Tax Uniformity as a Requirement of Justice

Abstract

Barbara Fried takes the view that uniform taxation — that is, a single rate applicable to all income levels — cannot be defended on any grounds of justice. She goes further by saying that, of all possible rate structures, it might be “the hardest one” to ground in “a” theory of fairness. Using the contractarian-constitutional perspective advanced by John Rawls and James Buchanan, this article argues that tax uniformity can be seen as a requirement of justice. After modelling how the political world realistically decides to distribute tax shares (self-interested parties act under a majority constraint), I show how the uniformity principle could emerge from the constitutional contract. In other words, rational individuals would choose uniformity as a procedural constraint under a “veil of uncertainty”; that is, with limited knowledge regarding their positions under the future application of the rule. Moreover, I elucidate how the uniformity requirement integrates generalized criteria of fairness and efficiency into fiscal politics as it precludes fiscal exploitation and constrains majorities, and their most influential subgroups, to opt for policies in the direction of the Pareto frontier, and as such promotes outcomes acceptable to all participants.

Keywords: Taxation, Distributive Justice, Social Contract Theory, Public Choice Theory

JEL Classification: K34