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This page intentionally left blank INCOME TAX IN COMMON LAW JURISDICTIONS Many common law countries inherited British income tax rules. Whether the inheritance was direct or indirect, the rationale and origins of some of the central rules seem almost lost in history. Commonly, they are simply explained as being of British origin without further explanation, but even in Britain the origins of some of these rules are less than clear. This book traces the roots of the income tax and its precursors in Britain and in its former colonies to 1820. Harris focuses on four issues that are central to common law income taxes and which are of particular current relevance: the capital revenue distinction, the taxation of corporations, taxation on both a source and residence basis, and the schedular approach to taxation. He uses an historical perspective to make observations about the future direction of income tax in the modern world. Volume II will cover the period 1820 to 2000. is a solicitor whose primary interest is in tax law. He is also a Senior Lecturer at the Faculty of Law of the University of Cambridge, Deputy Director of the Faculty’s Centre for Tax Law, and a Tutor, Director of Studies and Fellow at Churchill College. PETER HARRIS CAMBRIDGE TAX LAW SERIES Tax law is a growing area of interest, as it is included as a subdivision in many areas of study and is a key consideration in business needs throughout the world. Books in this Series will expose the theoretical underpinning behind the law to shed light on the taxation systems, so that the questions to be asked when addressing an issue become clear. These academic books, written by leading scholars, will be a central port of call for information on tax law. The content will be illustrated by case law and legislation, but will avoid the minutiae of day-to-day detail addressed by practitioner books. The books will be of interest for those studying law, business, economics, accounting and finance courses in the UK, but also in mainland Europe, USA and ex-Commonwealth countries with a similar taxation system to the UK. Series Editor Professor John Tiley, Queens’ College, Director of the Centre for Tax Law. Well known in both academic and practitioner circles in the UK and internationally, Professor Tiley brings to the Series his wealth of experience in the tax world of study, practice and writing. He was made a CBE for service to tax law in 2003. INCOME TAX IN COMMON LAW JURISDICTIONS From the Origins to 1820 PETER HARRIS cambridge university press Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge cb2 2ru, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521870832 © Peter Harris 2006 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2006 isbn-13 isbn-10 978-0-511-26040-7 eBook (EBL) 0-511-26040-7 eBook (EBL) isbn-13 isbn-10 978-0-521-87083-2 hardback 0-521-87083-6 hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. CONTENTS List of tables vii List of maps ix List of statutes Preface xiii lxxv Introduction 1 Focus of the study Structure 7 2 1 To 1641: Searching for seeds in feudal Englan