---
entity_slug: stock_profit_tax
evaluator: null
evaluated_at: '2026-02-23T06:26:18.939829'
overall_score: 4.2
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition is precise and captures a distinct economic concept -
    a specific type of tax on capital profits with the key characteristic that it
    is passed through to consumers rather than absorbed by dealers. The definition
    avoids circularity and clearly distinguishes this from other types of taxes.
- name: source_grounding
  value: 5.0
  max_value: 5.0
  rationale: This entity is well-grounded in Smith's actual analysis in Book V, Chapter
    2, where he explicitly discusses how taxes on stock profits cannot be absorbed
    by dealers and must be passed on to consumers through higher prices. The concept
    directly reflects Smith's reasoning about tax incidence.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: '"General Theory" is the appropriate domain placement as this represents
    Smith''s theoretical analysis of tax incidence and economic mechanisms rather
    than a specific policy recommendation or empirical observation. It fits naturally
    within his broader theoretical framework about how markets function.'
- name: vsm_relevance
  value: 3.0
  max_value: 5.0
  rationale: This entity has moderate VSM relevance, potentially mapping to S3 (internal
    regulation) as it represents a regulatory mechanism that affects resource allocation
    within the economic system. However, it's somewhat abstract and could be considered
    VSM-neutral as it describes a general economic principle rather than a specific
    systemic function.
- name: explanatory_value
  value: 4.0
  max_value: 5.0
  rationale: This entity provides genuine explanatory power by illuminating the mechanism
    of tax incidence - specifically how certain taxes are transmitted through the
    economic system rather than being absorbed at their point of application. It reveals
    an important structural relationship between taxation, pricing, and market participants.
---

# Evaluation: Stock Profit Tax

## definition_precision — 4.0 / 5.0

The definition is precise and captures a distinct economic concept - a specific type of tax on capital profits with the key characteristic that it is passed through to consumers rather than absorbed by dealers. The definition avoids circularity and clearly distinguishes this from other types of taxes.

## source_grounding — 5.0 / 5.0

This entity is well-grounded in Smith's actual analysis in Book V, Chapter 2, where he explicitly discusses how taxes on stock profits cannot be absorbed by dealers and must be passed on to consumers through higher prices. The concept directly reflects Smith's reasoning about tax incidence.

## domain_placement — 5.0 / 5.0

"General Theory" is the appropriate domain placement as this represents Smith's theoretical analysis of tax incidence and economic mechanisms rather than a specific policy recommendation or empirical observation. It fits naturally within his broader theoretical framework about how markets function.

## vsm_relevance — 3.0 / 5.0

This entity has moderate VSM relevance, potentially mapping to S3 (internal regulation) as it represents a regulatory mechanism that affects resource allocation within the economic system. However, it's somewhat abstract and could be considered VSM-neutral as it describes a general economic principle rather than a specific systemic function.

## explanatory_value — 4.0 / 5.0

This entity provides genuine explanatory power by illuminating the mechanism of tax incidence - specifically how certain taxes are transmitted through the economic system rather than being absorbed at their point of application. It reveals an important structural relationship between taxation, pricing, and market participants.
