Ricardo's theory of tax incidence: a Sraffian re-interpretation

Article Abstract:

A model of the Sraffian system which integrates tax rates on the sectors producing necessity, raw produce and luxury items is used to test David Ricardo's theory of tax incidence. The study indicates that a rise in the tax rate on raw products increases commodity prices and the price of luxury items by an amount equal of the tax increment per unit. On the other hand, an increase on the tax rate on profits decreases the rate of profits but will have no impact on raw produce and luxuries. Likewise a rise in the money wage would reduce rate of profits. Ricardo's tax incidence postulates are accurate when taken in the context of labor proportionality rule.

Analysis, Tax incidence

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Ricardo on income tax: a note

Article Abstract:

David Ricardo saw tax as a key issue, and his work 'Principles of Political Economy and Taxation' was written in 1817, at the time of a heated debate on income tax. Ricardo's main criteria for taxation were security of property, convenience and certainty, in addition to minimum taxation, price neutrality and distribution neutrality. He could not find a tax system fitting in with his criteria, and he saw all types of taxation as representing a choice of evils. Ricardo tended to overestimate the cost of government, and underestimated the government's economic importance, compared to Adam Smith's views of government.

United Kingdom, History, Tax administration and procedure

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Adam Smith's theory of tax incidence: an interpretation of his natural-price system

Article Abstract:

Adam Smith and David Ricardo disagreed on whether taxed on raw materials, profits, wages and necessities would fall on profits, as Ricardo argued, or on rent, as Smith argued. Smith sees rent as an endogenous variable, with the rate of profits seen as exogenous, while Ricardo does not include rent in his system, so the rate of profits becomes endogenous. Smith can thus be positioned with Quesnay, Sraffa, Marx and Ricardo, rather than with the supply-demand tradition.

Public Finance Activities, Tax Administration, Economics, Research and Development in the Social Sciences and Humanities, Beliefs, opinions and attitudes, Economists, Smith, Adam (Economist)

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