The Establishment of the "Succession Duty" in the Financial Reform of 1853

The purpose of this article is to make clear the historical factors, the contents, and the historical significance of the establishment of the Succession Duty in the Financial Reform of 1853. The conclusions the author could draw are summed up as follows. First, in the Financial Reform Movement started after the Corn Law repeal, Industrial Capital demanded the death duties upon real property as the resources for further free trade. On the base of this demand, the Succession Duty of 1853 was proposed primarily to provide a fund by means of which free trade might be still more promoted. Second, after the Corn Law repeal, Industrial Capital demanded the principle of differentiation in the imposition of the income tax, while landed classes demanded the abolition of that tax. Under such conflicting demands, the Succession Duty of 1853 was proposed secondary to rectify the inequality in the income tax that the operation of the tax was severe upon intelligence and skill as compared with property, and also to provide the means of dispensing with that tax at 1860. Third, landed property, unlike personal property, was hitherto totally exempted from all death duties, on the ground that under a system of settlement the owner of the land had only a life estate and no power to dispose of the land in fee simple. After the enactment of a series of statutes concerning improvement of landed estates in the late 1840's, which conferred a tenant for life almost the same power as to land improvement that a tenant in fee simple could exercise, the Succession Duty of 1853 was established. Fourth, the Succession Duty of 1853 concretized the new principle of taxation that all successions to real property, whether settled or not settled, and settled personal property, should be taxed upon the value of life-interest of successor therein at scale of consanguinity. The new principle was gradually accepted. Fifth, the Succession Duty of 1853 implys a change in the composition of classes of the British capitalism. Namely, by the Succession Duty of 1853 landed classes were for the first time imposed a tax upon succession to the same extent as capital classes, which means that the interests of the capital classes demanding for further free trade were able to be carried through at the partial deprivation of the privilege of total exemption of the landed classes from the death duties. Sixth, and last, from the standpoint of revenue the Succesion Duty of 1853 was a failure because in 1860 the tax yielded only £0.6., instead of £2m. a year, expected. The reason of the failure was that because of the progress of land improvement real property had been more heavily encumbered than anticipated, and also that the base of the tax was value of life interest, not capital value. Therefore a new tax upon capital value came to be demanded in the "Great Depression".