2) the "death" or
inheritance duties. Beginning at the rate of 7d. per pound (1842-1854),
the income-tax was raised to 1s. 4d. for the Crimean War, and then
continued at varying rates; reduced to 2d. in 1874, it rose to 5d., then
in 1894 to 8d., and by 1909 appeared to be fixed as a minimum at 1s., or
5% on income from property. The yield per penny on the L has risen
almost uninterruptedly. From L710,000 in 1842, it now exceeds
L2,800,000, though the exemptions and abatements are much more
extensive. In fact, all incomes of L3 per week are absolutely free (L160
per annum is the precise exemption limit), and an income of L400 derived
from personal exertion pays less than 5-1/2d. per pound, or 2-1/4%. The
great productiveness of the tax is equally remarkable. From L5,600,000
in 1843 (with a rate of 7d.) the return rose to L32,380,000 in
1907-1908, having been at the maximum of L38,800,000 in 1902-1903, with
a tax rate of 6-1/4%. The income-tax thus supplies about one-fifth of
the total revenue, or one-fourth of that obtained by taxation. Several
fundamental questions of finance are connected with the taxation of
income and have been dealt with by English practice. Small incomes claim
lenient treatment; and, as mentioned above, this leniency means in
England complete freedom. Again, earned incomes appear to represent
lower ability to pay than unearned ones. Long refused on practical
grounds (as by Gladstone and Lowe), the concession of an abatement of
25% on earned incomes of L2000 and under was granted in 1907. The
question whether savings should be exempt from taxation as income has
(with the exception of life insurance premiums) been decided in the
negative. Allowances for depreciation and cost of repairs are partially
recognized. Far more important than these special problems is the
general one of increased tax rates on large incomes. Up to 1908-1909 the
tax above the abatement limit of L700 remained strictly proportional;
but opinion showed a decided tendency in favour of extra rates or a
"super tax" on incomes above an assigned amount (e.g. L5000), and this
was included in the budget of 1909-1910 (see INCOME-TAX).

In close relation with the income-tax is the estate duty, with its
adjuncts of Legacy and Succession Duties. After Pitt's failure to carry
the succession duty in 1796, no change was made till Gladstone's
introduction in 1853 of a duty on land and settled property parallel to
the legacy duty on free persona