The fair face of the outright and graduated levy would be marred in many ways.  First, there are cases affected by valuation.  The valuation of a fixed rate of interest on good security is easy enough.  The valuation of a field or a house in these days presents more difficulty, but is, of course, practicable.  In practice, however, people do not own these things outright.  They have only an interest in them.  This is where the rub comes.  A very large part of the property in this country is held in life interests, and on reversions or contingencies.  It is not a question of saying that a given property is worth L10,000 and that it forms part of the fortune of Jones, who pays 40 per cent. duty.  The point is that the L10,000 is split between Jones and Robinson.  Jones maybe has a life interest in it, and Robinson a reversionary interest.  You value Jones’s wealth by his prospect of life on a life table, and Robinson has the balance.  But the life table does not indicate the actual likelihood of Jones’s life being fifteen years.  It only represents the actuarial average expectation of all the lives.  This may be useful enough for insurance dependent on the total experience, but it may be a shocking injustice to the individual in taxation.  Only some 10 per cent. of the Joneses will live for the allotted time, and for the rest your valuation and your tax will be dead wrong, either too much or too little.  Jones will be coming to you two years after he has paid, or rather his executors will come to you and say:  “We paid a tax based on Jones living 15 years, and he has died; this ought, therefore, to be shifted to Robinson.”

DIFFICULTIES OF VALUATION

People often say that a Capital Levy merely imagines everybody dying at the same time.  This parallel is wrong in degree when you are considering the ease of paying duty or of changing the market values by a glut of shares, and it is still more wrong when you are thinking of ease of valuation.  When a man is dead, he is dead, and in estimating the death duty you have not to bother about how long he is going to live!  But every time you value a life interest and take a big slice of it for tax you are probably doing a double injustice.  The charge is incorrect for two taxpayers.  On a flat rate of tax this difficulty might be made less, but the essence of any effective levy is a progressive scale.  Moreover, whether you are right or wrong about Robinson’s tax, he has nothing in hand with which to pay it.  He has either to raise a mortgage on his expectation (on which he pays annual interest) or pay you by instalments.  So far as his burden is concerned, therefore, there is no outright cut.  You will be getting an annual figure over nearly the whole class of life interests and reversions.  It is difficult to see how one can escape making adjustments year after year for some time in the light of the ascertained facts, until the expiry of, say, nine or ten years has reduced the disparities between the estimated valuations and the facts of life to smaller proportions.