Sunday, July 31, 2011

Founding Fathers: A good tax

Adam Smith is often quoted, the so-called "Father of Economics" has rarely been read. Consequently he is often misunderstood.
Smith, who made such a strong stand against the protectionist mercantile system of trade of his day, devoted over ONE THIRD of his work An Inquiry into the Nature and Causes of the Wealth of Nations, to discussing the subject of government revenue and the methods by which it may be best collected, including new taxes. This is not generally known.
Examining the different forms of taxation, Smith adheres to four maxims which a good tax should conform to:
1. "The subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State."
2. "The tax each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, and the quantity to be paid, ought all to be clear and plain to the contributor, and to ever other person."
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."
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."will we be fooled again??

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