A Political Philosopher’s View of Equitable Taxation

Abstract

I comment on this paper as a political philosopher and not as a political economist. My principal goal is not to criticise the paper’s theoretical results — which, insofar as I possess any competence of judgement, seem to me unexceptionable — but instead to clarify, and thus to expose to criticism, its methodological and evaluative presuppositions. At the methodological level, I will argue, it is hardly surprising that most of the conceptions of equitability discussed in the paper are unrealisable in any actually existing economy. For the formal model which the authors deploy in a neoclassical intellectual tradition encompasses drastic abstractions from realistic contexts in which utilities and productivities are not only widely divergent, but typically also only partially knowable. At the level of substantive value-judgement, I will maintain that the quest for equity or fairness in income distribution is the search for a mirage. Fundamental questions of equity, fairness and justice arise most saliently in respect of market processes, not with regard to income flows, but instead with reference to the underlying structure of entitlements from which these flows are generated. If the notion of equity or fairness in income distribution is a mirage, akin to the mediaeval idea of the just price or wage, it follows that progressive taxation policies which aim to approximate such equity in income distribution are radically flawed. It does not follow from this, however, that considerations of justice are altogether irrelevant to policy for income taxation, since (I shall contend) important injustices may well be incurred under any regime of progressive income taxation.