Last week, upon arriving home from university and opening the mailbox for the first time in a rather long time, I was avalanched by a barrage of letters in a language I seldom understand. Yet their characteristically green background and three vertically placed red crosses were enough to send shivers down my spine. I fearfully pried the first open, peering into it like one would the mouth of a hungry lion. With shaky hands, I unfolded its contents. A long text preceded what I had feared the most; in bold black numbers, the universal language of municipal authorities worldwide, stood my monetary dues to the great city of Amsterdam, which I must admit seemed exorbitantly high to me, being simply a humble international student. Later that day, as I sat in front of my computer, heading to make the bank transfer as one heads to getting a tooth removed, the ultimate rebellious thought suddenly circumvented my mind. What if I refuse? Make my stand against such a blatant aggression of my private funds? I paid up, not principally moved by a notion of civic duty and communal concord, but rather the fear of my mother’s reaction was she ever to find my transgression. My revolution had been crushed, our entire economic and political system saved by my instinctual fear towards my progenitor. However, the seed of discontent had been planted, and it remained so to the extent that I feel compelled to share with you a few thoughts on the issue.
I must first admit that municipal dues are a form of taxation few people could ever discredit. They help keep our immediate surroundings in acceptable shape and are arguably the one’s whose effect is most palpable, parrying most common accusations labelled against the lack of general transparency in their use. Value-added tax (VAT) is also a tax that is so ingrained in our societal conception of business that few doubt its merit. Given that all enterprises make some use of government infrastructure, be that transport or otherwise, it would seem likely that the government would be entitled to a share of the profits, on the guise of maintaining the services that made the profit possible in the first place. However, other taxes remain contentious, such as the notorious inheritance tax. For some, including highly polarizing economist Thomas Piketty, inheritance tax serves to redistribute wealth both among social groups as well as generations. For others, it remains a form of double taxation, by which earnings of individuals are taxed upon payment and upon death. In Spain, my own country, it has been labelled by many as a death tax. Sensationalism aside, the argument of wealth redistribution only holds for the upper echelons of earners, as it could prevent an excess accumulation of capital for them, and it would seem hypocritical to push towards double taxation of individual profit at a time when authorities actively move towards the elimination of the same phenomenon among business profits. Moreover, Income tax has also been criticized for disproportionately impacting lower-class families, given that it targets one of their scarce sources of sustenance. On the other hand, a statist argumentation would hold that workers, being factors of production, have benefited from governmental actions, such as education and infrastructure, in order to reap the rewards for their labour, and that following the same logic of VAT, must contribute to replenishing these services. There is no objective truth that vilifies or justifies this system, yet further core divergences on opinion upon this issue warrant the inclusion of its own section.
Therefore, in regard to income tax, another age-old question arises; flat or progressive? Many studies carried out by people infinitely more qualified than me have deeply explored the economic ramifications of both systems. However, in layman terms, a purely egalitarian approach to the discussion leaves me with no other choice than decanting myself towards a flat tax rate for income. Why should different people contribute differently from their paychecks to society, especially when no other form of taxation discriminates in this manner? If our economic system is efficient and salaries are directly correlated with the value of one’s labour, why do we assume that a 15% contribution out of a 30,000€ salary would be equivalent to one comprising 50% of 90,000€? Higher salaries should correspond to a higher value of labour input, which should entitle an individual to a higher level of commodities, not a bigger contributive burden. Nowadays such a statement has become a form of political taboo, as if low income should be lauded, rather than escaped. Returning to income tax, one could also argue that if the same logic of use of services from the VAT tax applies, then it would be unfair to consider that higher earners make more use of governmental services. In fact, the opposite could hold, as those able to afford it usually decant themselves for private modes of education and healthcare. However, the pragmatist in me must admit that throughout history, progressive income taxation schemes have led to more prosperous and equal societies, most likely due to their adverse effect on the excessive accumulation of capital, arguably one of the most nefarious phenomena of our modern economic system. None of these arguments is new, and in fact, they constitute some of the most contentious differences between modern mainstream political ideologies. However, in ideology lies the biggest paradox of taxation, where we seldom find facts, but rather the sensationalist argumentation of political dogma – dictating policy.
Finally, all these circular, and rather an inconsequential surface level reflections on the subject of taxation lead to a daunting question: is it possible to transcend the need for it? A Marxist would scoff and preach endlessly as to how, without private property, there is no need for taxation. To that I would concede, but also respond that they present an unsavory tradeoff. On the other hand, Max Stirner, an individualist anarchist and Marx’s contemporary, might also come to mind as a polar opposite antidote, for whom taxation is not necessary, because there is no government to impose it. In Stirner’s model society, it would be a union of self-interested citizens who voluntarily provide the funds for common services such as schools and protection. Indeed, this would circumvent our traditional need for state wide taxation, but it would also make the modern nation state, arguable staple of prosperity and unity, unviable, as national defense and other governmental programs would become a logistical nightmare to fund. Pick your poison, destruction of private property or of the nation state? Perhaps you, much like I, find either unacceptable. And thus, we come full circle, just to find our dear taxes waiting for us at the end, imperfect, yet comfortably familiar.