Question

What is a tax plan for taxing 1 million residents and need 20 million dollars in revenue that isn't already being taxed, and why/how does it relate to Adam Smiths 4 cannons of taxation?

Answer 1

Most of the goods that can be taxed are already taxed by most governments. This includes United States as well. However, as a nation if there is a target to generate $20 million from 1 million residents, then the next best option for taxation is newspapers.

Currently newspapers are not taxed. By taxing newspaper, the price of newspaper will increase. However, newspaper circulations are quite high and this would mean that per person will need to pay only additional $20 per year for the newspaper subscription/purchase.

We can assume that out of 1 million residents, the number of people who buy and read newspaper are 500,000. Each of them buy a newspaper a day for $1. If we increase the price of the newspaper to include tax by 11% then the additional revenue from newspaper annually is $0.11*500,000*365 = $20 million 75 thousand.

Adam Smiths’ 4 canons of taxation includes

• Canon of equality: Everyone that want to read the news on newspaper will have to pay the tax. That is equality.
• Canon of certainty: Tax payers need to be aware of why they are paying tax on newspaper and how much are they paying. This can be easily implemented by printing the price and tax break up on the newspaper.
• Canon of convenience: The customers will be paying tax to the government through the newspaper publishers. This way, the government does not need to spend additional resource on collection.
• Canon of economy: The taxes collected must be used for the betterment of the economy.

The four canons does not fit very smoothly with this new taxation plan of taxing newspapers. However, as far as a new, common and standard taxation system can be applied, newspaper provides the best avenue.