Reblogging this for a few things.
One, it was tagged under taxes. I canât see the word taxes in this quote at all so Iâm confused as to how a quote on voluntary, charitable giving got misconstrued into a quote to support theft and violence.
Two, I do notice the word should. Should is different than must in that it urges someone to do something, apart from threatening wealth redistribution with threats of force or imprisonment. Philanthropy canât be forced.
Something tells me this is the only thing the economically illiterate left have actually read by Adam Smith.
Two other things: first, the obvious fact that our system of progressive taxation guarantees that the rich will be paying something more than an equal proportion of their revenue. Not only that, our system has reached a point where only half of income earners paid income taxes last year. In case youâre curious, that is most certainly the bottom half. So, if anyoneâs not paying their âfair shareâ itâs me, the father of two whoâs been in the workforce since I was 16 and never not gotten a refund.
Second, and slightly less obvious: to say something is ânot very unreasonableâ is not the same as saying itâs the right thing to do. There are most certainly other solutions. Of course, weâve already chosen this one, unfortunately, a bunch of people who pay no taxes or something like 8% after credits and deductions, think itâs a travesty that someone who earns more only has to give up 30%. If thatâs youâre idea of âin proportion to their revenueâ, then we are, as a society, well and truly screwed.
That quote is completely out of context and dishonestly misrepresents what Smith was talking about to make it fit into a statist justification for âprogressiveâ income taxation.
First, obviously, it should be noted that Adam Smith was a brilliant thinker for his time, but wrong on many things (the labor theory of value, for example). And though he was much more laissez-faire than most of his contemporaries, he was not a completely anti-state libertarian and nobody pretends he was. He believed the state was necessary for national defense, for instance, and thus some taxes were required.
Furthermore one needs to understand how Smith wrote: he would present many arguments both for and against potential policies and then discuss a kind of cost-benefit analysis. Thus, just because he presents a potential benefit of X doesnât mean he was in favor of X.
Smith is here talking about what taxes would be least burdensome, going through many different potential tax schemes. Look at the whole chapter. In this particular excerpt, he is talking about different kinds of property taxes (âhouse-rentsâ vs. âground-rentsâ) and he notes that one characteristic of house-rents is that the burden falls more heavily in proportion on richer people because they have much more opulent houses relative to income than poorer people.
He reasons that poorer people expend a greater proportion of their wealth on the ânecessities of lifeâ (food etc.) whereas richer people proportionally spend less on these things, and therefore this particular characteristic of the house-rent property tax is tolerable (ânot very unreasonableâ) and thus not a strong argument against it. He is saying that the fact that a tax is progressive is not itself necessarily a strong argument against the tax.
He is not endorsing progressive income taxation (or any income taxation at all, which he opposed) and he concludes against the house-rent tax he is specifically talking about in that quote, and he explicitly states that any taxes should optimally be proportional, not âprogressiveâ:
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.
Adam Smith. Wealth of Nations. V.II.§25.
