Thread by @adamsmithworks

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

But before he gets into those subdivisions...a list of maxims! (V.ii.b.2) #WealthOfTweets #SmithTweets

Taxes in general should:
1) Be in proportion to ability to pay.
2) Be certain, not arbitrary.
3) Be charged when it's easy to pay.
4) Not cost people more than necessary.

Seems reasonable. (V.ii.b.3–7) #WealthOfTweets #SmithTweets

So! Taxes on rent. (V.ii.c) #WealthOfTweets #SmithTweets

Taxes on rent can be set for a location, or they can vary with the improvement and productivity of (and therefore the rent paid on) the land. (V.ii.c.1) #WealthOfTweets #SmithTweets

Britain had a land tax set way-back-when by district that hadn't been updated since its imposition. This has worked out pretty well, says Smith! It's definitely certain and it's charged when people can conveniently pay it. (V.ii.c.2) #WealthOfTweets

Smith admits this could have been worse if the rent of the lands or the value of silver had varied dramatically (which they hadn't) things could have worked out otherwise. But they didn't. (V.ii.c.3–6) #WealthOfTweets #SmithTweets

Some places try to assess the rent of land in order to set the tax based on what's actually paid. Like Venice. #VeniceYouSoCrazy The physiocrats think this is a great idea. Smith, not so much. (V.ii.c.7–9) #WealthOfTweets #SmithTweets

I mean, sure, says Smith. It would be more EQUAL (by which he means allocated based on ability to pay), but it would not be so certain. And a lot of inequality is better than a little uncertainty. Plus, those assessments. So expensive! (V.ii.b.4, c.9) #WealthOfTweets #SmithTweets

Smith proposes a complicated-sounding system of lease registries for preventing uncertainty and moderating the expense of tax assessment. (V.ii.c.10–17) media.giphy.com/media/l2JdV8tM…
#WealthOfTweets #SmithTweets

Even if the complicated assessment scheme could work, a tax on the rent of land would discourage improvement of the land by reducing the payoff for improving it.

That's bad. (V.ii.c.18) #WealthOfTweets #SmithTweets

But wait! By another somewhat complicated system of administration, maybe the land-tax could ENcourage rather than DIScourage the improvement of the land.

That would be good! (V.ii.c.18–19) #WealthOfTweets #SmithTweets

If you could pull this off, says Smith, boy would it be great. It should be a fundamental law of the commonwealth if you can pull this off. (V.ii.c.20) #WealthOfTweets #SmithTweets

Instead of the simple and obvious system of getting landlords and tenants to register leases together with payments for snitching if one side or the other cheats...(V.ii.c.21) #WealthOfTweets #SmithTweets

...and amendments to make sure that you're encouraging improvement (so simple! so obvious!), some countries do SURVEYS. #Numpties (V.ii.c.21–23) #WealthOfTweets #SmithTweets

(Yes, we, the SmithTweeters, also see the word "Doomsday-book" there, and no, we were not just going to ignore it. But it's not as interesting as it sounds. Doom used to be less doomy. (V.ii.c.21)) en.wikipedia.org/wiki/Domesday_…
#WealthOfTweets #SmithTweets

Some places also charge different taxes to churches and nobility than the common people. It's an option, but Smith would probably like those who consider it to remember the four maxims of taxation. (V.ii.c.24–25) #WealthOfTweets #SmithTweets

Anyway, even if the tax is perfectly equal when you set it, it'll become unequal over time. Unless you go to a lot of work and bother and impose a burden on those being taxed. It's probably, says Smith, more trouble than it's worth. (V.ii.c.26–27) #WealthOfTweets #SmithTweets

Another way to tax rent is to tax the produce of land. Because rent is a monopoly price and landlords just collect all the value they can beyond the wages and profit generated, a tax on the produce of the land will be paid by the landlord. (V.ii.d.1) #WealthOfTWeets #SmithTweets

Church tithes are an example of this kind of "tax". They look equal, says Smith, but they're not because the rent of the land is not set by its productivity. (V.ii.d.2) #WealthOfTweets #SmithTweets

In addition to being unequal, the tithe discourages both improvement of the land and production by the farmer. (V.ii.d.3) #WealthOfTweets #SmithTweets

Asian governments tax the land according to its produce rather than its rent. When it's the government doing it, Smith sees some advantages: it creates an incentive to make sure roads, canals, etc. are kept up and the land is improved. (V.ii.d.5) #WealthOfTweets #SmithTweets

If the government provides the public works that make the whole country productive, its tax on produce will be more lucrative.

Churches don't control enough of an area to have these good incentives from the tithe. (V.ii.d.5) #WealthOfTweets #SmithTweets

A tax on produce might also be collected in kind, but this leads to corruption unless it can be overseen by the person the tax is being paid to. (Corrupt tax officials were a real problem at the time, judging by this chapter.) (V.ii.d.7) #WealthOfTweets #SmithTweets

I mean, we know @turbotax @HRBlock @IRSnews @NTU @wwwojtekk and @jmhorp have been waiting for this like Smithtweeters wait for Girl Scout Cookies....