Tuesday, April 17, 2007

Adam Smith on Taxes

Adam Smith gave four signs of bad taxation:

1. If it requires a large bureaucracy for administration.
2. If it “may obstruct the industry of the people, and discouraged 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.”
3. If it encourages evasion.
4. If it puts people through “odious examination of the tax-gatherers, and expose them to much unnecessary trouble, vexation, and oppression."

In conclusion, “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.”

(From Charles Adams’ For Good and Evil: The Impact of Taxes on the Course of Civilization)

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