Mill's Tax Thoughts

Adam Smith and Friedrich List on Taxation Ideas

Introduction

Adam Smith and Friedrich List made some of the most influential contributions to the study of taxation ideas and principles in the eighteenth and nineteenth centuries. Smiths “The Wealth of Nations” and Lists “The National System of Political Economy” laid the groundwork for modern economic theory and debate. This paper seeks to examine the differences between their taxation principles and the inherent differences between them in terms of their contexts, economic theories, philosophies, assessments, and policies.

Adam Smith

Adam Smith was a prominent economist and philosopher in the eighteenth century. He wrote the pioneering “The Wealth of Nations” in 1776, which is widely regarded as the foundation of modern economic study. The book applied principles of economic theory to promote economic liberalism and free markets. Smith argued that free markets should be allowed to operate unimpeded by government intervention in order to promote efficiency and wealth.

In terms of taxation, Smith argued that taxes should be based upon individual ability to pay, so that those with the highest incomes should pay the most in taxation. He favored progressive taxation, where those with higher incomes are taxed more in order to fund public goods. Additionally, Smith proposed that the government should not directly manipulate markets and should pursue a policy of non-interference with the markets.

Friedrich List

Friedrich List was an early nineteenth century political economist and theorist. His seminal work “The National System of Political Economy” was published in 1841, and argued that the success of countries and states depends upon effective economic policies, including taxation. List argued that the states should pursue a course of protectionism, with tariffs used to protect domestic industries and stimulate economic growth.

In terms of taxation, List argued that taxes should be based upon the value of goods and services. He believed in the use of tariffs on imports in order to protect domestic industries, and argued that taxes should be used to raise revenue for the state. Additionally, List favored a developed and efficient public sector, which could be funded by taxes.

Comparison

Despite their shared focus on taxation, Smith and List had large differences in their conceptions of taxation. Smith favored a less interventionist approach, advocating free markets and unfettered trade, while List favored a system of protectionism and tariffs on imports to support domestic industries.

Additionally, Smith favored a principle of individual ability to pay where those with higher incomes should pay more in taxes, while List advocated a value-based system of taxation where taxes are based upon the value of a good or service. Smith viewed taxes primarily as a means of raising revenue, while List argued that they should also be used to protect domestic businesses and industries.

Conclusion

Adam Smith and Friedrich List made significant contributions to the study of taxation principles and ideas throughout the eighteenth and nineteenth centuries. Smith favored a more liberal approach with free markets and progressive taxation, while List advocated for protectionism and tariffs on imports in order to support domestic industry. Despite their differences, both Smith and List made important contributions to the development of modern economic theory and debate.

Adam Smith and Carl Marx are two of the most important and influential economists of the 18th and 19th centuries. While they differed on many important economic issues, they both shared a common belief in the need for taxation. Specifically, they both argued that taxation was essential to fund public goods and provide welfare provisions to the working poor and disadvantaged members of society.

Adam Smith, the father and founding father of classical economics, argued that taxation was essential for the efficient functioning of a modern economy. Smith believed that taxes provided government with the resources it needed to invest in public goods and services, such as roads and educational systems, which were essential to enabling people to produce and trade effectively. Smith also believed that taxation could be used to redistribute wealth from high-income earners to those with low incomes, thus providing a greater level of economic security and stability for society as a whole.

Carl Marx was an influential philosopher, economist, and activist. Marx was highly critical of capitalist societies, which he argued were exploitative and unfair in their use of taxation. Marx believed that the wealthy should pay a greater proportion of taxes in order to fund measures aimed at assisting the working poor and providing economic security. He argued that the wealthy had an obligation to contribute to the welfare of society, as they had prospered due to their position of privilege.

The ideas of Adam Smith and Carl Marx remain influential today and continue to shape the debates surrounding taxation, welfare, and public goods. While they disagreed in some respects, it is clear that both economists viewed taxation as an essential tool for funding public investments and redistributing wealth in order to create a more equitable and prosperous society.