Key Arguments

• Smith contrasts luxuries with necessaries: 'It is otherwise with taxes upon what I call luxuries, even upon those of the poor. The rise in the price of the taxed commodities, will not necessarily occasion any rise in the wages of labour.'
• He cites tobacco as a luxury of rich and poor alike, heavily taxed in England and France, yet 'those high duties seem to have no effect upon the wages of labour.'
• The same holds for taxes on tea and sugar in England and Holland, and chocolate in Spain, which 'have become luxuries of the lowest ranks of people' without affecting wages.
• Similarly, 'The different taxes which, in Great Britain, have, in the course of the present century, been imposed upon spiritous liquors, are not supposed to have had any effect upon the wages of labour,' and the higher porter price after an extra tax 'has not raised the wages of common labour in London.'
• For 'the sober and industrious poor,' such taxes 'act as sumptuary laws, and dispose them either to moderate, or to refrain altogether from the use of superfluities which they can no longer easily afford,' increasing rather than diminishing their ability to bring up families through 'forced frugality.'
• He notes that 'It is the sober and industrious poor who generally bring up the most numerous families, and who principally supply the demand for useful labour.'
• The 'dissolute and disorderly' may continue their indulgence and subject their families to distress, but 'such disorderly persons, however, seldom rear up numerous families,' and their surviving children tend to become 'public nuisances by their vices and disorders.'
• Hence, even if taxes on the luxuries of the poor 'might increase somewhat the distress of such disorderly families,' they 'would not probably diminish much the useful population of the country.'
• He generalizes: 'Taxes upon luxuries have no tendency to raise the price of any other commodities, except that of the commodities taxed.' and 'Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution... They fall indifferently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land.'

Source Quotes

If his employer is a farmer, the final payment, together with a like overcharge, will fall upon the rent of the landlord. It is otherwise with taxes upon what I call luxuries, even upon those of the poor. The rise in the price of the taxed commodities, will not necessarily occasion any rise in the wages of labour.

It is otherwise with taxes upon what I call luxuries, even upon those of the poor. The rise in the price of the taxed commodities, will not necessarily occasion any rise in the wages of labour. A tax upon tobacco, for example, though a luxury of the poor, as well as of the rich, will not raise wages.

The high price of such commodities does not necessarily diminish the ability of the inferior ranks of people to bring up families. Upon the sober and industrious poor, taxes upon such commodities act as sumptuary laws, and dispose them either to moderate, or to refrain altogether from the use of superfluities which they can no longer easily afford. Their ability to bring up families, in consequence of this forced frugality, instead of being diminished, is frequently, perhaps, increased by the tax.

Upon the sober and industrious poor, taxes upon such commodities act as sumptuary laws, and dispose them either to moderate, or to refrain altogether from the use of superfluities which they can no longer easily afford. Their ability to bring up families, in consequence of this forced frugality, instead of being diminished, is frequently, perhaps, increased by the tax. It is the sober and industrious poor who generally bring up the most numerous families, and who principally supply the demand for useful labour.

If by the strength of their constitution, they survive the hardships to which the bad conduct of their parents exposes them, yet the example of that bad conduct commonly corrupts their morals; so that, instead of being useful to society by their industry, they become public nuisances by their vices and disorders. Through the advanced price of the luxuries of the poor, therefore, might increase somewhat the distress of such disorderly families, and thereby diminish somewhat their ability to bring up children, it would not probably diminish much the useful population of the country. Any rise in the average price of necessaries, unless it be compensated by a proportionable rise in the wages of labour, must necessarily diminish, more or less, the ability of the poor to bring up numerous families, and, consequently, to supply the demand for useful labour; whatever may be the state of that demand, whether increasing, stationary, or declining; or such as requires an increasing, stationary, or declining population.

Any rise in the average price of necessaries, unless it be compensated by a proportionable rise in the wages of labour, must necessarily diminish, more or less, the ability of the poor to bring up numerous families, and, consequently, to supply the demand for useful labour; whatever may be the state of that demand, whether increasing, stationary, or declining; or such as requires an increasing, stationary, or declining population. Taxes upon luxuries have no tendency to raise the price of any other commodities, except that of the commodities taxed. Taxes upon necessaries, by raising the wages of labour, necessarily tend to raise the price of all manufactures, and consequently to diminish the extent of their sale and consumption.

Taxes upon necessaries, by raising the wages of labour, necessarily tend to raise the price of all manufactures, and consequently to diminish the extent of their sale and consumption. Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution. They fall indifferently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land.

Key Concepts

• It is otherwise with taxes upon what I call luxuries, even upon those of the poor.
• The rise in the price of the taxed commodities, will not necessarily occasion any rise in the wages of labour.
• Upon the sober and industrious poor, taxes upon such commodities act as sumptuary laws, and dispose them either to moderate, or to refrain altogether from the use of superfluities which they can no longer easily afford.
• Their ability to bring up families, in consequence of this forced frugality, instead of being diminished, is frequently, perhaps, increased by the tax.
• Through the advanced price of the luxuries of the poor, therefore, might increase somewhat the distress of such disorderly families, and thereby diminish somewhat their ability to bring up children, it would not probably diminish much the useful population of the country.
• Taxes upon luxuries have no tendency to raise the price of any other commodities, except that of the commodities taxed.
• Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution.

Context

Continuation of the treatment of taxes on consumable commodities; Smith analyses the incidence and demographic effects of taxes on luxuries, particularly those consumed by the poor.