CH. 6 THE DEFINITION OF INCOME 59

equipment taken as a whole. But it is also reasonablein certain circumstances to recalculate the allowancefor supplementary cost on the basis of current valuesand expectations at an arbitrary accounting interval,e.g. annually. Business men in fact differ as to whichcourse they adopt. It may be convenient to call theinitial expectation of supplementary cost when theequipment is first acquired the basic supplementary cost,and the same quantity recalculated up to date on thebasis of current values and expectations the currentsupplementary cost.

Thus we cannot get closer to a quantitative defini-tion of supplementary cost than that it comprises thosedeductions from his income which a typical entre-preneur makes before reckoning what he considers hisnet income for the purpose of declaring a dividend(inthe case of a corporation) or of deciding the scale ofhis current consumption(in the case of an individual).Since windfall charges on capital account are not goingto be ruled out of the picture, it is clearly better, incase of doubt, to assign an item to capital account, andto include in supplementary cost only what ratherobviously belongs there. For any overloading ofthe former can be corrected by allowing it more in-fluence on the rate of current consumption than itwould otherwise have had.

It will be seen that our definition of net income comesvery close to Marshall’s definition of income, when hedecided to take refuge in the practices of the IncomeTax Commissioners and—broadly speaking—to regardas income whatever they, with their experience, chooseto treat as such. For the fabric of their decisions canbe regarded as the result of the most careful and ex-tensive investigation which is available, to interpret what,in practice, it is usual to treat as net income. It alsocorresponds to the money value of Professor Pigou’smost recent definition of the National Dividend.1

1 Economic Journal, June 1935, p. 235.