whatever cause it