254 ADAM SMITH. 



rent, profit, and wages, the house itself yielding no 

 revenue, and by its use and wear resembling a con- 

 sumable commodity. As nothing is a better test of a 

 person's whole expenses than the house he lives in, a 

 house tax is recommended by the first maxim, and it 

 suits well enough with the other three. The ground- 

 rent and not the rent payable for profits of building 

 should be the subject of this tax, because that would 

 not raise house-rent, and it would fall heaviest on the 

 capital and larger houses, which can best afford to pay 

 it. As revenue from houses is received without exert- 

 ing any labour, and with little care either of superin- 

 tendence or collection, it is a better subject of taxation 

 than land-rents 



2. A tax upon the profits of stock must either fall 

 upon the part of the profits which goes to pay the 

 interest of the stock, or the price paid for the stock, or 

 it must fall on the surplus profit over what the interest 

 amounts to. The former revenue belongs to the owner 

 of the stock, the latter being a compensation, generally 

 a very moderate compensation, for the trouble and risk 

 of employing the stock. He cannot pay this himself, 

 for if he did he must run the risk and take the trouble 

 for inadequate reward. Therefore he lays it upon the 

 price of his goods if a trader, or deducts it from the 

 rent if a farmer, or he must take it from the interest, 

 if he does not either raise his prices or lower his rent. 

 Now the interest, though it seems to be, like rent, a 

 fit subject of taxation, is really not so, for two reasons: 

 it is impossible to get at profits of trade as you do at 

 rent, and it is easy to remove stock in trade, while land 

 is not removable. The result has been, that where 

 attempts have been made to tax profits, the State has 

 had recourse to some vague and inaccurate estimate, 

 and has been always content with a very moderate 

 proportion, answering to a very low valuation. Thus 

 our land-tax, though intended to tax all profits, falls 

 mainly on the country and on houses in the towns. 



