Taxes and Sustainability

Abstract

Adam Smith is generally regarded as the godfather of modern economics. His four principles of Equity, Certainty, Convenience, and Efficiency remain the cornerstone of tax policy analysis today. But the tax landscape has broadened exponentially in the years since the publication of The Wealth of Nations. Today, most authorities would list far more principles than Smith’s four. When Adam Smith postulated his principles of good tax policy, he probably had no conception of the extent to which taxes would be utilized as instruments of economic and social policy. He even stated that the tax system should not attempt “social engineering.” According to Smith, a tax system should not attempt to encourage or discourage certain types of behavior (McHugh 2004).