Taxation Definition

Taxation Definition

Taxation in 1889

The following information about Taxation is from the Cyclopaedia of Political Science, Political Economy, and the Political History of the United States by the Best American and European Writers:

“On this (tax) subject the eminent French economist, Joseph Garmer, in his Traité des Finances, ch. v., says: “From the point of view of distributive justice and economic truth, and to attain an equitable apportionment of the public burdens, we must put the question: A tax being given, on whom does it fall in the last analysis? No absolutely satisfactory answer to this question, insoluble in its generality, has been given or could have been given. However, Ricardo, who made a profound study of taxation, thought that taxes, no matter of what kind, are always paid by the consumer, on his capital or on his income, the producer always making them enter into the cost of production; and employing his capital and his industry in other branches when he can not include the taxes he pays in such cost. James Mill likewise adopted the same opinion. This was Franklin’s view also; he thought that the merchant always added the tax to his bill or invoice. It was likewise Adam Smith’s idea, who, in passing, says: ‘The tax is finally paid by the last purchaser or consumer.’ [‘Wealth of Nations,’ edited by J. E. Thorold Rogers, vol. ii., p. 132.]—The physiocrates had been led to think that taxes finally fell, directly or indirectly, on the landed proprietor, to whom they thought the entire net product of production, which in the end is the only thing taxed, and which alone should be taxed by the legislator, comes back.


J. B. Say says that Ricardo may be right in the abstract, but that, in fact, the producer does not always succeed in making the consumer pay the tax, a part of which he (the producer) must bear himself. The French economist adds: ‘This subject does not admit of an absolute opinion. There is probably no kind of contribution which does not fall on several classes of citizens.’ According to him, therefore, the subjects taxed (bases de l’impot) should be increased sufficiently to attain this end: that those producers who are not reached by one tax may be reached by another.

Several Taxes

It is an error to say of a tax that its weight divided ad infinitum becomes almost insensible to those who bear it. This would be true of one sole tax, but it is not true when there is question of several taxes; taxes may apportion themselves and repercuss as much as you will, but they must be paid, and they produce their natural effects none the less. Division, diffusion and repercussion are unfortunately not synonymous with evaporation. We can, therefore, formulate no general law as to the incidence, the repercussion or diffusion of taxes. On this point there is among economists a great diversity of opinions and much hesitation.”

Other Popular Tax Definitions in the World Legal Encyclopedia

See also

Banking, Offshore, Banks, Corporations, Transnational, Economic Development, Global Economic Issues, International Monetary Fund (IMF), Law, Transnational, Monetary Policy, Organisation for Economic Co-operation and Development (OECD), Tobin Tax, Trade

Further Reading

Auerbach, A. J., &Feldstein, M. (Eds.).(2002) Handbook of public economics (4th ed.). Amsterdam: North-Holland.
Barr, N.(2004) Economics of the welfare state (4th ed.). Oxford, UK: Oxford University Press.
Begg, D.(2009) Foundations of economics. London: McGraw-Hill.
Brown, C. V.Jackson, P. M.(1990) Public sector economics (4th ed.). Oxford, UK: Blackwell.
Devereux, M. P. (Ed.). (1996) The economics of tax policy. Oxford, UK: Oxford University Press.
Greve, B.(2010) Taxation, equality and social cohesion: European experiences. In Zupi, M. & Puertas, E. E. (Eds.), Challenges of social cohesion in times of crisis: Euro-Latin American dialogue(pp. 307-332) Madrid, Spain: FIIAPP.
Musgrave, R.Musgrave, P.(1989) Public finance in theory and practice (5th ed.). New York: McGraw-Hill.
Salanie, B.(2003) The economics of taxation. Cambridge: MIT Press.
Slemrod, J. (Ed.). (1999) Tax policy in the real world. Cambridge, UK: Cambridge University Press.



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