Canons of Taxation

The canons (or maxims) of taxation are the classic criteria by which a tax is judged good or bad. Two statements dominate the tradition: Adam Smith's four maxims (1776) and Henry George's four conditions (1879). Georgists invoke both because a tax on land values scores unusually well against each — the argument George makes when he "tries the proposition by the canons of taxation."

Smith's four maxims (1776)

In The Wealth of Nations, Book V, Ch. II, Part II, Smith lays down what later writers call the four canons (F-claim; see the book page for the verbatim quotations):

1. Equality. Contribute "in proportion to the revenue which they respectively enjoy under the protection of the state."
2. Certainty. The tax "ought to be certain and not arbitrary" — clear as to time, manner, and quantity.
3. Convenience. Levied "in the manner… most likely to be convenient for the contributor to pay." Smith's own example of a well-timed tax is one on the rent of land or houses.
4. Economy. Take "as little as possible, over and above what it brings into the public treasury."

Smith applied these to many taxes and reached no single-tax conclusion.

George's four conditions (1879)

In Progress and Poverty, Book VIII, Ch. III ("The proposition tried by the canons of taxation"), George gives his own list. In his words, "the best tax by which public revenues can be raised is evidently that which will closest conform to the following conditions":

1. "That it bear as lightly as possible upon production."
2. "That it be easily and cheaply collected, and fall as directly as may be upon the ultimate payers."
3. "That it be certain — so as to give the least opportunity for tyranny or corruption on the part of officials, and the least temptation to law-breaking and evasion on the part of the taxpayers."
4. "That it bear equally — so as to give no citizen an advantage or put any at a disadvantage, as compared with others."

George's conditions overlap Smith's — his 3 and 4 restate certainty and equality — but foreground the efficiency criterion, lightness upon production, that Smith folds into economy.

How George applies each canon (Book VIII, Ch. III)

George does not merely assert that a land tax scores well — he walks through each of his four conditions in turn (his own numbering, I–IV) and gives an argument, which the wiki should carry rather than only summarize (D-claim; interpretive — the Georgist reading, not a neutral verdict):

• I. Lightness on production. George's argument turns on land's fixed supply: taxes on land value "cannot check production in the slightest degree, until they exceed rent," because unlike taxes upon commodities, capital, or the tools and processes of production, "they do not bear upon production." He presses the claim to its limit: "Taxes may be imposed upon the value of land until all rent is taken by the State, without reducing the wages of labor or the reward of capital one iota; without increasing the price of a single commodity, or making production in any way more difficult." This is the textual root of the modern deadweight loss argument for LVT, stated pre-formally.
• II. Ease and cheapness of collection. Land "cannot be hidden or carried off; its value can be readily ascertained." George also gives an early statement of the no-shifting-to-consumers claim: "A tax on land values does not add to prices, and is thus paid directly by the persons on whom it falls," contrasting it with tariffs and sales taxes, which are "shifted from hand to hand, increasing as they go, until they ultimately rest upon consumers."
• III. Certainty. George contrasts the land tax with the fraud and corruption he attributes to customs duties, income-tax returns, and personal-property assessment: the land tax "may be assessed and collected with a definiteness that partakes of the immovable and unconcealable character of the land itself" — the least arbitrary of taxes, in his account, because the base cannot be concealed.
• IV. Equality. Here George engages Smith directly rather than merely restating him. Smith's ability-to-pay principle asks who benefits "under the protection of the state"; George answers that only land value is a value the state and community themselves create: "It is the taking by the community, for the use of the community, of that value which is the creation of the community." He pairs this with a distributional claim from natural-law premises — "Nature gives to labor; and to labor alone" — distinguishing income earned by production from income "gained by a monopoly of the natural opportunities which Nature offers impartially to all."

Critics accept much of the efficiency and certainty case while disputing whether land rent is a large enough base (see Objection: LVT can't raise enough revenue) and whether assessment is as clean in practice as in theory. George's own chapter (Book VIII, Ch. IV, "Indorsements and Objections") anticipates the assessment worry and answers it by citing contemporary US states that already assessed land and improvements separately.

See Also

• Adam Smith · The Wealth of Nations
• Single Tax · Land Value Tax
• Deadweight Loss — the efficiency criterion LVT uniquely satisfies
• Progress and Poverty — Book VIII, Ch. III applies the canons

Sources

1. Adam Smith (1776), The Wealth of Nations, Book V, Ch. II, Part II — used for the four maxims (verbatim). Quotations and Georgist scoring on the book page; repository full text at sources/publicdomain/wealth-of-nations.md (public domain).
2. Henry George (1879), Progress and Poverty, Book VIII, Ch. III (sub-sections I–IV) — used for George's four conditions and his own per-canon application, quoted verbatim; verified verbatim against the repository full text (Project Gutenberg #55308) (public domain, EDITORIAL §3b).
3. Henry George (1879), Progress and Poverty, Book VIII, Ch. IV ("Indorsements and Objections") — used for the note that George anticipated the assessment-separability worry; verified against the repository full text (public domain, EDITORIAL §3b).