Thread by @adamsmithworks

Welcome back to consumption taxes! #AdamSmith has still got a lot to say on this in #WealthOfNations. Let's jump right back in. (V.ii.k.) #WealthOfTweets #SmithTweets

Exise duties are a tax that falls mostly on goods produced at home for consumption at home—generally a few goods that are widely used.
These are mostly luxuries, except for the salt, leather, soap, candles thing.

And green glass. (V.ii.k.19) #WealthOfTweets #SmithTweets

Fellow Smithsters, the green glass thing threw us for a loop.

Is green glass a necessity? Why wasn't it mentioned earlier if so? Is the glass green in color? It a technical term? Send us your theories! regencyredingote.wordpress.com/2008/10/10/the…
(V.ii.k.19) #WealthOfTweets #SmithTweets

Customs duties are suuuuuper old. Time immemorial old. (Or maybe just from feudal England. It's less clear than you'd think from the use of "time immemorial".) (V.ii.k.20) #WealthOfTweets #SmithTweets

Back in the feudal days, the nobility looked down upon merchants and the domestic population looked down upon foreign goods.
Which...kind of sounds like what Smith has been describing in his own time but OK. #BackInTheDay (V.ii.k.20–21) #WealthOfTweets #SmithTweets

The prejudice against foreign goods was the original reason for higher customs duties, but higher duties persist because of the spirit of monopoly and mercantile system. Perhaps you've heard Smith mention this before. #OverAndOver (V.ii.k.21) #WealthOfTweets #SmithTweets

Setting aside the treatment of foreign goods, customs were...customarily? applied to goods equally in an attempt to be fair. There were three kinds of ancient customs:
1) On wool and leather,
2) On wine,
3) On everything else. (V.ii.k.23)
en.wikipedia.org/wiki/Celestial… #SmithTweets

You might think that Smith is bringing up the mercantile system again because he hates it so much and...well, you might be right. But it actually makes sense to do it here. Customs duties are taxes, but they're bad at being taxes. (V.ii.k.23–29) #WealthOfTweets #SmithTweets

Because customs duties are set to try to achieve a certain balance of trade, they fail at raising revenue. What might be a useful public policy tool gets hijacked and turned against its most plausibly useful purpose: revenue generation. (V.ii.k.23–29) #WealthOfTweets #SmithTweets

Instead of raising revenue, customs duties foster monopoly, encourage smuggling, and discourage consumption. All three of these things make them expensive instead of lucrative. (V.ii.k.23–29) #WealthOfTweets #SmithTweets

Okay. Look. Smith mentions this thing called "The Book of Rates" which is extremely comprehensive and enumerates all kinds of customs duties. We confess, we braced ourselves. (V.ii.k.30) #WealthOfTweets #SmithTweets

But then he doesn't quote it. Or discuss it for 65 pages. There is no Digression on the Book of Rates! And now we think we might be disappointed? Maybe? (V.ii.k.30) #WealthOfTweets #SmithTweets
gph.is/23186WW

Smith disagrees that the best way to make sure everyone contributes as they should to the public revenue is to tax everything. He thinks you could achieve this goal by taxing a few things well. This could be done via customs duties. (V.ii.k.31–32) #WealthOfTweets #SmithTweets

He suggests that imported common luxuries (Yes, including tea. We, the SmithTweeters, feel attacked.) are a good target. They already provide a good deal of revenue. How could their taxation be improved? (V.ii.k.32–41) #WealthOfTweets #SmithTweets

The two main things that reduce the revenue from customs duties are high prices that reduce consumption and smuggling. Lowering the tax rate can address both of these problems. (V.ii.k.32–41) #WealthOfTweets

Public warehouses could be used to combat smuggling, but only if far fewer goods were charged duties (which is what Smith is suggesting). (V.ii.k.32–41) #WealthOfTweets

Customs policies that aimed to raise revenue and not to pursue wrong-headed mercantile goals might, thinks Smith, raise as much revenue as all the customs duties Britain was imposing at the time while otherwise freeing trade. (V.ii.k.32–41) #WealthOfTweets #SmithTweets

But obviously this is v unpopular with proponents of the mercantile system, so politically it ain't gonna happen. (V.ii.k.40) #WealthOfTweets #SmithTweets

Taxes on cheaper luxuries fall pretty equally upon all people in proportion to their consumption of those luxuries, especially because the rich are paying for the consumption of their servants as well. (V.ii.k.42) #WealthOfTweets #SmithTweets

We should pay special attention to the taxes paid by the working poor and others below the "middling rank" of people. (V.ii.k.43) #WealthOfTweets #SmithTweets

There are so many of the working poor that their combined spending is consequential.
Almost all the capital in any country is spent on supporting the wages of their labor. (V.ii.k.43) #WealthOfTweets #SmithTweets

The combined profit from the small capitals of the working poor is significant. Many of them own a little land, so even their rents matter.

IOW, they've all got a little wealth. But there's a lot of them, so it's a lotta wealth. (V.ii.k.43) #WealthOfTweets #SmithTweets

If the point of a tax is to raise revenue for the state, therefore, it should not overlook the poor as a source of revenue, but try to affect all ranks of people indifferently. (V.ii.k.43) #WealthOfTweets #SmithTweets

Smith isn't saying that's what you should do, he's just saying it'd raise a lot of cash. (V.ii.k.43) #WealthOfTweets #SmithTweets

This isn't exactly gripping, folks, valuable as it may be. Let's take a break and regroup tomorrow. With more tea. #WealthOfTweets #SmithTweets

This right here, guys? *This* is how you get a job as Commissioner of His Majesty's Customs at Edinburgh.