498

PART I

OF TAXES

THE private revenue of individuals, it has been shown in the first book of
this Inquiry, arises ultimately from three different sources: Rent, Profit,
and Wages. Every tax must finally be paid from some one or other of those
three different sorts of revenue, or from all of them indifferently. I
shall endeavour to give the best account I can, first, of those taxes
which, it is intended, should fall upon rent; secondly, of those which, it
is intended, should fall upon profit; thirdly, of those which, it is
intended, should fall upon wages; and, fourthly, of those which, it is
intended, should fall indifferently upon all those three different sources
of private revenue. The particular consideration of each of these four
different sorts of taxes will divide the second part of the present chapter
into four articles, three of which will require several other subdivisions.
Many of those taxes, it will appear from the following review, are not
finally paid from the fund, or source of revenue, upon which it was
intended they should fall.

Before I enter upon the examination of particular taxes, it is necessary to
premise the four following maxims with regard to taxes in general.

I. The subjects of every state ought to contribute towards the support of
the government, as nearly as possible, in proportion to their respective
abilities; that is, in proportion to the revenue which they respectively
enjoy under the protection of the state. The expense of government to the
individuals of a great nation is like the expense of management to the
joint tenants of a great estate, who are all obliged to contribute in
proportion to their respective interests in the estate. In the observation
or neglect of this maxim consists what is called the equality or inequality
of taxation. Every tax, it must be observed once for all, which falls
finally upon one only of the three sorts of revenue above mentioned, is
necessarily unequal in so far as it does not affect the other two. In the
following examination of different taxes I shall seldom take much further
notice of this



499

sort of inequality, but shall, in most cases, confine my
observations to that inequality which is occasioned by a particular tax
falling unequally even upon that particular sort of private revenue which
is affected by it.

II. The tax which each individual is bound to pay ought to be certain, and
not arbitrary. The time of payment, the manner of payment, the quantity to
be paid, ought all to be clear and plain to the contributor, and to every
other person. Where it is otherwise, every person subject to the tax is put
more or less in the power of the tax-gathered, who can either aggravate the
tax upon any obnoxious contributor, or extort, by the terror of such
aggravation, some present or perquisite to himself. The uncertainty of
taxation encourages the insolence and favours the corruption of an order of
men who are naturally unpopular, even where they are neither insolent nor
corrupt. The certainty of what each individual ought to pay is, in
taxation, a matter of so great importance that a very considerable degree
of inequality, it appears, I believe, from the experience of all nations,
is not near so great an evil as a very small degree of uncertainty.

III. Every tax ought to be levied at the time, or in the manner, in which
it is most likely to be convenient for the contributor to pay it. A tax
upon the rent of land or of houses, payable at the same term at which such
rents are usually paid, is levied at the time when it is most likely to be
convenient for the contributor to pay; or, when he is most likely to have
wherewithal to pay. Taxes upon such consumable goods as are articles of
luxury are all finally paid by the consumer, and generally in a manner that
is very convenient for him. He pays them by little and little, as he has
occasion to buy the goods. As he is at liberty, too, either to buy, or not
to buy, as he pleases, it must be his own fault if he ever suffers any
considerable inconveniency from such taxes.

IV. Every tax ought to be so contrived as both to take out and to keep out
of the pockets of the people as little as possible over and above what it
brings into the public treasury of the state. A tax may either take out or
keep out of the pockets of the people a great deal more than it brings into

500 the public treasury, in the four following ways. First, the levying of it may require a great number of officers, whose salaries may eat up the greater part of the produce of the tax, and whose perquisites may impose another additional tax upon the people. Secondly, it may obstruct the industry the people, and discourage them from applying to certain branches of business which might give maintenance and unemployment to great multitudes. While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to do so. Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals. An injudicious tax offers a great temptation to smuggling. But the penalties of smuggling must rise in proportion to the temptation. The law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it; and it commonly enhances the punishment, too, in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime. Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble, vexation, and oppression; and though vexation is not, strictly speaking, expense, it is certainly equivalent to the expense at which every man would be willing to redeem himself from it. It is in some one or other of these four different ways that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign. The evident justice and utility of the foregoing maxims have recommended them more or less to the attention of all nations. All nations have endeavoured, to the best of their judgment, to render their taxes as equal as they could contrive; as certain, as convenient to the contributor, both in the time and in the mode of payment, and, in proportion to the revenue which they brought to the prince, as little burdensome to the people. The following short review of some 501 of the principal taxes which have taken place in different ages and countries will show that the endeavours of all na- tions have not in this respect been equally successful.

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