84 Pages Posted: 5 Nov 2003
This paper applies philosophical and ethical concepts to the disciplines of taxation and public finance. It discusses various characteristics and attributes of the various forms of taxation, including whether taxation is voluntary or coercive, whether high rates or low rates are preferable from a variety of perspectives, the ability to pay and the cost benefit principles, uniform and discriminatory rates, tax administration, whether taxes should be visible or hidden, whether taxes should be earmarked or placed into the general fund, distortions to the economy that result from taxation, the effect of taxation on competitiveness and economic growth, tax complexity, vagueness, stability and frequently changing rules, the effect of taxation on behavior and incentives, and the effects on social harmony.
Section III discusses the pros and cons of the various forms of taxation. There are separate discussions of the individual income tax, the corporate income tax, property taxation, the value added tax, retail consumption taxes, excise taxes, estate, inheritance and gift taxes, the social security tax, tariffs, inflation as a form of taxation, user fees, lotteries, and capital gains taxation. Part IV discusses the need to limit taxation and discusses various methods that have been advocated to achieve this goal, including a balanced budget amendment, the line-item veto, a supermajority requirement, the referendum, sunset provisions, stating an upper limit in the constitution and privatization.
Keywords: taxation, public finance, income tax, excise tax, property tax, lottery, user fee, ability to pay, tax characteristics, tax rates, earmarking, vagueness, value added tax, consumption tax, estate tax, gift tax, inheritance tax, capital gains tax, tax limitation, balanced budget amendment, line-item veto, referendum, sunset, supermajority, privatization
JEL Classification: H2, K34, O23, P5
Suggested Citation: Suggested Citation
McGee, Robert W., Taxation and Public Finance: A Philosophical and Ethical Approach. Commentaries on the Law of Accounting & Finance, Vol. 1, pp. 157-240, 1997. Available at SSRN: https://ssrn.com/abstract=461340 or http://dx.doi.org/10.2139/ssrn.461340
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