The Myth of Ownership : Taxes and Justice

## Abstract In a capitalist economy, taxes are the most significant instrument by which the political system can put into practice a conception of economic justice. But conventional ideas about what constitutes tax fairness--found in the vigorous debates about tax policy going on in political and public policy circles, in economics and law--are misguided. In particular, the emphasis on distributing the tax burden relative to pretax income is a fundamental mistake. Taxation does not take from people what they already own. Property rights are the product of a set of laws and conventions, of which the tax system forms a central part, so the fairness of taxes can’t be evaluated by their impact on preexisting entitlements. Pretax income has no independent moral significance. Standards of justice should be applied not to the distribution of tax burdens but to the operation and results of the entire framework of economic institutions. The result is an entirely different understanding of a host of controversial issues, such as the estate tax, the tax treatment of marriage, “flat” versus progressive taxes, consumption versus income taxes, tax cuts for the wealthy, and negative income taxes for the poor. Contents......Page 8 Chapter 1. Introduction......Page 14 I. Political Morality in Tax Policy: Fairness......Page 23 II. Vertical Equity: The Distribution of Tax Burdens......Page 24 III. The Benefit Principle......Page 27 IV. Ability to Pay: Endowment......Page 31 V. Ability to Pay: Equal Sacrifice......Page 35 VI. Ability to Pay as an Egalitarian Idea......Page 39 VII. The Problem of Everyday Libertarianism......Page 42 VIII. Horizontal Equity......Page 48 I. Political Legitimacy......Page 51 II. Consequentialism and Deontology......Page 53 III. Public Goods......Page 56 IV. Benefits for Individuals......Page 59 V. Efficiency and Utilitarianism......Page 61 VI. Distributive Justice, Fairness, and Priority to the Worst Off......Page 64 VII. Equality of Opportunity......Page 67 VIII. Legitimate Means and Individual Responsibility......Page 69 IX. Rewards and Punishments......Page 71 X. Liberty and Libertarianism......Page 74 XI. The Moral Significance of the Market......Page 77 XII. Personal Motives and Political Values: The Moral Division of Labor......Page 81 XIII. Conclusion......Page 84 I. Two Functions of Taxation......Page 87 II. Paying for Public Goods......Page 90 III. Which Goods Are Public?......Page 97 IV. Redistribution......Page 99 V. Transfer or Provision?......Page 101 VI. Public Duties......Page 104 VII. Conclusion......Page 105 I. Efficiency and Justice......Page 107 II. Outcomes, not Burdens......Page 109 III. The Consumption Base and Fairness to Savers......Page 110 IV. Fairness as Equal Liberty......Page 114 V. Desert and the Accumulation of Capital: The "Common Pool"......Page 120 VI. Wealth and Welfare......Page 123 VII. Wealth and Opportunity......Page 130 VIII. Endowment and the Value of Autonomy......Page 132 IX. Exclusions and Credits......Page 136 X. Transitions......Page 139 I. Graduation, Progression, Incidence, and Outcomes......Page 141 II. Assessment of Outcomes......Page 143 III. Optimal Taxation......Page 146 IV. Tax Reform......Page 150 I. The "Death Tax"......Page 153 II. The Tax Base of the Donee......Page 156 III. No Deduction for Donors......Page 159 IV. Details and Objections......Page 161 V. Equal Opportunity and Transfer Taxation......Page 165 VI. Conclusion......Page 170 I. Justifying Differential Treatment......Page 173 II. An Example: The Marriage Penalty......Page 177 III. Incentive Effects and Arbitrariness......Page 180 I. Theory and Practice......Page 184 II. Justice and Self-Interest......Page 188 III. Plausible Policies......Page 192 IV. Effective Moral Ideas......Page 199 Notes......Page 202 References......Page 220 B......Page 232 E......Page 233 H......Page 234 M......Page 235 R......Page 236 S......Page 237 W......Page 238 Z......Page 239 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. [publisher Web Site]. Introduction -- Traditional Criteria Of Tax Equity -- Economic Justice In Political Theory -- Redistribution And Public Provision -- The Tax Base -- Progressivity -- Inheritance -- Tax Discrimination -- Conclusion: Politics. Liam Murphy & Thomas Nagel. Includes Bibliographical References (p. 209-219) And Index. 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. BLURB: In a capitalist economy, taxes are more than a method of payment for government and public services. They are the most significant instrument by which the political system puts into practice a conception of economic justice. Yet there has been little effort to bring together important recent philosophical work on justice with vigorous debates about tax policy going on in national politics and public circles, in economics and law. *The Myth of Ownership* bridges this gap, offering the first book to explore tax policy from the standpoint of contemporary moral and political philosophy. In a capitalist economy, taxes are the most important instrument by which the political system puts into practice a conception of economic or distributive justice. This book aims to bring together the philosophical discussions of justice with the complex debates about tax policy that go on in practical politics, in economics, and in law In a capitalist economy, taxes are the most important instrument by which the political system puts into practice a conception of economic or distributive justice. This book unites philosophical discussion of justice with debates on tax policy It has been recognized for a long time that tax policy must take account of political morality, or justice.