8: Taxes
Taxation represents a portion of the material of a nation that is taken by its government to spend at its own discretion It may be removed from wealth or taken from working capital, or both.
When the annual production of a country exceeds the amount necessary to replace its annual consumption, it is said to increase its capital; and when production fails to cover consumption, it is said to diminish its capital.
In terms of taxes, production and consumption are divorced. The profit of production is taken from the producer, so the producer has not consumed it; and it is given to another party to consume without having produced it. (EN: this may be splitting hairs - in aggregate, the amount consumed by someone has still been produced, just not by the same person.)
Ricardo considers taxation to diminish the working capital of a nation, to take form a producer a portion of his product requires him to demand more of customers for the remaining product to cover his costs of production. To take in the same way from all who produce is to diminish the productive power of a nation, and "distress and ruin will follow."
(EN: I'm not sure I entirely agree. While taxes are an affront to the liberty of a people - taking from them to spend on their behalf - in terms of total productivity, I don't believe it to have a significant impact. The goods used to pay taxes must still be produced, and when the money is spent by government, it is exchanged for other goods which also must be produced. In that sense, it is little different from a laborer handing his paycheck over to his wife to pay the household bills. So while taxation is inherently offensive, the problem is not inherent, but has to do with the specific way in which tax is collected and spent. If this is wasteful, then harm is done.)
In the author's time, there has been great prosperity in England. There was more production than in years past, and the welfare of the people greatly improved - such that even after the payment of their taxes, the national capital has increased. Evidence aplenty exists in the increase in the number of the people, the possession of each, and the growth of productive facilities (factories, farms, roads, canals, etc.)
Even so, he asserts that "it is certain that but for taxation this increase of capital would have been much greater." As taxes remove from working capital, they diminish investment in productive activity, and the impact grows greater over the course of time: the funds taken by government that did not build a ship have deprived the crew of employment and the people of the goods the ship may have carried - not just in the year they were collected, but for as long as that ship may have lasted (and in that time, the ship would certainly have earned a profit to pay for its own replacement, extending the loss).
This remains true regardless of whether taxes are taken from wealth or income, as "every man seeks to keep his station in life" and, if his wealth is diminished, he will restore it by depriving himself of luxuries, which in turn diminish the revenue of those who produce them, which in turn diminishes working capital, the net effect being the same as if the working capital had been taken from him.
(EN: The connection here seems tenuous, but my sense is the entire point is moot. The only difference between wealth and capital is that wealth is stored for future employment, at which time it will become capital. As such, taxation is deprivation of the people, whether immediately or in future seems to be a matter of little importance to the nature of the act.)
There is also special attention given to the damage done by taxation when property is transferred "from the dead to the living." The continued prosperity of a nation depends on continuity of its productive operations - when a productive person dies, his operations are continued by another. If a farmer dies and the state seizes half his land, his heir's ability to produce crops is diminished by half rather than perpetuated in full - and even then, he may find himself unable to sustain on half the income and quit farming altogether.
The same can be said of sales taxes placed on the factors of production. To tax the sale of land is to diminish the resources of the buyer, diminish his future production, and diminish his future contribution to the welfare of all citizens of the nation. Or if the taxes make the purchase unaffordable, his contribution is effectively prevented altogether.
Even when the tax is placed on the sale of finished goods rather than the factors of production, it results in the deprivation of the consumer. The producer must charge a higher price, making the product less affordable, or diminishing the buyer's budget that may have been used to purchase other goods.
It is all too commonly accepted that taxation is harmful only to the wealthy few, who are reckoned by the spiteful majority to be able to afford to pay them without personal deprivation when, in practice, a tax placed upon any productive member of a nation is the deprivation of all who would have benefitted by the product he would have produced (or by paying less to have his product).
(EN: there is no consideration given here of the taxes on the mass of humanity - for example, a tax collected from the workman on his wages immediately deprives him the benefit of his own labor, but also enables him to trade less with others. While there is a similar economic impact, it's likely an economist would not feel the need to explain the precise nature injustice to those who already consider it to be unjust.)