Introduction to Political Economy

Author: Say
Publisher:
Publishing Date: 1997-01-01
Features: In 1803, Say's important work Introduction to Political Economy was published. Due to his special admiration for Adam Smith, the book explains Smith's economic theories in a popular form and is considered one of the earliest bourgeois economists to vulgarize classical economics. Later, works such as Questions and Answers in Political Economy (1817) and A Course in Political Economy were also published. After 1816, Say taught at universities. Say and Ricardo were contemporaries, but their theories were entirely different. Ricardo absorbed and developed the scientific aspects of Smith's theories, while Say expanded the vulgar elements in Smith's doctrines. In his works such as Introduction to Political Economy, Say elaborated on his theory of taxation. The main points include:
(1) Definition of Taxation. He believed, "Taxation refers to a portion of national product passing from individuals to the government to pay for public expenses or public consumption." He further explained that taxation is the value of goods paid by taxpayers, adding, "When taxpayers pay taxes, they lose money. Once taxes are consumed by the government or its officials, their value disappears for society as a whole" (both quotes are from Introduction to Political Economy, Commercial Press, 1982, p. 501–502). Therefore, Say argued that political economy should study the nature of taxation, its sources, and its impact on the interests of the state and individuals. Say disagreed with the view that the burden of taxation promotes production, believing that taxation is the extraction of a portion of private property to serve public purposes, and that these public expenditures do not contribute to social reproduction.
(2) Principles of Taxation. Say believed that "the best fiscal plan is to spend as little as possible, and the best taxation is the lightest taxation" (ibid., p. 504). He agreed with Adam Smith's views on limiting state functions and reducing non-productive fiscal expenditures, viewing state intervention in the economy as harmful. Say proposed five principles of taxation:
① Tax rates should be moderate.
② The degree of inconvenience to taxpayers should be minimal without increasing the treasury.
③ The burden should be equitable among all classes.
④ It should minimally hinder reproduction.
⑤ It should be beneficial to national morality, which means promoting habits that are useful and beneficial to society. Say's five principles of taxation largely inherited Smith's four principles while adding the principle of being beneficial to "national morality." In the fairness principle, he advocated heavy taxes on luxuries and light taxes on necessities. Due to the difficulty of distinguishing between the two, he believed that the only fair approach was to tax income at a progressive rate. He advocated a progressive tax rate, differing from Adam Smith's proportional tax rate.
(3) Tax Incidence and. Say analyzed the transfer and of the tax burden using the theory of "supply and demand elasticity." He believed that the proportion of the tax burden borne by the taxed object is proportional to its supply elasticity. The higher the demand elasticity of the taxed object, the more the tax burden falls on the seller; the higher the supply elasticity, the more it falls on the buyer.