A wealth tax is an idea best judged by the canons of taxation
Subscribe to enjoy similar stories. The trouble with taxation is not its inevitability, nor its comparison for that reason with mortality, but its susceptibility to being viewed through lenses tinted by the viewer’s own tax liability. Evidence of this rises and falls in waves, peaking around budget time.
For a steady view of the broad idea, one must turn to first principles. These were set out by Adam Smith in The Wealth of Nations (1776) as “canons of taxation." They still serve as a good test for tax ideas. The first canon is that of ‘equity.’ The tax burden must be proportional to the taxpayer’s ability to pay.
As Smith put it: “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." Second is the canon of ‘certainty.’ One’s liability must not be arbitrary. In Smith’s words: “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." Third is the canon of ‘convenience.’ Taxes should be easy to pay.
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