The Enlightenment and Influence of Social Contract Theory on Taxation

52 Pages Posted: 18 Nov 2021

See all articles by Hans Gribnau

Hans Gribnau

Tilburg Law School; Leiden University

Jane Frecknall Hughes

affiliation not provided to SSRN

Date Written: November 12, 2021

Abstract

This paper considers some of the most important political philosophers of the Enlightenment (taken as broad concept) – thinkers whose reflections on the idea of a social contract we relate to their views on taxation. Hobbes argues for an (almost) absolute political sovereignty and legal authority and corresponding obedience of citizens constituted by the social contract. For Hobbes, taxes are justified as the price of security. He advocates the benefit theory of taxation, best measured by consumption. The same goes for Locke, although for him the social contract serves to guarantee the individual’s property rights which embody his liberty. Taxes are the price of the protection of the right to property. Both Montesquieu and Hume do not have need for a social contract: man living in societies is a fact of life. Their focus is on legitimate government rather than sovereignty and obedience. Hume inherently adheres to the benefit theory of taxation as paying tax is contributing to society on which one depends to survive. Montesquieu is a proponent of indirect taxation, though he considers progressive taxation and a subsistence minimum which must not to be taxed. For him, tax fairness is a contextual affair, since taxation should be relative to a given form of government. Rousseau radicalises the notion of the social contract which is a device to protect an equal freedom for all. He transposes the emerging new ideal of equality to taxation which not only is to enable government to protect its citizens, but also to consider their subsistence. Taxes should enhance liberty and equality (distributive justice). Thus, progressive taxation based on the ability to pay is put on the agenda. Rousseau’s popular sovereignty was self-evident for Paine, the Federalists and Anti-Federalists alike. Paine argued for a more radical redistribution as taxes should pay for welfare provision which was part of his proposals for reform. Both the Federalists and Anti-Federalists elaborated on Montesquieu’s plea for the separation and distribution of powers, but unlike in Montesquieu, their take focus was on multi-level governance. Like the other theorists, they approached taxation from their political-philosophical perspective.

Keywords: Hobbes, Locke, Hume, Montesquieu, Rousseau, the Federalists and Anti-Federalists, social contract theory, tax, political philosophy, benefit theory, justice, equity, equality, liberty, separation of powers

Suggested Citation

Gribnau, Hans and Hughes, Jane Frecknall, The Enlightenment and Influence of Social Contract Theory on Taxation (November 12, 2021). Available at SSRN: https://ssrn.com/abstract=3963285 or http://dx.doi.org/10.2139/ssrn.3963285

Hans Gribnau (Contact Author)

Tilburg Law School ( email )

Tilburg, 5000 LE
Netherlands

Leiden University ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

Jane Frecknall Hughes

affiliation not provided to SSRN

No Address Available

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