May 20, 2016

Taxing the rich to feed the leviathan

Taxing the Rich: A History of Fiscal Fairness in the United States and Europe

In deep endebted states, the endless debate about direct taxes finally relies on one thing, where is the money to raise more resources?. Nowadays, you'll notice a different formulation, focused on redistribution: we want to raise more money to redistribute to those with unfulfilled needs.
A new book is specially welcome to clarify all the concepts in a politicaly troubled moment:
We argue that societies do not tax the rich just because they are democracies where the poor outnumber the rich or because inequality is high. Nor are beliefs about how taxes influence economic performance ultimately decisive. Societies tax the rich when people believe that the state has privileged the wealthy, and so fair compensation demands that the rich be taxed more heavily than the rest.
When it comes to thinking of what tax policy is best, few would disagree with the notion that governments should be-in part guided by fairness. It is a term used frequently by those on both the political left and right.1 How can this be? History suggests that the concept of fairness is up for grabs. Standards of fairness in taxation vary greatly across countries, over time, and from individual to individual.
If we believe that
 Political support for taxing the rich is strongest when doing so ensures that the state treats citizens as equals. Treating citizens as equals means treating them with "equal concern and respect".
Then, we'll agree that the current debate on taxing the rich in our country is absolutely biased and intentionally partisan. With this approach we can't build a new country.
What a country decides about taxes on the rich has profound consequences for its future economic growth and the distribution of economic resources and opportunities
Therefore, this is the book to read for those that have to prepare the next public budget, and for any citizen, a must read.

PS. A good comment on the book.