n the light of this fact. Unless the business promises to
yield as good incomes (wages, profits) as other lines, the number
engaging in it, and the output, must diminish and thus the price of
the product rise, or the cost of the factors fall, or both in some
proportion. The tax on any durative agent or on any established
business thus becomes incorporated after a time in its price and in
the prices of the products, and any purchaser pays a price based on
the net income remaining to the owner of the wealth after the tax is
paid. Viewed in this way, taxes are seen to be borne to some extent
by every one, by those who do not as well as by those who do actually
meet the tax-collector face to face. The citizen with no taxable
property is affected, far more than he realizes, by extravagance of
government and by inequities in taxation, for the effects of most
taxes are diffused so that every self-sustaining member of the
community has some share in them.

Sec. 15. #Taxes as costs.# Now if a new tax is levied, or an old tax
changed in amount or in its incidence, it becomes a new influence in
industry. Some occupations are made more attractive, others less so.
Some places are made more, others less, desirable to live in.
Property thus fluctuates in value, and investments become more or less
remunerative. If the new tax reduces the net income of any productive
agent, it reduces likewise its value, which is but the capitalization
of its net rental. If taxes are taken off of factories and put upon
farm rents, factories rise and farms fall in value in the hands of
their owners. The immediate change in value is much greater than the
annual tax, for if five dollars is to be taken permanently from the
annual rental of the farm, nearly one hundred dollars is taken at once
from its selling value when the prevailing yield on investment is
5 per cent. The rate of adjustment varies greatly under different
conditions, and the inflow and the outflow of labor and capital are
more or less rapid in the various industries.

Taxes that enterprisers are unable to shift to others are reckoned by
them as a part of their costs of production whenever the conditions of
competition and of substitution make it possible to do so. Every new
tax that curtails the supply of any necessary agent must raise the
price of the products and cause more or less of the tax to fall upon
the consumers. In the Civil War an increase in the tax on whisky
increased its s