Adam Smith on Public Expenditure and Taxation
Maurício Chalfin Coutinho
Universidade Estadual de Campinas - Instituto de Economia
Nova Economia, Vol. 11, No. 2, 2001
This paper presents Adam Smith's view on taxation and public
expenditure, by means of an almost literal reading of the Wealth of Nations famous passages on the "duties of the sovereign" and on the "maxims of taxation". Contrarily to the commonest usage of these passages, we will show that their core is the preoccupation with the public expenditure soaring and the defence of decentralisation. Furthermore - and also contrarily to the existing interpretations - we defend the non-existence of any contradiction between Smith's income and price theory (and the incidence hypothesis), provided due attention is paid to the guiding role of the "maxims".
Keywords: Adam Smith, taxation, public expenditure
JEL Classification: B10, B12Accepted Paper Series
Date posted: October 22, 2003
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