Question From a Reader
A reader asks a question:
"I have started reading The Wealth of Nations. I read on your website that you do not subscribe to Stiger's idea of an invisible hand theory. That appealed to me.
What of Smith's call for Public Education and his call to tax lands?
I'd like Ireland to tax land rents as Smith says "Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them." Book5 Ch2 On taxes
Do you agree that ground rent should be taxed and is this a good way of funding education?"
Response:
Smith's attitudes to landlords was based on its historical origins in Feudalism and before that in war lords after the fall of Rome in the 5th century. From the spread of primogeniture - inheritance of all by the eldest male heir - and the spread of entail - no part of an estate can be sold except as an integral part of the whole estate - this led to locked-in lands, in time beyond the capacity of the heirs to farm and manage productively (each generation's land acquisitios automatically were entailed. Capital in land was wasted if the lands were not productive, and capital was diverted into land ownership and the prestige accorded to it in 18th-century society (Ireland and Britain has much experience of absentee landlords).
Hence, to raise revenue - there was no income tax in his day - he looked for other sources, and he recognised, with regret, that customs duties were inevitable, and with them tariffs, which prevented free trade (he called it 'utopian' to expect free trade to be instituted in Britain on such a narrow tax base).
His stance on taxes must be understood in that context.
Thank you for your question and your interest in Lost Legacy.
Postscript:
On the use of such land-based taxes for education, I make two observations.
1 The range of taxes has spread widely either side of land taxes, which plus borrowing is quite a different (much larger) burden on a national economy, as both Ireland and Britain now know to our cost.
2 On what or whether any new sources of taxation should be spent on any particular heading is a political choice and choice is a (divisive) problem of priorities.
"I have started reading The Wealth of Nations. I read on your website that you do not subscribe to Stiger's idea of an invisible hand theory. That appealed to me.
What of Smith's call for Public Education and his call to tax lands?
I'd like Ireland to tax land rents as Smith says "Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them." Book5 Ch2 On taxes
Do you agree that ground rent should be taxed and is this a good way of funding education?"
Response:
Smith's attitudes to landlords was based on its historical origins in Feudalism and before that in war lords after the fall of Rome in the 5th century. From the spread of primogeniture - inheritance of all by the eldest male heir - and the spread of entail - no part of an estate can be sold except as an integral part of the whole estate - this led to locked-in lands, in time beyond the capacity of the heirs to farm and manage productively (each generation's land acquisitios automatically were entailed. Capital in land was wasted if the lands were not productive, and capital was diverted into land ownership and the prestige accorded to it in 18th-century society (Ireland and Britain has much experience of absentee landlords).
Hence, to raise revenue - there was no income tax in his day - he looked for other sources, and he recognised, with regret, that customs duties were inevitable, and with them tariffs, which prevented free trade (he called it 'utopian' to expect free trade to be instituted in Britain on such a narrow tax base).
His stance on taxes must be understood in that context.
Thank you for your question and your interest in Lost Legacy.
Postscript:
On the use of such land-based taxes for education, I make two observations.
1 The range of taxes has spread widely either side of land taxes, which plus borrowing is quite a different (much larger) burden on a national economy, as both Ireland and Britain now know to our cost.
2 On what or whether any new sources of taxation should be spent on any particular heading is a political choice and choice is a (divisive) problem of priorities.
Labels: land reform, taxation
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