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Introduction: The Value of a Political Theory for the Proper Application of Taxation

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Abstract

This chapter is the introduction to the book and provides an overview of the content of each chapter as a context for a broader discussion on the role of taxation. It comments on certain findings and elaborates on other aspects or philosophical positions, which have received less pronunciation in the chapters. In particular, the author elaborates on social contract theory, libertarianism by evaluating Murphy and Nagel’s (The myth of ownership. Oxford University Press, Oxford, 2002) critique against it, and egalitarianism including an evaluation of the concept of desert and, within that context, taxation of natural endowments. An ideal society is a metaphysical concept. People have different values, which often conflict with one another. In reality, therefore, choices between non-compatible values and alternative policy options need to be made. That is also true for one’s approach to the role of government in society and the function and modalities of taxation. Tax policy should be driven by an underlying political philosophy, otherwise taxation becomes arbitrary and deprived of the moral basis necessary to ensure societal acceptance and compliance.

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Notes

  1. 1.

    For the origins and background of the Arbroath Declaration, see Cowan (2020).

  2. 2.

    This is generally correct. However, as Gribnau and Frecknall-Hughes point out in Chap. 2, n. 10, there does exist some evidence of actual contracts between rulers and subjects, notably the Magna Carta between King John and the barons but this was a contract among the elites and did not encompass the whole populace, and the arrangement of the Pilgrim Fathers when establishing the tiny Plymouth Colony in today’s Massachusetts. These are exceptions, though, and it remains debatable whether any next generation would be bound by a contract signed by their ancestors. It could be argued that the U.S. Constitution is a form of a social contract between the 13 original states after the war of independence from Great Britain.

  3. 3.

    Emigration does not necessarily fully relieve a person from the control of the exited state. The U.S., for example, tax citizens on their worldwide income regardless of residence. Thus, emigration would require also change of citizenship. The U.S. allow renunciation of citizenship for a fee of $2350 (8 U.S.C. § 1481 (a)(5)) which is basically an exit penalty; and depending on meeting certain income and wealth criteria, so-called ‘covered expatriates’ are due an exit tax (sec. 877 and 877a of the IRC).

  4. 4.

    The first forms of warfare were essentially raiding parties on neighboring tribes for material gain, what we would call looting. That was the practice of the North American plain Indians, for example. When institutionalized, raids and loot were replaced with the payment of annual tribute by conquered or weaker tribes or kingdoms to more powerful ones. This was the case after the Scythians defeated Babylonia (Phillips 1972) and the price to be paid by the kingdoms defeated by Alexander the Great on his journey to India, and of peoples defeated by the Romans. Criminal gangs exercise their power over neighborhoods they control in the same manner by demanding and coercing payment of ‘protection money.’

  5. 5.

    Consent can only be considered a given if one adheres to a Hobbesian absolutism, reasoning that the sovereign authority acts on behalf of the citizens as if they write the laws themselves.

  6. 6.

    See the research by McGee et al. (2012).

  7. 7.

    D. W. Bushyhead, P. N. Blackstone, and George Sanders, Cherokee Delegation to Congress of the United States (Jan. 17, 1881), in SEN. DOCS., 49th Cong., 1st Sess., Serial 2362, vi; cited in Bobroff (2001, 1571).

  8. 8.

    At a restaurant dinner in 1974 that included Arthur Laffer, then professor at the University of Chicago, journalist Jude Wanniski, Donald Rumsfeld, then Whitehouse chief of staff to President Gerald Ford, and his deputy Dick Cheney, according to the story, Arthur Laffer sketched a curve on his napkin illustrating the trade-off between tax rates and tax revenues. Wanniski (1978) named the trade-off “The Laffer Curve.”

  9. 9.

    For a critical note on the idea of Tax Freedom Day, see Buchanan (2014).

  10. 10.

    For reviews of their book, see inter alia, Kordana and Tabachnick (2003); Gosseries (2005); Schoenblum (2003); Gordon (2002); Sterba (2004); and Waltman (2002).

  11. 11.

    The same notion is found in the Indian Ṛgveda where Prajāpati is the creator-God, equivalent to Allah in the Qurʾān and Elohim/Yahweh in the Torah or Hebrew Bible.

  12. 12.

    Bobroff presents an overview of the New England, Algonquian, Iroquois, Inuit property rights regimes and those of the Five ‘Civilized’ Tribes, tribes of the Southwest, of the West coast, and the Great Plains.

  13. 13.

    Therewith I confirm Locke’s conclusion that property rights pre-date the institution of the state (Epstein 2011, 99).

  14. 14.

    That does not mean that laws are unchangeable, of course. Moral views change and that may trigger a change in laws. But the fact that a law is changed or repealed does not mean that the original law was deprived of a moral basis or societal acceptance.

  15. 15.

    Their position echoes utilitarian Jeremy Bentham’s assertion that natural rights are “nonsense upon stilts” (Bentham 1973, 269).

  16. 16.

    Obviously, taxes cannot be levied on property before the concept of property was developed.

  17. 17.

    The personal income tax in the U.S. was enabled by the passage of the 16th Constitutional Amendment on June 2, 1909, ratified February 3, 1913. Sales and turnover taxes were introduced as an emergency measure in times of economic distress and war in the early twentieth century. West Virginia was the first in the U.S. to introduce a gross receipts tax in 1921; in Europe such turnover taxes started in 1916 in Germany, followed by France and Belgium in 1920 and 1921 respectively. Turnover taxes go back in concept to the Spanish Alcabala, first impose in 1342. VAT started its proliferation in Europe in 1948 in France as a single stage manufacturer’s tax. Excise taxes are typically levied on commodities and go back 5000 years (Boesen 2021), but the first excise tax in the U.S. was introduced in 1791 and levied on the manufacture of whiskey.

  18. 18.

    Tolls for passage across bridges and roads were common in medieval Europe. Rome, e.g., under Julius Caesar had a 1% sales tax (centesima rerum venalium), land taxes and a direct tax in the form of a head tax. Ancient Egypt and China had taxation, see Keen and Slemrod (2021, Ch. 2).

  19. 19.

    All three Abrahamic religions have thithing traditions going back to Abraham himself (Gen. 14:20), but likely rooting in the Temple states of Mesopotamia and Syria-Palestine in the second millennium BCE, see Chodorow (2006, n. 2).

  20. 20.

    M.C. Escher, ‘The Waterfall’ (lithograph 1961).

  21. 21.

    Scientist have discovered artefacts at Middle Stone Age sites at the Olorgesailie Basin in Southern Kenya indicating that hominins at that time (300,000 years ago) exchanged goods with others (Potts et al. 2018; Deino et al. 2018; Brooks et al. 2018).

  22. 22.

    Modern markets are just a temporary end point in a long historical development, and we cannot reach conclusions on the functioning of markets and the intervening role of the state in isolation, i.e., without considering the historical roots and future direction of markets and the continued changing role of governments in these markets. If the state were to disappear tomorrow, markets would either continue their existence or emerge anew.

  23. 23.

    Libertarians will argue, though, that other solutions than government regulation, such as consensual private ordening, are feasible and more appropriate.

  24. 24.

    Nozick’s view that one could voluntarily enter into slavery (Nozick 1974, 331) is incorrect in that (1) such an alienation is not acceptable under the conception of self-ownership and (2) where an individual certainly could enter into a condition in which he would act in a slave-like manner, this would logically not constitute slavery simply because of the voluntary character of the arrangement (Feser 2000, 227).

  25. 25.

    Solt mentions the emergence of Christianity ending classical civilization, and humanism that concluded the Middle Ages.

  26. 26.

    Election campaign speech delivered in Roanoke, VA on July 13, 2012.

  27. 27.

    To focus on the United States, where Rawls lived and worked, donations by the wealthy have enormous influence, directly or indirectly on the election process. Either through donations directly to favorite candidates or donations to organizations that utilize funds to enhance partisan voter turnout, i.e., of voters that support the preferred cause or candidate. For example, Michael Bloomberg supports candidates and policies aligning with his gun control preferences; Charles and David Koch support libertarian (and Republican) politicians and causes, and Facebook’s Mark Zuckerberg in 2020 donated hundreds of millions of dollars to one-sidedly increase Democratic party turnout in certain counties, i.e., that more Democratic votes would be casted relative to Republican votes, putting his foot on the scale of electoral outcome (In re of the 2020 election, see Hemingway 2021) .

  28. 28.

    Hayek (1945).

  29. 29.

    Cambridge Dictionary: dictionary.cambridge.org/us/dictionary/English/luck; Merriam Webster Dictionary: merriam-webster.com/dictionary/luck

  30. 30.

    Karma is not a single concept and different schools within Hinduism, Buddhism, and Jainism derive different definitions from the ancient texts. Conceptually it is first discussed in the Upaniṣad and is also discussed in the epic Mahābhārata. For a deeper understanding of the many theories of karma, see, e.g., Karl Potter (2001). Karma is based on the notion of cause and effect – you reap what you sow – which in that sense (and that sense only) is also found in the Christian tradition, see Galatians 6:7.

  31. 31.

    Redistribution of the faculties itself, i.e., in kind, is of course not possible, so the compensation must take place in monetary form.

  32. 32.

    Swift [1726] 1900, 233/4.

  33. 33.

    Zelenek 2006, 1150.

  34. 34.

    Source: https://www.statista.com/statistics/minimum-nba-salary

  35. 35.

    Source: registerednursern.com/rn-salary/

  36. 36.

    Which is over $53 Million in today’s dollars. Source: hoopshype.com/player/Michael-Jordan/salary.

  37. 37.

    Assuming a 40-year career making an average salary of $73,000 each year, it would take a nurse 89 years and 284 days to earn enough to pay the $6.6 million in taxes owed on the $33 million salary.

  38. 38.

    She claimed an IQ of 163 but other sources mention an IQ of 149. Legacy.com/news/celebrity-deaths/jayne-mansfield-33facts; salon.com/2001/08/06/jayne_mansfield; projects.latimes.com/Hollywood/star-walk/jayne-mansfield; crfashionbook.com/celebrity/g26041893.jayne-mansfield-secret-moments/?slide=23

  39. 39.

    There is no actual social contract every signed historically or contemporarily. It is a theoretical construct based on what free people might agree to if they were in the original position ignorant to their endowments. The original position has no historical basis either and the closest we can come to imagining the state of ignorance is Adam and Eve in the Garden of Eden, which is an allegory not history, and even there we see immediately differences in endowment between the happy couple, with Adam showing tardiness and Eve curiosity and initiative; endowments they would not have ignored if called to negotiate a social contract between them.

  40. 40.

    The 2–3% of arable land held privately contributed 25% of total agricultural production in 1970–1980ies. See https://en.wikipedia.org/wiki/Agriculture_in_the_Soviet_Union

  41. 41.

    For an historic overview of feminist tax scholarship in the U.S., see Infanti and Crawford (2020).

  42. 42.

    Davis refers to the U.S. Tax Code, but this is likely correct for the tax codes of almost all countries.

  43. 43.

    The distinction between formal equality and factual equality has its roots in Karl Marx and can also be found in Rawls’ philosophy.

  44. 44.

    Jizyah is based on Qurʾān 9:29. It was paid by non-Muslims in return for protection and the right to practice their own religion. Certain categories, such as monks, religious functionaries, the elderly, women, the mentally ill, and the poor were exempt as well as those non-Muslims serving in the military. The tax was generally a fixed amount per income group.

  45. 45.

    See, Couzin (2017). After the Jewish rebellion in Judea was defeated, emperor Vespasian imposed a head tax on the Jews wherever resident (in the empire) as a replacement (appropriation) of the religious Temple tax paid previously. On the Temple tax, see, inter alia, Chodorow (2007–2008, 62–65).

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van Brederode, R.F. (2022). Introduction: The Value of a Political Theory for the Proper Application of Taxation. In: van Brederode, R.F. (eds) Political Philosophy and Taxation. Springer, Singapore. https://doi.org/10.1007/978-981-19-1092-0_1

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