Thread by @adamsmithworks

#AdamSmith! #WealthOfNations! #Taxes! He's still going!
Today, at long last, we come to
ｃｏｎｓｕｍｐｔｉｏｎ ｔａｘｅｓ!

We, the SmithTweeters, realize we've really built this up. (V.ii.k) #WealthOfTweets #SmithTweets

But! There's a lot of good stuff in here! So once more into the breach, dear Smithketeers...

Smith divides consumable commodities into necessaries and luxuries. (V.ii.k.2) #WealthOfTweets #SmithTweets

Smith includes in necessaries not just what's needed for physical survival, but what's required by common decency in a given society at a given time. He uses the examples of linen shirts and leather shoes for British working class men. (V.ii.k.3–4) #WealthOfTweets #SmithTweets

The best way to tell if something is a necessary commodity is whether increasing its price increases the wages of labor or just changes consumption patterns. (V.ii.k.3–4) #WealthOfTweets #SmithTweets

Because taxes on necessary commodities will raise the wages of labor to ensure workers have what they need in a given economy, taxing them has the same effect as taxing the wages of labor.

That's bad. (V.ii.k.5) #WealthOfTweets #SmithTweets

By "luxuries", Smith doesn't mean goods only the rich can afford. He means commodities that aren't necessaries. Goods universally consumed by the poor can still count as luxuries. Some examples include tobacco, sugar, and—hold up. Tea‽ (V.ii.k.6) #WealthOfTweets #SmithTweets

We really weren't ready for that.

A quick break while we brew a recovery pot. (V.ii.k.6) #WealthOfTweets #SmithTweets

[We, the SmithTweeters, assure you that if the price of TEA goes up, our per-tweet rate will go up right along with it!] (V.ii.k.6) #WealthOfTweets #SmithTweets

Ahem.

We look askance on Smith's claim that increasing the price of luxuries will make the poor better off by making them more frugal. (V.ii.k.7) #WealthOfTweets #SmithTweets

We straight-up SIDE EYE the suggestion that disorderly families who can't moderate their consumption and let their children starve instead wouldn't add "useful" people to the population anyway. (V.ii.k.7) #WealthOfTweets #SmithTweets

It's a reminder of the high stakes of increasing wealth in the 18thC, but it's 𝙧𝙖𝙩𝙝𝙚𝙧 𝙖𝙩 𝙤𝙙𝙙𝙨 with Smith's laudable idea from way back in Book I that we're born with equal potential. (V.ii.k.7) #WealthOfTweets #SmithTweets

Even middle- and high-income people should oppose taxes on necessities, says Smith. They're better able to weather the increase in the cost of living, but taxes on necessities, like takes on wages, make everyone poorer. (V.ii.k.9) #WealthOfTweets #SmithTweets

Taxing luxuries, though—by definition—doesn't raise the overall cost of living. They just make the luxuries taxed more expensive. (V.ii.k.9) #WealthOfTweets #SmithTweets

Britain may not have taxed wages, but it did tax necessities. Specifically:
- Salt (need it to live)
- Leather (need it for shoes)
- Soap (need it to wash linen shirts)
- Candles (need it to work at night, esp in UK winters) (V.ii.k.10–11) #WealthOfTweets #SmithTweets

Smith thinks fuel might also qualify in the winter, and suggests that if a bounty could ever be reasonable, a bounty to get coal to places would qualify.
Britain, meanwhile, taxed that kind of thing. (V.ii.k.12) #WealthOfTweets #SmithTweets

Smith thinks all these taxes on necessities are obviously harmful, but that that's not enough to say you shouldn't do them. If a government needs the revenue and can't get it another way, it might make sense to continue taxing these goods. (V.ii.k.13) #WealthOfTweets #SmithTweets

#SmithSnark drive-by: This potential defence of taxing necessities is 𝗻𝗼𝘁 available to duties imposed to support the mercantile system, which have all the bad effects of taxes and none of the good ones. (V.ii.k.13) #WealthOfTweets #SmithTweets

Britain could be worse. (V.ii.k.14–15) #WealthOfTweets #SmithTweets

There are two ways to tax consumable commodities: an annual fee for using them paid directly by the consumer, or a tax on the merchants selling them paid by the consumer as the goods are purchased for use. (V.ii.k.16–17) #WealthOfTweets #SmithTweets

Annual consumption licenses might make sense for coaches and things like coaches, especially when compared to an up-front tax when purchasing the coach. But generally, consumption licenses are worse than pay-as-you-go taxes. (V.ii.k.17–18) #WealthOfTweets #SmithTweets

Consumption licenses are:
1) Less equal (not based on consumption)
2) Less convenient (you need a lot of money all at once)
3) Do less to discourage bad consumption
4) Likely onerous for low-income consumers. (V.ii.k.18) #WealthOfTweets #SmithTweets

Smithsters, there's a lot still to come on consumption taxes. We're going to leave it here for today. See you tomorrow for more! (V.ii.k) #WealthOfTweets #SmithTweets