”In this world nothing is certain but death and taxes." Benjamin Franklin
The economic goal of the individual members of society is to accumulate wealth. In
the course of their economic activity they are often driven by self-interest. However,
by acting on self-interest the participants in the same economic system can do harm
to one another, therefore it is imperative to coordinate individual actions. One
means of doing that is by taxation. The state takes away part of the income (wealth)
of individuals in order to have the means of coordinating their actions.
The other main purpose of taxation is to make society more equitable, that is, individuals
with worse performance, and especially their offspring, are subsidized in order to
offset their disadvantage compared to better performers.
”Collecting more taxes than is absolutely necessary is legalized robbery.” Calvin
In its earliest form taxation was plain robbery. The stronger took away the possessions
of the weaker. Later on, the state provided services in return for the goods taken
away (protection, education, health care, etc.). Currently, privatization of public
services is underway because multinational companies now have the capital to finance
large scale investments. However, privatization is not a cure-all. Even the activities
of multinational corporations have to be coordinated, and in addition, privatization
in itself is insufficient to deal with social inequalities. Therefore, even if privatization
can make society operate more effectively, taxation remains necessary.
”Government is the great fiction, through which everybody endeavors to live at the
expense of everybody else.” Frederic Bastiat
Even though taxation is necessary, it is not beloved by the members of society. The
causes for this remain outside of the scope of the tax system. People usually do
not like taxation because the taxes paid and the public services provided are disproportionate,
or because certain classes of society avoid taxation and as a result the burden of
taxation is unevenly distributed. In addition, the better performing members of society
dislike it because income is reallocated to the worse performers, thereby reducing
”In general, the art of government consists of taking as much money as possible from
one party of the citizens to give to the other.” Voltaire
The tax system has been abused from the beginning by all classes of society. The
state provides services disproportionate to the tax collected. The worse performing
classes take advantage of subsidies provided by the better performers instead of
creating success for themselves. The better performing classes of society avoid taxes
so as not to subsidize the worse performers in order to maintain their advantage,
or they can even use taxation to take away the income of worse performers in order
to increase their advantage.
So taxation in itself is neither good nor bad. It is simply a tool used by society.
The way it is used, however, is dependent on the behavior of the members of society,
therefore taxation reflects the stage of development of a civilization.
”Taxes, after all, are dues that we pay for the privileges of membership in an organized
society.” Franklin D. Roosevelt