Adam Smith’s Views on Tax Cuts
On the subject of bounties designed to offset the cost of exportation by the merchant class, Adam Smith said this- “neither the bounty, it is evident, nor any other human institution, can have [the effect of raising production of whichever commodity is affected by such bounty]”. Smith makes a strong case against the use of governmental funds to encourage production. The premise of Smith’s more libertarian views, though he admits their dependence on a perfect system, is that the market, when left to its own designs, can effectively regulate price and production for the benefit of society as a whole. The bounties, then, interrupt this natural cycle and are not needed and counter-productive. Tax cuts for the rich are the worst kind of bounties in today’s economy.
Tax cuts for the rich are often justified by the master class’ bootlickers as way to stimulate the economy. Time and time again, the slovenly worms crawl out of their holes to carp on about the benefit of cutting taxes for not only the master class, but for the poor and downtrodden. Employment is promised, industry’s growth assumed and essentially all ills of the capitalist system are potentially absolved by way of worship of the tax cut. Ideally, they promise, with the added revenue of not paying the outrageous taxes levied against them by the government, the rich will invest every last penny of their savings into the domestic economy, and the loss of tax revenue on the rich will be compensated by the tax revenue on new business and income generated by the investment. This is preposterous.
The rich hardly pay taxes in the first place. The offshore accounts, the endless loopholes, and write-offs conspire to keep the rich from paying their share of the national revenue. Asking for more cuts on top of this is ludicrous. Smith knows the true reason for government is to help industry and business to succeed in a competitive world and market. He also knows that the rich benefit from this more than any other social group and thus must put some of their gains back into the upkeep of the system. That the rich no longer pay taxes in any great amount is testament to the failings of our political representation and their lack of true reliance on the work of Smith, which they quote ad infinitum when it suits them.
Smith’s primary focus in The Wealth of Nation was to expose the flaws in the capitalist system as far as he saw them and to celebrate the successes. In the section of Book IV devoted to discussion of bounties and general governmental interference, as Smith sees it, with the capitalist market. Smith’s arguments for a softly libertarian capitalist economy, one which allows for subsidization of the interests of the poor, are harshly prescriptive. Government must be an institution to assist business and industry in their endeavors to make profit and thus drive the economy, but also, for the most part, stay away from helping or hindering industry in doing such beyond the national defense and the institution of justice to protect the property of the few from the many. Tax cuts as misdirected bounties are a perfect example of the intrusion of government into the market in a negative way.