A Moral Argument for Taxation

 

Taxation has been part of the economic system since ancient times. Every country has some sort of taxation system. Tax is one of the biggest sources of revenue for governments. However, despite the ubiquity of tax, it has been criticized by many, especially libertarians. 

Socialists, on the other hand, consider the taxation system as an equalizer; for redistribution of wealth. However, this essay does not echo the already existing literature on the redistribution of the wealth factor of the taxation system. Rather, as the title suggests, it makes a moral argument for taxation.

To understand the moral side of taxation, we need to first understand the most common arguments for and against taxation.

 

FOR and AGAINST

The most popular arguments made FOR tax are- redistribution of wealth, the wealthy need to give back to society and wealthy anyway have a lot of money to spare.

On the other hand, libertarians claim that taxation is theft and government by coercion is taking away legitimately earned money from people. Some libertarians go to the extent of claiming that taxation is slavery/bonded labour. And the logical scheme of their argument is as follows:

          Earning = labour

          Tax = taking away a part of the income (i.e. labour) with coercion

          Taking away labour forcefully = forced labour (i.e. slavery or bonded labour)

A counter to this would be that the government along with taking earning is also giving resources and facilities to people in return.  But this is not a very convincing argument since the rich might not want government hospital facilities, or use the public transportation system, and if he/she doesn’t want them then why making them pay for it? Also, poor use government facilities more than the upper-class. So, shouldn’t the poor be paying more tax or at least equal tax to the government as the upper-class?

Despite the case for and against tax system, some problems of the tax system in most countries are- poorly formulated tax slabs, leakage of tax money, corruption, allocation of tax money to ineffective sectors by the government, and other structural and systemic failures. And this essay does not address these issues. It asks the bigger question, the moral question- should the government impose tax? Or why pay tax? A question on the principle of taxation; not its fine details.

 


The broken taxation system

Since modern markets are essentially driven by businesses, the tax policies are lenient towards investments, especially in capitalist economies. Further, tax avoidance by corporate companies and business-persons puts the majority of the tax burden on the salaried middle-class people.

In India, only 1% of the taxpayers earn above 50 lakh rupees. Even though the number of Audis, BMWs and Mercedes Benz on the roads tell a different story.

What is even more horrifying is that only 1.5 crore Indians pay income tax. That is, less than 1% of the Indian population. And out of the 1%, 57% earn less than 2.5 lakhs. Any reasonable person can sense heavy tax evasion/avoidance.

The situation is made worse by corruption, resource mismanagement, administrative red tap-ism, etc.; the already burdened middle class is further financially encumbered with the governmental problems.

Such a scenario will naturally turn a person cynical and opposed to taxation. However, what people often miss is that their hatred has more to do with the poor tax regime and governance than taxation itself.

I argue that taxation is objectively moral and the question- why the government must tax, has a moral answer.

 

The Moral Conundrum

Consider the famous example of Peter Singer- You are walking around a lake and you see a child drowning in it. You do not find anyone around and realize that if you do not act quickly, the child will die. The lake is shallow and you proceed to save the child. But before you step into the lake you realize that you are wearing an expensive pair of shoes and jeans worth Rs. 10,000 (both combined).

Now, you have two options-

1.    To save the child and damage your shoes and jeans (permanently)

Or  

2.    To protect your shoes and jeans but let the child die.



I believe that it is a no-brainer for most of us- we will decide to save the child sacrificing Rs. 10,000. It is axiomatic that human suffering is bad and must be avoided.

Interestingly, we face similar situations almost every day. We travel past slums or see donation ads on the internet seeking money to save children suffering from polio or malaria or such diseases. 

In India, seven people are killed every day due to contaminated water. Approximately, 9 lakh children below the age of five died in India, in 2018, due to hunger. The statistics of human suffering in India are horrific and depressing.



Government uses tax money of the people to alleviate such sufferings. However, one might ask- Should the wealthy pay tax because the government needs to save these people and since the wealthy can pay, they should be taxed?

Essentially yes. But the reason is more complicated than it might seem.

One might further, ask- Why should the government save these people? And why should you pay? Government has other sources of income, and if it is not able to generate sufficient funds for initiatives such as clean water, or food for all, then it should consider investing in better places instead of coercing money out of people.

Think about the hypothetical scenario of the drowning child again. I believe that it is immoral for a person (who can afford jeans) to protect his jeans instead of saving the child, or a person to walk past the drowning child. Therefore, as Peter Singer argues, something to which I subscribe as well, morality is not just determined by our actions but also our inactions. Morality is determined not just by making donations but also not making donations. If a person who makes Rs. 10,000  donation, to feed the hungry, out of his/her 10 lakhs salary is moral, then a person who does not make Rs.10,000 donation salary is immoral; considering 10,000 Rupees is negligible compared to 10 lakhs. 

Therefore, as Peter Singer says in his book, Famine, Affluence and Morality-

“If it is in our power to prevent something bad from happening without thereby sacrificing something of comparable moral importance, we ought to do so.”

And the assumption here is that- children dying of hunger or malaria or such preventable causes are bad. And not protecting these children when it hardly costs anything substantial in comparison is immoral.

This is where the government steps in. The Government becomes an agency which can enforce morality by collecting tax and using it to alleviate human suffering. Government agencies can work effectively and reach out to larger sections of the society without profit-motive. I acknowledge that the government may not allocate tax money efficiently and there is scope for corruption. But these are issues with the governance system and not the principle of taxation and the role of government.  The Government can contribute significantly to sustain a large scale social initiative. 

But why pay the government when we could make donations on our own? Unfortunately, most of us choose not to, despite earning in six figures. 

The omission to pay for legitimate causes is immoral. We are walking past hundreds of drowning-children when we omit to make donations or contribution to a cause. Of course, it is not possible to save everyone but it is possible to save some lives. The Government can play a role in enforcing morality on persons who do not voluntarily make a contribution.

This raises a few questions- why is the government enforcing morality? Should the government enforce morality? Isn’t morality subjective? How does the government decide what is moral?

These are valid and important questions that should be addressed.

Firstly, Morality is not as subjective as it seems. Morality can be objectively determined as Sam Harris argues in his book ‘The Moral Landscape’. Letting a child drown to death to protect a hundred rupee slippers is not moral, or throwing away food in front of a child who is starving is not moral from any reasonable point of view, especially when you do not have anything higher at stake. These acts are not just ‘not good’ but patently bad and immoral.

Secondly, the government enforces moral principles all the time. All criminal offences are patently immoral (except those which are discriminatory like Section 377). When a doctor removes kidneys to traffic them, it is immoral. When hospitals bill patients extravagantly to make for the sake of profit, it is immoral. Murdering your own child in the name of honour is immoral. And governments have laws against such acts because these acts cause human suffering and causing human suffering arbitrarily without a justified cause is immoral. And as discussed earlier, not preventing human suffering is also immoral.




Let me reiterate that this article makes a case for taxation as a principle. The fine details of who should be taxed, how and when and for what is a matter for economists to decide. But the principle that human suffering is bad and not reducing human suffering when it does not adversely affect one substantially is immoral. The arguments made in this essay can be summed up in the following way:

1.   Human suffering is bad.    

2.   It is immoral to not spend on initiatives or causes which can save lives or reduce human suffering.

3. The government in several instances makes laws to enforce moral principles.

4.   Taxation is a means of enforcing the moral principle mentioned in point 1.

 

 ​​




Buy Sam Harris' Book 'The Moral Landscape': https://www.amazon.in/Moral-Landscape-Science-Determine-Values/dp/143917122X 


Buy Peter Singer's Book 'Animal Liberation': https://www.amazon.in/Animal-Liberation-Definitive-Classic-Movement/dp/0061711306


Buy Peter Singer's Book 'Famine, Affluence, and Morality': https://www.amazon.in/Famine-Affluence-Morality-Peter-Singer/dp/0190219203':

Comments

Popular posts from this blog

In praise of the 9 to 5

When an Atheist Becomes a Believer: Dawkins' Dialogue with Ayaan Hirsi Ali

WE choose to go to the moon- A story of how nationalism turned into a global achievement