Democracy, Equality and Taxes

Abstract:     
Our national political debate, since its beginning, has raised questions about what taxation is legitimate. Recently, there has been renewed interest in the appropriate allocation of our collective tax burden because it is the most important means by which our political system implements its version of distributive justice. Despite an increasingly strident rhetoric, there has been little productive dialogue. This is unfortunate since tax issues such as these are really questions about government legitimacy and the proper relationship between individuals and government. It is not surprising, then, that one of the most frequently debated (by politicians, the public and academics) questions is whether a tax system that places a heavier tax burden on the wealthy through progressive tax rates is compatible with a government dedicated to political equality. This foundational question is frequently answered in the negative, despite the lack of any serious examination of democracy, its nature or definition.

Democracy, Equality and Taxes examines this central question by asking if our current, progressive tax structure is compatible with democracy. After reviewing political and philosophical theories debated by the Founders to demonstrate that our Constitution is ultimately a democratic document, this Article examines the question of what allocation of the tax burden is consistent with democratic government. By examining this important question historically, outside of our all too familiar world, a cross-cultural comparison will show that allocating the tax burden to the wealthy is not only consistent with but necessary for a democratic government committed to political equality.

A common dedication to political equality and freedom characterizes both ancient and modern democracy. By examining Athenian democracy, the most important model (both historically and for the Founders), it becomes clear that there is no necessary link between equal political rights and the obligation to fund a democratic government. On the contrary, a comparison of political systems and their allocation of tax burdens reveals exactly the opposite relationship usually assumed. Equal tax burdens characterize non-democratic political systems. Governments funded through generally applicable, flat taxes are uniformly those least devoted to political equality. Athenian democracy, with its complete commitment to political equality, allocated its tax burden to the wealthy and exempted ordinary citizens from tax, an exemption largely responsible for incorporation of ordinary (i.e., non-wealthy) citizens in democratic government.

In sum, democracy by definition and normative content does not require equality of tax burdens. If the democratic ideals of political equality and freedom are identified as central to our political identity, future debates involving tax issues will benefit from recognition that the allocation of the tax burden should be consistent with these tenets.

Accepted Paper Series