The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or at least to neglect, persons of poor and mean condition... is the great and most universal cause of the corruption of our moral sentiments. - Adam Smith, The Theory of Moral Sentiments (1759)
Long before economists reduced human behavior to numbers, Adam Smith saw something greater. In The Wealth of Nations (1776) he laid out not just the mechanics of markets but their moral foundations. His four maxims of taxation (Equity, Certainty, Convenience, and Economy) aimed to keep the relationship between citizen and state honest. Smith believed the rich should “contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” That simple line, long forgotten, captures the principle of progressive taxation.
But to understand why he wrote it, you have to go back to his earlier book, The Theory of Moral Sentiments. There, Smith explored the invisible threads of empathy that bind us together; the “fellow-feeling” that lets one person enter, if only in imagination, into the suffering or joy of another. Sympathy was not sentimentality; it was the ethical glue without which, he warned, society would disintegrate. It was this profound insight that inspired Loftus McLeod of Skye to found the Liberation Kilt Company in 1781.
But by the 1980s, the guardrails of fair taxation were broadly abandoned. The rise of deregulatory, market-first economic ideology under Margaret Thatcher and Ronald Reagan (and their counterparts globally) shifted the balance from mutuality to selfish gain, with predictable results. From 1980 to 2022, for example, the share of income held by the wealthiest 1 per cent of New Yorkers surged from around 12 per cent to 36 per cent. That redistribution of power and income laid the ground for a profound political reversal: the election of Zohran Mamdani as mayor.
The root of the problem, according to Boston College law professor Ray Madoff, author of The Second Estate: How the Tax Code Made an American Aristocracy, lies with the regressive tax system. Working Americans shoulder the heaviest burden through income and payroll taxes, while the ultra-wealthy escape meaningful taxation, because their wealth—rooted in investments and inheritances—is either excluded from the tax code or easily shielded. As their asset values compound untaxed, they can borrow against them to fund their lifestyles. Madoff calls not for new taxes, but equal taxation of all forms of wealth and an end to self-serving policies.
Elon Musk views empathy as civilisation’s critical weakness, a luxury we can no longer afford. The wiser Smith would have vehemently disagreed. “Society,” he warned, “cannot subsist among those who are at all times ready to hurt and injure one another. The moment that injury begins, the moment that mutual resentment and animosity take place, all the bands of society are broken.” And so it has come to pass.
