Adam Smith's Canon of Economy in Taxation

Steps:

• Recall Adam Smith's four canons of taxation: equity, certainty, convenience, and economy.
• Focus on the canon of economy, which addresses efficient tax administration.
• Define economy as minimizing collection costs relative to revenue raised.
• Match this definition to the provided choices.

Why A is correct:

• Smith's canon of economy explicitly requires that the cost of collecting taxes be kept as low as possible to maximize net revenue, per his definition in "The Wealth of Nations."

Why the others are wrong:

• B: Refers to the canon of convenience, emphasizing ease of payment for taxpayers.
• C: Describes modern tax neutrality or efficiency, not addressed in Smith's canons.
• D: Relates to macroeconomic effects, absent from Smith's 18th-century principles.

Final answer: A