Adam Smith
Citation: taxprof.typepad.> files>Moran
ABSTRACT
Increasing inequalities in income and wealth undermine the capitalist promise of universal prosperity and political liberty. To explore that growing tension, this article examines the key role of taxation in the original vision and extensive writings of Adam Smith — the father of capitalism. Comparing that vision to the current United States tax system reveals many important inconsistencies, particularly the current penchant for simultaneously taxing wages and exempting (or delaying) taxes on wealth and wealth appreciation. The article proposes several ways in which the U.S. tax system could more closely align with Smith’s capitalist vision. These ways of more closely adhering to a capitalist ideal include exempting a portion of wages (equal to the earnings of almost half of the United States population) from all forms of taxation and introducing a wealth tax on amounts greater than needed for working people to enter the housing market.
* Beverly I. Moran., Professor of Law and Sociology, Vanderbilt University, A.B.
(Vassar), J.D. (Pennsylvania), LL.M. (New York University)
- Why Adam Smith?
Scholars from both the right and left opine that capitalism is a precursor to democracy.
7 See, e.g. , PAUL BOWLES , CAPITALISM , supra note 4, at 42–47; ROBERT B. REICH, SUPERCAPITALISM 9 (2007) (arguing that capitalism is almost certainly a precondition for democracy); MILTON FRIEDMAN , CAPITALISM AND FREEDOM 9 (1962) (“The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other”).