over capitalist economics. As is true of every other aspect of economic activity, Smith has a view of taxation. On the underlying principles and theory of an effective system of taxation, Smith Said:
Before I enter upon the examination of particular taxes, it is necessary to premise the four following maxims with regard to taxes in general.
Adam Smith stated four criteria for levying taxes. These criteria are as follows:
1. Every resident of a state should contribute to 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."
2. Taxes should be certain and not arbitrary. For a system of taxation to be otherwise, according to Smith amounts to a form of tyranny. Smith argues further that uncertainty in a system of taxation leads to both corruption in government and non-compliance by ratepayers. Smith also believed that uncertainty in a system of taxation was more damaging to the effectiveness of taxation than inequities introduced by a failure to heed the taxation in relation to an ability to pay maxim.
3. Smith held that taxes should be payable at a time that is convenient to the ratepayer. Smith did not mean that people should pay taxes at any time of their choosing. Rather, he meant that taxes should not be payable when the ratepayer's rent is due or when the crops are still in the field. Smith also suggested, however, that taxes on consumable goods were different because people were "at liberty à 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."
4. Smith believed that a tax collection system should be efficient, i.e., the cost of collection should be the least amount required to do the job efficiently. Smith also believed that taxes should not destroy the incentive ...