Edited by José Casas Pardo and Pedro Schwartz
17. A theory of the democratic ﬁscal constitution Francesco Forte and Domenico D’Amico 1 1.1 INTRODUCTION Rise and Fall of the Beneﬁt Principle Adam Smith in The Wealth of Nations1 outlined what one may call a ‘ﬁscal constitution’ stating ‘the four following maxims with regard to taxes in general’: I. The subjects of every state ought to contribute towards the support of government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state . . . The tax which each individual is bound to pay ought to be certain, and not arbitrary . . . Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it . . . Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state. II. III. IV. As for the relation between taxes and public goods, a distinction is made2 between expenses of general beneﬁt to the whole society and the ‘local or provincial expenses of which the beneﬁt is local or provincial’. The latter ‘ought to be defrayed by a local or provincial revenue’. Smith further distinguished the ‘expense of defending the society, and that of supporting the dignity of the chief magistrate’ on the one hand,...
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