The Language of Taxation: Ideology Masquerading as Science

Abstract

When policymakers discuss tax policy, they are attempting to sell their ideas to their colleagues and to voters, but they frame their sales pitch in scientific-sounding language for credibility. Economists generally agree on the principles for sound taxation — for example, that taxes should be levied on the basis of taxpayers’ ability to pay. This chapter explains that politicians can spin these broad principles as support for nearly any favored tax plan. The general welfare clause of the US Constitution was originally interpreted to prevent Congress from funding any program that would benefit select groups of people rather than the population as a whole. Over time, the general welfare clause has been reinterpreted to encompass any policies that Congress supports. Sin taxes clearly affect consumers differently in accordance with their preferences for affected goods. But politicians justify these discriminatory taxes on the basis of the public good.

The working paper version of this paper can be found at: http://ssrn.com/abstract=2731508

Keywords: US Constitution, tax policy, general welfare clause, sin taxes

JEL Classification: H2, H71