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)…
#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))…
#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....

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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
26 Feb
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
Read 17 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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