Some responses I received to
the previous post[1] prompt
me to add some comments.
Lower taxes
One respondent seemed to get
the idea that I was in favour of higher taxes. That is clearly not the
case. My underlying theme of a
conditional preference for the market[2]
means that we should limit the role of government as much as possible. That
implies that taxes automatically will be lower than when one favours a more
interventionist government. All government activity has to be paid for by
taxes—if not now than later.
As I noted in the
last post, the Bible clearly supports the government’s right to tax its
citizens in order to finance its activities. Although some Christians have
argued that there are biblical limits to the purposes for which a government
can raise taxes, I have found that contention to be unsupportable. There are,
however, practical reasons why taxation should be limited. Beyond some point, if
tax rates are increased further, the total tax collected will decrease because
of unlawful tax evasion and unproductive structuring of activities merely to
avoid taxes. Moreover, excessive taxes will reduce our ability to exercise our
personal responsibility and reduce incentives to exercise our stewardship
through productive work. Finally, taxation is limited by the tax burden in
neighbouring or other accessible countries and states (provinces) since
smuggling and emigration will, otherwise, occur.
Consequently, the
article was not a plea for more taxes but, by implication, for choosing among
taxes.
One Best Tax?
Another responded wrote:
Correct
me if I’m wrong but you didn’t have anything positive to say about any type of
tax. Isn’t the point of an article like this to pick one and say why it’s
superior to other types of taxation?[3]
Now,
I believe, I did point out the merits of some taxes as opposed to others.
However, as to choosing one as the best, that is impossible for various
reasons:
Needs too great.
While
we should try to reduce the overall tax burden, it is impossible for me to
visualize that we could cover all the government’s expenditures by one kind of
tax. Is it politically feasible to double or triple , for example, the sales
tax? For each particular tax, we must recognize the tax level in neighbouring
jurisdictions. For example, in Ontario we cannot raise the sales tax
significantly higher than Michigan, Manitoba or Quebec without causing problems
with cross-border shopping and smuggling.
Different levels of government
Moreover,
we can discuss taxation in general, but in practical terms we must recognize
that there are at least three levels of government with different legal and/or
traditional taxing powers-national, provincial/state and local (municipal). Not
all could use the same tax.
Compromise
As I’ve said in the original post, some of the Christian
principles that I’ve derived conflict and compromises must be made. For
example, the sales tax while least affecting the motivation to work does not
consider ability to pay (neighbour love).
Conclusion
I suggest that, economically speaking,
consumption/sales tax are best since they do not negatively affect the
motivation to work or invest. However, they do not consider ability to pay.
Personal income taxes, however, do take this into account. Consequently,
recognizing the other various recommendations I made before, I believe that the
majority of government taxes will and should come from a combination of
sales/consumption taxes and income taxes.
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