Imágenes de páginas
PDF
EPUB
[ocr errors]

tion, is not universally true. We need, rather, beside the purely financial theory of taxation, to establish a second, the sociopolitical, by which a tax becomes something more than a means of raising revenue, and is considered a means of correcting that distribution of wealth which results from competition. This is to be brought about particularly by discriminating as sharply as possible between "earned" incomes and incomes resulting from chance or speculative gains. . . . And then, with the incomes drawn from ordinary industry, we must distinguish more sharply between income derived from labor and income derived from property; and we must consider that the larger gains, and the accumulation of property which they render possible, usually result more or less from good fortune as well as from the personal contributions of the recipients. Furthermore, only from the socio-political standpoint can due consideration be given to the undeniable fact that the larger incomes represent greater ability to pay taxes than the smaller incomes represent, and that income from property. indicates greater ability than income from labor. And, finally, from this standpoint, can be justified the policy of favoring classes of persons with small and precarious incomes or incomes derived wholly from labor, by means of certain exemptions from taxation. Such exemptions necessarily lead to higher taxation of the wealthier classes, but they are, from this standpoint, quite as justifiable as the institutions already maintained, at public expense, for the benefit of the poorer classes, such as schools. So far as concerns the postulates of universality and equality in taxation, the results of the socio-political theory are as follows:

1. Universality is not interpreted literally, even for those who are members of the state. It permits the exemption of persons with small incomes, especially incomes derived from labor, from taxation in general or from the operation of certain taxes. This is the social demand for the exemption of a minimum of subsistence.

2. Equality is, in this theory, considered to mean taxation as far as possible in proportion to ability to contribute, which increases more rapidly than the absolute amount of a person's income or property increases. Therefore the socio-political

theory demands progressive taxation of larger incomes and the rejection of mere proportional taxation. Furthermore it demands heavier taxation of funded incomes than of incomes derived from labor. . . And, in strictness, only upon this sociopolitical theory can the taxation of inheritances find adequate justification. For, according to it, the rights of property and inheritance are not mere matters of course and wholly independent of the action of the state, as the liberal school believes them to be. These things are, on the contrary, a product of the legal activity of the state.

33. Professor Seligman's Criticism of Wagner's Theories. The socio-political theory of taxation is vigorously criticised by Professor Seligman in his work on Progressive Taxation :1

The foremost scientific advocate of the socialistic theory of progression is the German economist, Adolph Wagner. Wagner distinguishes between the purely fiscal period in the history of public finance, and the socio-political period. The essence of the first period consists in the simple endeavor on the part of the government to raise a revenue adequate to its needs. The essence of the second period consists in the predominance of social reasons over purely fiscal reasons. The state is no longer satisfied merely with raising an adequate revenue, but now considers it a duty to interfere with the rights of private property in order to bring about a more equitable distribution. of wealth. The fiscal policy looks merely to the needs of the administration; the socio-political policy looks at the relations of social classes to each other, and the best methods of satisfactorily adjusting these relations. The fiscal policy necessarily results in proportional taxation; the socio-political policy results in progressive taxation. The ethical demands of modern civilization are everywhere preparing the way for a transition from the old fiscal period to the incipient socio-political period. It is these ethical or social reasons alone which can logically serve as a basis for progressive taxation.

1 Progressive Taxation in Theory and Practice, 66-70. In Publications of the American Economic Association, IX (1894). Reprinted by consent of the author and the Association.

This distinction of Wagner is, however, entirely baseless. It is not true historically that the tax policy of various nations has been adjusted solely with reference to purely fiscal reasons. governments have allowed social considerations in the wider sense to influence their revenue policy. The whole system of protective duties has been framed not merely with reference to revenue considerations, but in order to produce results which should directly affect social and national prosperity. Taxes on luxuries have often been mere sumptuary laws designed as much to check consumption as to yield revenue. Excise taxes have frequently been levied from a wide social, as well as from a narrow fiscal, standpoint. From the very beginning of all tax systems these social reasons have often been present. The attempt to sharply distinguish such periods historically is, therefore, unsuccessful.

But, on the other hand, it is not allowable to confound this undoubtedly social element in all fiscal policy with what Wagner calls the socio-political, or what may be called more correctly the socialistic, element. From the principle that the state may modify its strict fiscal policy by considerations of general national utility to the principle that it is the duty of the state to redress all inequalities of fortune among its private citizens is a long and dangerous step. It would land us not only in socialism, but practically in communism. If this were one of the acknowledged functions of government, it would be useless to construct any science of finance. There would be only one simple principle: confiscate the property of the rich and give it to the poor. The difference between the social element and Wagner's sociopolitical idea is the difference between social reform and socialism. We may indeed deprecate the existing conditions which affect the distribution of wealth. But where so much is spoken of just and unjust arrangements, it is necessary to come to an understanding exactly what justice means. Justice, in so far as the action of the state is concerned, consists in holding the balance equal; in giving none an undue advantage; in affording each individual equal rights before the law and equal opportunities to develop his own talents and resources. Justice indeed demands that the state should do nothing consciously and purposely to increase inequality of wealth; but it cannot demand

that the state should do away with inequality of wealth. Justice in the sense of equality may demand great changes in the existing forms of taxation; but that is a question by itself. It involves the problem of the equal treatment of all, as over against historic inequality and its survivals in the tax systems of the world to-day. In that sense indeed there is room and need for social reform; but it is a reform which consists in checking the continuance of old unequal laws, not in fostering the growth of new unequal laws. Legal justice means legal equality; but a legal equality which would attempt to force an equality of fortune in the face of inevitable inequalities of native ability would be a travesty of justice.

We may indeed grant the crying need for social reform. But in so far as the government is concerned the possibility of social reform lies rather in the general attitude of the legislator in social and industrial matters. And even in so far as finance is concerned, the chief social reforms are in the domain of outlay and expenditure rather than in that of revenue. The desirable social reforms consist in extending the benefits of governmental activity to the poor and needy, and in enabling even the lowest classes to participate, as far as possible, in the advantages of progressive civilization. Even here it is a question how far it is desirable to go; and the answer depends not alone on fiscal reasons, but also on wider considerations of general governmental policy. But at all events, the so-called sociopolitical theory is untenable in so far as it implies a conscious effort on the part of the state to levy higher taxes on the rich in order to reduce them to the level of the poor.

34. Professor Seligman's Views concerning Progressive Taxation. Rejecting in toto, therefore, the theories of Wagner, Professor Seligman, after an exhaustive examination of the literature on the subject, presents his own views as follows: 1

We have thus far learned the chief arguments urged for and against progressive taxation. We have seen the inadequacy of the socialistic and compensatory theories in favor of, and the weakness of the benefit theory in opposition to, the doctrine of

1 Progressive Taxation, 190-200.

progression. And we have analyzed more closely the equalsacrifice doctrine, and found that it is unable to serve as the basis of a definite and infallible scale of progression. Are we, then, to abandon progressive taxation in theory? It seems to me not, and for a convincing reason. We must revert to the fundamental conception of faculty or ability, which is, after all, the best standard we have of the measure of general obligation to pay taxes. What does the faculty theory in its wisest interpretation teach us in the matter?

President Walker's definition of faculty is well known.1 Faculty, says he, is "the native or acquired power of production." But if we analyze faculty more closely, in the sense in which we instinctively use the word in tax matters, we see that it means something more than that. It not only implies native or acquired power of production, but includes at least also the opportunity of putting these powers to use, the manner in which the powers are actually employed, and the results of their use as measured by periodical or permanent accretion to the producer's possessions. We have seen how the original idea was that represented by President Walker, but how this was soon supplanted by the more real and practicable tests, first of property (or permanent accretion), then of income (or periodical accretion). But, furthermore, faculty connotes an additional conception. It means not only powers of production or results of powers of production, but also the capacity to make use of these powers or these results-the capacity, in other words, of enjoying the results of the exertions. It is this latter conception which has been developed by recent writers, although they have carried it to an extreme just as one-sided as that represented by the advocates of the earlier theories. The elements of faculty, then, are twofold - those connected with acquisition or production, and those connected with outlay or consumption. What is the application to the matter in hand?

If we regard only the first set of elements, it is evident that the possession of large fortunes or large incomes in itself affords the possessor a decided advantage in augmenting his possessions. The facility of increasing production often grows in

1 F. A. Walker, The Bases of Taxation. Political Science Quarterly, III. (1888), p. 14.

« AnteriorContinuar »