The Guardian reports that any new tax on the very wealthy will raise disappointingly little unless the exceptions and loopholes that riddle the existing code are first cleared away. I find this observation neither surprising nor new. The merchant who shapes the law to his own advantage has always been the great corrupting force in political economy, and a tax written by the people it is meant to reach will contain, from its very first clause, the means of its own defeat.

Let me state the principle plainly. I never argued that the wealthy ought to escape their share of the public burden. In the Wealth of Nations I wrote — and I will not disavow it — that it is not very unreasonable that the rich should contribute to the public expense not only in proportion to their revenue, but something more than in that proportion. A steeply progressive tax on income or consumption is, on its face, consistent with that sentiment. The question is not the rate; the question is the institution that administers and enforces it.

Here is where the argument becomes difficult. Great fortunes in the present age — this I infer from the structure of modern capital markets, not from recollection — are held less in land or in goods that one can see and count than in instruments of extraordinary complexity: stakes in private companies, derivatives, interests held through layered vehicles in jurisdictions chosen for their opacity. The assessor who could tax a field of wheat could see the wheat. The assessor who must tax an unrealised gain embedded in a holding company faces a genuinely hard problem of valuation. The Guardian's lead acknowledges this difficulty honestly; it deserves to be taken seriously rather than waved aside by either side.

My deeper concern, however, is not technical but institutional. A tax that cannot be enforced uniformly is not a tax; it is a selective impost on those too modest or too poorly advised to evade it, while the great fortunes pass through untouched. Every loophole is a privilege granted, usually quietly, to a concentrated interest at the expense of the general public — the very pattern of mercantile legislation I spent a good portion of the Wealth of Nations denouncing. The East India Company extracted its rents through chartered monopoly; a well-lobbied tax code extracts the same rents through a different mechanism. The consumer — here, the ordinary taxpayer who funds the public goods that markets require — pays in both cases.

The productive question, then, is not whether to tax large accumulations but whether the sovereign possesses the institutional capacity to do so honestly. That requires, at minimum: a revenue authority that is professionally staffed and independent of political patronage; disclosure rules that make the structure of large fortunes legible to the assessor; international cooperation sufficient to prevent simple relocation of paper ownership to a friendlier jurisdiction; and a legal framework that treats aggressive avoidance as the near-fraud it often is in spirit, even when technically lawful. Without these, the rate on the face of the statute is almost irrelevant. With them, even a modest rate raises substantial revenue and, more importantly, signals that the law applies to everyone — which is the foundation without which no commercial society can long sustain the trust that exchange requires.

I am, in the end, less interested in the particular rate than in the answer to this question: what framework makes the levy honest? Get that right, and the arithmetic will follow. Get it wrong — write the loopholes in before the ink is dry — and you will have added one more instrument by which the well-connected extract advantage from the rest, and called it reform.