Tax Discussion Series: Is it Just Tax?
Tax and the economy are issues on many people’s minds at the moment; raising questions that all governments and societies must debate. Questions of fairness, compassion for those in need and the limits to freedom, are all foundational to the tax debate. They help us define our society and influence what we think of policies like progressive taxation, Working for Families and KiwiSaver tax credits. These foundational issues are addressed in a new discussion paper from Maxim Institute: Is it Just Tax? The shaping of our society.
Read the Paper here:
Is it Just Tax? The shaping of our society
The paper questions assumptions behind the tax system and its policies, beginning with the popular debate about “fairness” or justice. “Fairness” is often pursued by policies designed to alter people’s outcomes, like redistribution to achieve greater income equality. However, the paper argues that justice actually depends on treating people equally, and that it must go hand-in-hand with a moral obligation to those in genuine need and hardship. This casts doubt on policies like progressive taxation, which treats people unequally, and Working for Families and KiwiSaver tax credits, which benefit many who are not
Tax policy also raises certain issues of freedom. For example, the increasing reliance on tax incentives poses subtle, but real implications for freedom, as the incentives attempt to shape people’s actions. More obviously, paying taxes is compulsory and therefore inevitably limits freedom. Of course, freedom must be limited in some way, and the paper argues that the need to protect society’s common good from harm defines the limits of freedom. This then should also dictate the boundaries of taxation. Again, this leaves current policies open to question—the “poverty traps” (disincentives to earn more) and “marriage penalties” (tax structures that disadvantage couples) of Working for Families are an example of tax policy creating threats to the common good, and so are high levels of taxation which leave people dependent on
Tax reform is a hot topic these days, but one where many fundamental assumptions go unquestioned. Big picture questions about the shape of our nation, the way we care for those in need and what it means to be a citizen and pay our dues are often drowned out in a welter of calculators and dollar signs, and unchallenged rhetoric. Connecting the debate about change to the bigger picture is the best way to guard against short-term and superficial reform, and gives us a system that taxes fairly, embodies genuine compassion and respects freedom.
Read more from the Tax Discussion Series here: