Now you know all the things #AdamSmith has to say about what the government should spend money on. But that money's gotta come from somewhere. What does #WealthOfNations say about how governments should get money to spend? (V.ii.) #WealthOfTweets #SmithTweets
I know the tax nerds have been waiting for this chapter (we ❤ you, nerds), but first Smith wants to talk about other sources of revenue "which may peculiarly belong to the Sovereign or Commonwealth". (V.ii.a) #WealthOfTweets #SmithTweets
IOW, before we get to taxes we've gotta cover businesses run by the sovereign (like the post office), public banks, public lending, and revenue from public lands.

But don't worry, we can do that pretty quickly...ish. (V.ii.a) #WealthOfTweets #SmithTweets
States are generally bad at running businesses. The incentives don't line up, and the character of the two activities is too different to succeed in both. (V.ii.a.4–7) #WealthOfTweets #SmithTweets
Except the post office. I mean, *no one* could lose money via a public post office, right? (V.ii.a.5) #WealthOfTweets #SmithTweets
Another exception is very small states running weird little businesses like the public wine merchant and apothecary in Hamburg.

Smith grants that might work out, but these states "cannot be very great" if they have income like this. #Burn (V.ii.a.4) #WealthOfTweets #SmithTweets
Governments might also try to earn interest on stock, but this is unusual since international lending goes badly wrong in wartime, when foreign governments just keep the money. (V.ii.a.8–12) #WealthOfTweets #SmithTweets
Pennsylvania has this wacky system where they issue bills of credit (on which interest is paid and which is secured by land) for use as money to its citizens and they circulate and spend it and raise money that way. (V.ii.a.11) #WealthOfTweets #SmithTweets
This worked out OK for Pennsylvania, but the other American colonies that tried to do this without Pennsylvania's "moderation" created "much more disorder than conveniency." (V.ii.a.11) #WealthOfTweets #SmithTweets
#TLDR, Smith says that profits from stock and credit are not appropriate revenues for any kind of great nation. (V.ii.a.12) #WealthOfTweets #SmithTweets
But land! Surely owning land is a great way for governments to ensure they have the money they need, right? Rent is a monopoly price and all that. Plus, having lots of land is impressive and stuff. (V.ii.a.13) #WealthOfTweets #SmithTweets
OK, MAYBE, says Smith, unless you're a modern state and you're going to war. Since not everyone is a soldier any more, it's too expensive to wage war on the rent of public land alone. (V.ii.a.16) #WealthOfTweets #SmithTweets
Now Smith is sort of going to talk about land tax revenue but not land tax yet (spoilers, Dr. Smith!). (V.ii.a.16) #WealthOfTweets #SmithTweets
The produce of crown lands are just not high enough to yield the kind of income that a modern nation needs. Those lands aren't productive enough. (V.ii.a.17–18) #WealthOfTweets #SmithTweets
There's a misconception, says Smith, that even though crown lands aren't super productive, at least they don't cost anything. Wrong! The revenue they COULD generate if they were distributed to private people is a huge missed opportunity. (V.ii.a.19) #WealthOfTweets #SmithTweets
Smith isn't against publicly owned land, he just thinks it oughta be considered an expense, not a source of revenue. (V.ii.a.20) #WeathOfTweets #SmithTweets
And so, having dismissed stock and lands as appropriate sources of revenue for a great nation, Smith is ready to move on to taxes! And that's what we'll tackle tomorrow. #TheWaitIsAlmostOver (V.ii.a.21) #WealthOfTweets #SmithTweets

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More from @adamsmithworks

2 Mar
Having said what he had to say about taxes on rent and profits, #AdamSmith pauses, now, for an appendix to handle the taxation of the land and stock that generate rent and profit. (V.ii.h) #WealthOfTweets #SmithTweets
Dear readers, we hope you are tax nerds. (We still and forever ❤ you, nerds.) @turbotax @IRSnews @HRBlock (V.ii.h) #WealthOfTweets #SmithTweets
Taxing the revenue generated by land or stock doesn't diminish the ability of that land or stock to generate revenue. But taxing away a portion of the revenue-generating property does. (V.ii.h.1) #WealthOfTweets #SmithTweets
Read 22 tweets
1 Mar
#AdamSmith's thoughts on taxation: They are numerous, and outlined in detail in #WealthOfNations. Today we'll be looking at taxes on profit! (V.ii.f–g) #WealthOfTweets #SmithTweets
Smith starts out by reminding us that profits are divided into the part that pays the interest and the part over and above that which pays the interest.

You can't tax the over-and-above part directly. (V.ii.f.1–2) #WealthOfTweets #SmithTweets
Over-and-above paying the interest might sound like it's extra money, but it's not! It compensates the owner of stock for things like risk and trouble. If you tax away this profit, the owner of the stock won't employ it productively. (V.ii.f.2) #WealthOfTweets #SmithTweets
Read 28 tweets
28 Feb
Ready for more of #AdamSmith's thoughts on taxes from #WealthOfNations? Sure you are! (V.ii.e–h) #WealthOfTweets #SmithTweets
Taxes upon rent can also fall upon the rent of houses! House rent isn't like regular land-rent, though. It's split into two parts: the building-rent and the ground-rent. (V.ii.e.1) #WealthOfTweets #SmithTweets
Building-rent is really just the profit of the person who builds the building. Like all profit it's regulated by supply, demand, and the interest of money. (V.ii.e.2) #WealthOfTweets #SmithTweets"
Read 22 tweets
27 Feb
It's here! It's finally here! The (first) day #AdamSmith talks about taxes in #WealthOfNations!

We're assuming there's a group for whom this is exciting. We, the SmithTweeters, may not count ourselves among them. But let's go anyway! (V.ii.b) #WealthOfTweets #SmithTweets
Remember how Smith divided private revenue into rent, profit, and wages in the first book? Now he's gonna divide up taxes. Smith loves a good subdivision. Taxes can fall on:
1) Rent
2) Profits
3) Wages
4) All three indifferently. (V.ii.b.1) #WealthOfTweets #SmithTweets
He'll be dividing up three of these into further subdivisions, obvs. (V.ii.b.1) #WealthOfTweets #SmithTweets
Read 27 tweets
25 Feb
Sovereigns are fancy, and they need revenue to support their fanciness. This is the entirety of part four of this chapter. (V.i.h.1–3) #WealthOfTweets #SmithTweets
In conclusion, all these expenses in Book V Chapter 1—defense, justice, public works, education, religion, fancy sovereigns—are for the benefit of society as a whole so society should help pay for them. (V.i.i.1–6) #WealthOfTweets #SmithTweets
When possible, it is good to find ways to make these things also help pay for themselves, though. You can’t ever expect them to cover all those costs, though. (V.i.i.1–6) #WealthOfTweets #SmithTweets
Read 4 tweets
24 Feb
#AdamSmith isn’t just interested in educating kids. He knows we need #LifeLongLearning and #AdultEducation.
He doesn't mean university courses for adults, but rather “preparation for a better world to come.” (He means church.) (V.i.g.1) #WealthOfTweets #SmithTweets
So we need to know how to best fund the clergy who provide this kind of education. Direct payments from their hearers? Tax? Tithe? Salary? (V.i.g.1) #WealthOfTweets #SmithTweets
Just as with other educators, clergy will be more zealous and hard working when they are paid directly by hearers rather than being guaranteed an income. This is why newer religions are so lively. (V.i.g.1) #WealthOfTweets #SmithTweets
Read 33 tweets

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