252 ADAM SMITH. 



the crown lands could supply ; and other sources of 

 revenue became necessary. The other expenses of 

 the Government were increased in proportion, and 

 hence the total inadequacy of the rents compelled the 

 State to provide for the government in all its branches 

 by the levying of money from the people. This gave 

 rise to the modern System of Taxation. 



Part 2. Taxes imposed upon the people of any 

 country, must necessarily fall, either upon the rent of 

 land, the profits of stock, or the wages of labour ; and 

 a tax may fall on one or more of these three great 

 branches of the income of the community. Hence the 

 subject divides itself into four heads, as taxes are 

 intended to fall upon rents, profits, wages, or on all 

 indiscriminately, I say, are intended so to fall, because 

 we shall presently see that the incidence of an impost 

 may be very different from that which its authors 

 intended it should be. But there are four leading 

 principles which apply to all taxes whatever, and which 

 must in considering the merits of any given tax be 

 kept always in view. First. All the subjects of a State 

 should be called upon to contribute as nearly as pos- 

 sible in proportion to their several means or incomes. 

 Secondly. Each individual should be taxed according 

 to a known and certain, and not an arbitrary rule. 

 TJiirdly. Every tax should be levied in the time and 

 manner most likely to suit the convenience of the con- 

 tributors. Fourthly. Every tax should be so contrived 

 as to take and to keep out of the people's pockets as 

 little as possible beyond what goes into the coffers of 

 the State. A tax may depart from this last principle 

 in four ways : by requiring too large a number to col- 

 lect and manage it; or by obstructing the people's 

 industry and so injuring the fund of payment; or 

 by encouraging smuggling and thus increasing the 

 price of commodities, while it ruins by prosecutions ; 

 or by subjecting the people to vexatious search and 

 other annoyances, which though not directly money 



