The Myth of Ownership: Taxes and Justice
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In a capitalist economy, taxes are the most important instrument by which the political system puts into practice a conception of economic and distributive justice. Taxes arouse strong passions, fueled not only by conflicts of economic self-interest, but by conflicting ideas of fairness. Taking as a guiding principle the conventional nature of private property, Murphy and Nagel show how taxes can only be evaluated as part of the overall system of property rights that they help to create. Justice or injustice in taxation, they argue, can only mean justice or injustice in the system of property rights and entitlements that result from a particular regime. Taking up ethical issues about individual liberty, interpersonal obligation, and both collective and personal responsibility, Murphy and Nagel force us to reconsider how our tax policy shapes our system of property rights.
who don’t, so this means efficiency will be promoted if the former pay more. Of course, these values simply have to be guessed at by the designers of the system, since they won’t be revealed by a market. Whether they could be revealed by the political process is a difficult question. This is completely different from the pricing and allocation of goods in the free market. If a good like asparagus can be bought by one individual without being supplied to everyone, and if there is a competitive
personal responsibility. Property rights are not the starting point of this subject but its conclusion. While we hope the theoretical questions we discuss will have general application, we are going to conduct the discussion with reference to more or less familiar American examples. And we will talk mostly about federal rather than state and local taxation, and about taxes on individuals rather than corporations—even though the federal personal income tax plus Social Security and Medicare taxes
consumption. Welfare might seem to be the natural candidate, but it actually will not do. For even if Kurt and Bert are identically situated in terms of income and wealth, we cannot say that they are equally well off in the no-tax world, either this year or in the long run. What we know is that given Bert’s discount rate it is not worthwhile for him to save, even without taxes, while the opposite is true for Kurt. This tells us nothing about Kurt’s and Bert’s relative levels of welfare—neither
obvious. As Bankman and Griffith put it, “The desirability of taxing risk premia cannot be determined without a more adequate theory of how government spreads its risk back among its citizens.”62 This seems to us another example of a question that is in danger of being addressed from too narrow a focus— namely, the immediate impact of the tax on taxpayers. It is important to place such a tax in a larger context, including how the revenue will be used. Tax revenue on the return to risk has played
amount or in range of recipients, such programs of direct income supplement could realistically hope to become. Our guess is that a targeted program of cash transfers would lose all political viability if it went above the bottom quarter of the income distribution, and that a serious effort to guarantee a decent social minimum would probably have to take the alternative form of universal benefits, funded in a redistributive way. A family allowance is something that may take hold in the United