The Simplified Wealth of Nations of Adam Smith, Book 5, Chap. 2, Part 2, Article 2: Profit Taxes

Chapter 2g, Part 2: Article 2: Profit Taxes

ARTICLE 2: Profit Taxes
86 Profits on stock naturally divides itself into two:
  1. The part that pays the interest
    • This part belongs to the owner of the stock
  2. The part that is in excess of what is needed to pay the interest.
87 This latter part of profit is not taxable directly. 88 At first sight, interest seems equally directly taxable as land rent. 89 Two circumstances make the direct taxation of interest less proper than the direct taxation of land rent.
  1. 90 The quantity and value of land possessed by any man can never be a secret.
  1. 91 Land cannot be removed but stock easily may.
  92 Nations have taxed profits with a very loose, arbitrary estimation, instead of any severe inquisition. 93 The English land-tax intended that stock should be taxed in the same proportion as land. 94 In all countries, a severe inquisition into the circumstances of private persons has been carefully avoided. 95 At Hamburgh, every citizen is obliged to pay 0.25% of all that he possesses to the state. 96 Unterwald in Switzerland is frequently ravaged by storms and inundations.
Floods in Switzerland
97 It must not be difficult in those Swiss cantons to oblige every citizen to publicly declare his fortune on oath. 98 In Holland, soon after the exaltation of the late Prince of Orange to the stadtholdership, a 2% tax was imposed on every citizen. 99 The tax on stock imposed by the Land-tax Bill in England is proportional to the capital.
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Next: Chapter 2h: Specific Profit Taxes