Review of Economic Philosophy

Tag: Taxation

  • A Genealogy of the Principle of Horizontal Equity

    Abstract

    The concepts of Horizontal Equity and Vertical Equity were coined by the economist Richard A. Musgrave in the 1950s. Given a tax base, such as income or consumption, Horizontal Equity (HE) requires that people in equal positions should be treated equally, whereas Vertical Equity (VE) considers how differently should people in different positions be treated. This paper reconstructs the genealogy of Musgrave’s dual concepts of fiscal equity. It shows how a concern for tax equity has been central to philosophers and economists from Hobbes to Smith, to Musgrave. I show that HE and VE are fiscal applications of the Aristotelian formal concept of distributive justice. This suggests a role for the principle of HE in the context of non-ideal political debates about tax reform. HE can be used to flag morally unacceptable forms of discrimination.

    Keywords

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    JEL Codes: H20, B11, B12, B20, B40, D63

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  • A Note on Just Taxation

    Abstract

    Taxation is one of the fundamental topics in property right theory, but it is rather neglected one until quite recently. Today there are fervent arguments advanced in philosophical academia on what kind of, in any, taxation is justifiable, largely owing to Liam Murphy and Thomas Nagel’s The Myth of Ownership. In this controversial book, they claims that there are no such things as a morally legitimate right to pretax property or natural property rights and that taxation never infringes upon property rights because they are only institutionally created by governmental decree. Murphy and Nagel’s main target is Richard Epstein’s opposite libertarian or classical liberal view on tax. Epstein likens taxation to public expropriation or eminent domain and argues for proportionate income tax.

    Here, after concurring with Epstein’s view on private property with some important qualifications, I critically examine Murphy and Nagel’s statist property theory and claim that their overall egalitarianism is not argued for but merely presupposed. I conclude that estate tax is more justifiable kind of tax from the natural rights libertarian perspective than both income tax and consumption tax, which are the most common form of taxation today. I also claim this conclusion is consistent with the natural reading of the Japanese Constitution.

    JEL Codes: E62, G28, H24

    Keywords

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    Outline

    1. Foreword
    2. The Case of the Constitution of Japan and Epstein’s Unitary Understanding of Taxation and Taking
    3. Property Theory According to Murphy And Nagel
    4. Implications for Taxes

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