Taxation in Utopia

Article excerpt

Abstract

Utopias of the right and the left offer different justifications for taxation and propose different tax systems. Here, utopian proposals are analysed and evaluated from two perspectives: the "ideal" form of taxation (visible, equitable, and non-avoidable), and the democratic perspective (would people willingly consent to it?). Pre-taxation, favoured by left-wing utopias, raises problems from a democratic standpoint while right-wing utopias assert that taxation must be voluntary but are over-confident that "voluntary government financing" would provide a safety-net for poorer members of society. In the conclusion, I argue that there is more at stake than the left/right dispute. The different attitudes to utopian taxation are indicative of markedly different conceptions of society

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   In all the governments that there are, the public
   person consumes without producing. Whence
   then does it get what it consumes? From the
   labour of its members, The necessities of the
   public are supplied out of the superfluities of
   individuals. It follows that the civil State can
   subsist only so long as men's labour brings
   them a return greater than their needs.

(Jean-Jacques Rousseau, The
Social Contract 64)

   In every community which has passed the most
   primitive stage some portion of the produce is
   taken in taxation and consumed by government.

(Henry George, Progress and Poverty 117)

Every government needs revenue and even an ideal society needs some form of government, however light-touch its authority may be. As the above quotations from Rousseau and George suggest, government revenue will almost invariably be levied on the labour or income of members of the community. There have been cases including, most recently, regimes in the Middle East where the ruling power has had direct access to valuable natural resources such as forests or oil wells and by exploiting these has been able to govern without distraining upon the income of its subjects. These are called rentier states, The undesirable outcome in such cases is that the people can exert little influence on their rulers however authoritarian--an outcome unlikely to be considered utopian. When considering utopian strategies for taxation, therefore, I shall be looking at the most common situation, where the revenue for the support of government institutions is provided directly or indirectly by those who live in the society. It must be a requirement of any utopia that the inhabitants do not feel oppressed or coerced by the actions of the government, or by the tax which it levies: such negative feelings on the part of taxpayers would detract from the ideal quality of utopian life. Utopian taxpayers must feel both that the government holds power legitimately and that the particular taxes levied are just, equitable and not excessive. It is useful to bear in mind in the following discussion some general axioms about "ideal" taxation as perceived by economists and fiscal policy makers: taxes should be visible, equitable, and hard to avoid. There is, however, disagreement among experts as to whether taxes should be hypothecated which is to say that a particular tax or a proportion of revenue from particular or general taxation should be allocated to a particular head of expenditure. Some of the merits and demerits of hypothecation will be illustrated in the course of this article.

The purpose of this article is to examine utopias on the right and left of the political spectrum to see what fiscal strategies are proposed. I will also examine the different justifications for taxation which they offer, and the extent to which they establish or question the legitimacy of the taxing authority, that is the government or state. I start with some principles laid down by the radical American economist and social thinker Henry George.

In 1884, Henry George published an influential book called Progress and Poverty. …