Money, Banks and Finance in Economic Thought

The dawn of redistribution in the UK: Ideas in the debates on the reform of the succession tax in 1894

San Julian Arrupe Javier, University of Barcelona

In the last chapter of the General Theory, J.M. Keynes wrote “inequalities had been reduced in England thanks to direct taxes, especially the income tax and the succession tax”. Fiscal history of the United Kingdom is pretty well known, but it is our impression that ideas on some crucial tax reforms have been put aside in some occasions. This paper address what we consider one of the crucial reforms that British tax system, taking place in the last decade of the 19th century (more precisely in the Finance Bill of 1894) sponsored by liberal Chancellor of the Exchequer William Harcourt. This was reform in the intricate set of taxes on successions, which included as a big novelty progressive rates. The objective of this reform was to surcharge landowners and alleviate medium and low classes, paying the largest bulk of the income tax. The chief justification of the succession tax reform was on behalf of fairness, but political reasons possibly lied behind. In fact, Harcourt seemed not to hang on the prestigious and well-known economic doctrines in favor of progressive taxation, dating back to Smith and – more clearly – Stuart Mill. The discussions on the issue saw the tough Parliamentarian confrontation between Harcourt and Goschen, a high-quality debate from a doctrinal standpoint, in which economic ideas shined. British were the first movers towards a fiscal revolution which would lead to the acceptation of progressivity in taxes in Europe, first in succession taxes, and then in the income tax.


Keywords: taxation, sucession tax, progressivity, United Kingdom

Paper file