Principles of Political Economy / Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy

by John Stuart Mill

Book V. On The Influence Of Government.

Chapter I. On The General Principles Of Taxation.

§ 1. Four fundamental rules of Taxation.

One of the most disputed questions, both in political science and in practical statesmanship at this particular period, relates to the proper limits of the functions and agency of governments.

We shall first consider the economical effects arising from the manner in which governments perform their necessary and acknowledged functions.

We shall then pass to certain governmental interferences of what I have termed the optional kind (i.e., overstepping the boundaries of the universally acknowledged functions) which have heretofore taken place, and in some cases still take place, under the influence of false general theories.

The first of these divisions is of an extremely miscellaneous character: since the necessary functions of government, and those which are so manifestly expedient that they have never or very rarely been objected to, are too various to be brought under any very simple classification. We commence, [under] the first head, with the theory of Taxation.

The qualities desirable, economically speaking, in a system of taxation, have been embodied by Adam Smith in four maxims or principles, which, having been generally concurred in by subsequent writers, may be said to have become [pg 538] classical, and this chapter can not be better commenced than by quoting them:[336]