An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗

The tax which each individual is bound to pay, ought to be

certain and not arbitrary. The time of payment, the manner of

payment, the quantity to be paid, ought all to be clear and plain

to the contributor, and to every other person. Where it is

otherwise, every person subject to the tax is put more or less in

the power of the tax-gatherer, who can either aggravate the tax

upon any obnoxious contributor, or extort, by the terror of such

aggravation, some present or perquisite to himself. The

uncertainty of taxation encourages the insolence, and favours the

corruption, of an order of men who are naturally unpopular, even

where they are neither insolent nor corrupt. The certainty of

what each individual ought to pay is, in taxation, a matter of so

great importance, that a very considerable degree of inequality,

it appears, I believe, from the experience of all nations, is not

near so great an evil as a very small degree of uncertainty.

 

3. Every tax ought to be levied at the time, or in the manner, in

which it is most likely to be convenient for the contributor to

pay it. A tax upon the rent of land or of houses, payable at the

same term at which such rents are usually paid, is levied at the

time when it is most likely to be convenient for the contributor

to pay ; or when he is most likely to have wherewithall to pay.

Taxes upon such consumable goods as are articles of luxury, are

all finally paid by the consumer, and generally in a manner that

is very convenient for him. He pays them by little and little, as

he has occasion to buy the goods. As he is at liberty too, either

to buy or not to buy, as he pleases, it must be his own fault if

he ever suffers any considerable inconveniecy from such taxes.

 

4. Every tax ought to be so contrived, as both to take out and to

keep out of the pockets of the people as little as possible, over

and above what it brings into the public treasury of the state. A

tax may either take out or keep out of the pockets of the people

a great deal more than it brings into the public treasury, in the

four following ways. First, the levying of it may require a great

number of officers, whose salaries may eat up the greater part of

the produce of the tax, and whose perquisites may impose another

additional tax upon the people. Secondly, it may obstruct the

industry of the people, and discourage them from applying to

certain branches of business which might give maintenance and

employment to great multitudes. While it obliges the people

to pay, it may thus diminish, or perhaps destroy, some of the

funds which might enable them more easily to do so. Thirdly, by

the forfeitures and other penalties which those unfortunate

individuals incur, who attempt unsuccessfully to evade the tax,

it may frequently ruin them, and thereby put an end to the

benefit which the community might have received from the

employment of their capitals. An injudicious tax offers a great

temptation to smuggling. But the penalties of smuggling must

arise in proportion to the temptation. The law, contrary to all

the ordinary principles of justice, first creates the temptation,

and then punishes those who yield to it; and it commonly enhances

the punishment, too, in proportion to the very circumstance which

ought certainly to alleviate it, the temptation to commit the

crime.{ See Sketches of the History of Man page 474, and Seq.}

Fourthly, by subjecting the people to the frequent visits and the

odious examination of the tax-gatherers, it may expose them to

much unnecessary trouble, vexation, and oppression ; and though

vexation is not, strictly speaking, expense, it is certainly

equivalent to the expense at which every man would be willing to

redeem himself from it. It is in some one or other of these four

different ways, that taxes are frequently so much more burdensome

to the people than they are beneficial to the sovereign.

 

The evident justice and utility of the foregoing maxims have

recommended them, more or less, to the attention of all nations.

All nations have endeavoured, to the best of their judgment, to

render their taxes as equal as they could contrive ; as certain,

as convenient to the contributor, both the time and the mode of

payment, and in proportion to the revenue which they brought to

the prince, as little burdensome to the people. The following

short review of some of the principal taxes which have taken

place in different ages and countries, will show, that the

endeavours of all nations have not in this respect been equally

successful.

 

ARTICLE I. � Taxes upon Rent � Taxes upon the Rent of Land.

 

A tax upon the rent of land may either be imposed according to a

certain canon, every district being valued at a curtain rent,

which valuation is not afterwards to be altered; or it may be

imposed in such a manner, as to vary with every variation in the

real rent of the land, and to rise or fall with the improvement

or declension of its cultivation.

 

A land tax which, like that of Great Britain, is assessed upon

each district according to a certain invariable canon, though it

should be equal at the time of its first establishment,

necessarily becomes unequal in process of time, according to the

unequal degrees of improvement or neglect in the cultivation of

the different parts of the country. In England, the valuation,

according to which the different counties and parishes were

assessed to the land tax by the 4th of William and Mary, was very

unequal even at its first establishment. This tax, therefore, so

far offends against the first of the four maxims above mentioned.

It is perfectly agreeable to the other three. It is perfectly

certain. The time of payment for the tax, being the same as that

for the rent, is as convenient as it can be to the contributor.

Though the landlord is, in all cases, the real contributor, the

tax is commonly advanced by the tenant, to whom the landlord is

obliged to allow it in the payment of the rent. This tax is

levied by a much smaller number of officers than any other which

affords nearly the same revenue. As the tax upon each district

does not rise with the rise of the rent, the sovereign does not

share in the profits of the landlord’s improvements. Those

improvements sometimes contribute, indeed, to the discharge of

the other landlords of the district. But the aggravation of the

tax, which this may sometimes occasion upon a particular estate,

is always so very small, that it never can discourage those

improvements, nor keep down the produce of the land below what it

would otherwise rise to. As it has no tendency to diminish the

quantity, it can have none to raise the price of that produce.

It does not obstruct the industry of the people; it subjects the

landlord to no other inconveniency besides the unavoidable one of

paying the tax.

 

The advantage, however, which the landlord has derived from the

invariable constancy of the valuation. by which all the lands of

Great Britain are rated to the land-tax, has been principally

owing to some circumstances altogether extraneous to the nature

of the tax

 

It has been owing in part, to the great prosperity of almost

every part of the country, the rents of almost all the estates of

Great Britain having, since the time when this valuation was

first established, been continually rising, and scarce any of

them having fallen. The landlords, therefore, have almost all

gained the difference between the tax which they would have paid,

according to the present rent of their estates, and that which

they actually pay according to the ancient valuation. Had the

state of the country been different, had rents been gradually

falling in consequence of the declension of cultivation, the

landlords would almost all have lost this difference. In the

state of things which has happened to take place since the

revolution, the constancy of the valuation has been advantageous

to the landlord and hurtful to the sovereign. In a different

state of things it might have been advantageous to the sovereign

and hurtful to the landlord.

 

As the tax is made payable in money, so the valuation of the land

is expressed in money. Since the establishment of this valuation,

the value of silver has been pretty uniform, and there has been

no alteration in the standard of the coin, either as to weight or

fineness. Had silver risen considerably in its value, as it seems

to have done in the course of the two centuries which preceded

the discovery of the mines of America, the constancy of the

valuation might have proved very oppressive to the landlord. Had

silver fallen considerably in its value, as it certainly did for

about a century at least after the discovery of those mines, the

same constancy of valuation would have reduced very much this

branch of the revenue of the sovereign. Had any considerable

alteration been made in the standard of the money, either by

sinking the same quantity of silver to a lower denomination, or

by raising it to a higher ; had an ounce of silver, for example,

instead of being coined into five shillings and two pence, been

coined either into pieces which bore so low a denomination as two

shillings and seven pence, or into pieces which bore so high a

one as ten shillings and four pence, it would, in the one case,

have hurt the revenue of the proprietor, in the other that of the

sovereign.

 

In circumstances, therefore, somewhat different from those which

have actually taken place, this constancy of valuation might have

been a very great inconveniency, either to the contributors or to

the commonwealth. In the course of ages, such circumstances,

however, must at some time or other happen. But though empires,

like all the other works of men, have all hitherto proved mortal,

yet every empire aims at immortality. Every constitution,

therefore, which it is meant should be as permanent as the empire

itseif, ought to be convenient, not in certain circumstances

only, but in all circumstances; or ought to be suited, not to

those circumstances which are transitory, occasional, or

accidental, but to those which are necessary, and therefore

always the same.

 

A tax upon the rent of land, which varies with every variation of

the rent, or which rises and falls according to the improvement

or neglect of cultivation, is recommended by that sect of men of

letters in France, who call themselves the economists, as the

most equitable of all taxes. All taxes, they pretend, fall

ultimately upon the rent of land, and ought, therefore, to be

imposed equally upon the fund which must finally pay them. That

all taxes ought to fall as equally as possible upon the fund

which must finally pay them, is certainly true. But without

entering into the disagreeable discussion of the metaphysical

arguments by which they support their very ingenious theory, it

will sufficiently appear, from the following review, what are the

taxes which fall finally upon the rent of the land, and what are

those which fall finally upon some other fund.

 

In the Venetian territory, all the arable lands which are given

in lease to farmers are taxed at a tenth of the rent. { Memoires

concernant les Droits, p. 240, 241.} The leases are recorded in a

public register, which is kept by the officers of revenue in each

province or district. When the proprietor cultivates his own

lands, they are valued according to an equitable estimation, and

he is allowed a