The Philosophy and Ethics of Taxation

This book examines the justification for taxation and identifies the ethical tax issues. It also provides a blueprint for tax reform and advises on tax policy. At one end of the spectrum, any tax legislation is legitimate if the country has a democratic system of government because the peoples’ representatives have voted for it. At the other end of the spectrum, no tax can be justified on philosophical grounds because all governments are bands of thieves. A middle position is that taxation can generally be justified, but that some taxes are better than others, either from a utilitarian or deontological perspective. If a tax that is transparent and visible is better than a tax that is obscure or hidden, why are so many taxes obscure or hidden? There is a general belief that everyone must pay their “fair share” of taxes, but the term “fair share” is conveniently undefinable. Is a graduated income tax morally justifiable, or would some other approach be better? Could/should the income tax be replaced with a consumption tax, or should a consumption tax be viewed as a supplement to an income tax? Should the purpose of taxation be to raise revenue, or should the tax system also be used to alter behavior by taxing “bad” things like alcohol and tobacco products or subsidizing green energy initiatives? This book explores some of these questions.