Should the United States create an “External Revenue Service” as President Trump has recently proposed? As it happens, Adam Smith concludes Book IV, Chapter 2 of The Wealth of Nations (Para. 45) by asking whether “it may be proper to impose taxes upon the importation of foreign goods, in order not to prevent their importation but to raise a revenue for government“? That is, should we recognize a fifth exception to the principle of free trade on top of the first four exceptions Smith has already identified?

Alas, the Scottish philosopher-economist decides to postpone his answer to this particular tax question until later, writing that “I shall consider [this tax question] hereafter when I come to treat of taxes,” which he does in Book V, Chapter 2 of The Wealth of Nations. Smith’s treatment of taxes in Book V, Chapter 2, however, is not for the faint of heart: it consists of almost 200 dense paragraphs spread out across 90 single-spaced pages.

Nevertheless, that said, Smith does provide a tantalizing preview of what his answer might be, for the the very last sentence of Book IV, Chapter 2 of The Wealth of Nations reads as follows: “Taxes imposed with a view to prevent, or even to diminish importation, are evidently as destructive of the revenue of the customs as of the freedom of trade.”

For my part, I will survey Smith’s treatment of taxes starting sometime in April of this year. In the meantime, let us switch gears, leave the world of political economy behind, and explore the work of another great Scottish Enlightenment figure. Yes, I am talking about David Hume and his famous essay “Of Miracles“! I will turn to Hume on Monday, March 3rd.