1. “Restoration” of the Contradictory “Situation” between the Power to Tax and Property Right
The relation between the power to tax and protection of property right has always been a core issue in constitutional and tax jurisprudence. 2Constitutional interpretation and review of constitutional violation in relation to taxation are also often focused on how to keep the power to tax in rein to prevent violation of the fundamental rights, in other words, putting limits (Grenzen) on the power to tax for protection of the fundamental rights, especially the property right.
Constitutional restriction on the power to tax may be able to reduce intervention in
1 The two above-mentioned attempts to “interpret the state-people relation,” judging from the historic angle or the development and evolvement process of taxation ethics, have reflected two important historio-raphical views: the history of taxation and the influence of taxation. When applied in this paper, the former refers to how taxation has become a form of practice of public authority by the state (taxation state) [history of taxation] while the latter stresses on how the state influences its people through taxation (state taxation people) [influence of taxation.]
2 [Gee](1997), relevant stipulations in Japanese law, see [Nagajima et al](1996).
people’s lives from public authority, but this is only passive prohibition (formal rule of
law) and does not cover the content of practical protection of each taxpayer’s
fundamental rights. It carries the connotation that this protection lacks positive meaning (substantial rule of law). As a consequence, the scope of application of the power to tax not only should be observed from the angle of practice of authority but should also be judged from the angle of the object of this authority, so that a better understanding can be obtained.
In fact, the said angle of the object of this authority has the function of elevating the abstraction level. The definition of this limit is not simply a constitutional or even jurisprudential question. Besides being a fundamental question in fiscal constitution (Finanzverfassung), discussion on this question is also valued in the fields of economics, public finance, sociology, etc.1 In other words, to really understand the core of the question, instead of resorting to integrated interdisciplinary studies2, direct examination of the nature of the question to impart it with a modern meaning through its historical context3 (such as the evolvement of the relation between the power to tax and the
1 Investigations in financial economics include studies by such as Seidl, Shionoya, Musgrave, etc.;
explorations in sociology include Swedberg, O’Connor(1973), Bell(1974), Block(1981), etc. Related literature from Taiwan includes those by Chang Tse-yao, Huang Shi-hisn, Wu Ting-feng, etc.
2 There are political economy, financial economics (Finanzsoziologie), economic sociology, etc. This paper focuses more on Finanzsoziologie; for more information, see Musgrave(1980), McLure(2005), [Yamashita], [Ohata], [Naohiko], etc.
3 To this paper, the so-called modern meanings, such as the justifiability of this limit, whether it still exists, whether the limit theory still has its function in review of constitutional violation from taxation,
people) and development of the choice of value in a more fundamental fashion (such as whether the state should intervene in private economic domains) would be a better approach. In other words, this is an attempt to restore the original appearance of the view of the “give” and “take” of this authority from historical development.
2. Historical context of current issue – Changes in justification of tax power
First of all, the historical context should be included in the realm of the history and philosophy of taxation.
The question of how people’s property rights can cope with the state’s power to tax is actually a continuation1 of the question of how state’s power to tax was originally justified through “consent of people.” 2 Therefore, it seems that to investigate the limit of the power to tax even in the constitutional level, one cannot avoid but to reconsider the question of state’s intervention in society.
worthy of investigation.
1 On the agreement for the power to tax from the people (bourgeois class), Schumpeter (1918) once used letters of indemnity (Schadlosbriefe) and analyzed, “when the bourgeoisie admits… such as the Greco-Turkish War is not a private concern of the seigneur but a “common exigency” (gemeine Not), state affairs thus gained identification from the people. Such state affairs imply a private domain is therefore created and become the requisite of distinction as opposed to the public domain. Out of “common exigencies” a state is born” –see Kimura (1983/2006), p.24.
2 The so-called agreement should mean the people are willing (or make the decision) to give a part of their property for necessary public expenditure, the necessity of which perhaps can be traced back to the Aristotle’s view of “cohabitation.” In addition, for the idea of “social contract “derived from agreement, see the different interpretations of “state of nature” from Locke and Hobbes.
Despite the acceptance of the Sozialstaat concept, the notion that state is obliged to look after its people1, the concept also leads to the legitimacy for expansion of state. In other words, while the constitution recognizes tax state system, how the state employs its means to acquire financial resources with minimal violation of basic rights (Grundrechte) and realize its protection naturally becomes an issue.2
Therefore, definition of the constitutional limits of the power to tax in a modern state, beside facing the old question of “state intervention in society” again, also has to respond to the doubt of “how the state intervene in the society.” The former implies
“positioning of the state” while the latter is a question of the role the state to play.
i. Functionalism in taxation: from revenue-oriented to policy-oriented taxation
The original function of taxation had only the purpose of financial revenue (Fiskalzweck). Tax imposition also carries the purpose of control and guidance (Lenkungszweck) today due to expansion of the function of a modern state. In order to
1 This is the equivalent of the welfare concept in the West when practiced to a certain degree.
2 In fact, discussion on this question in public finance (discussion on the principle of taxation fairness) has evolved into how to minimize the people’s sacrifice under taxation. For details, see Musgrave, A Brief History of Fiscal Doctrine, in: A. J. Auerbach and M. Feldstein(eds.)(1985), Handbook of Public Economics, North Holland, vol. 1, pp.1-59. This paper believes, this principle of the lease sacrifice, when looking at the degree of limitation on the fundamental rights as a matter of quantity, it seems more likely
achieve specific missions, the state offers a certain degree of tax incentives to people who choose to accept state guidance. The reason is, in constitution, achieving these missions is more justifiable than distribution of tax burden.1
ii. Advance in social policy-oriented taxation: from primary to secondary purpose
When observing German tax law that has deep influence on the development of the tax law in Taiwan, the significance of the role that social thought (or Sozialstaastprinzip) has played is obvious. Other than that the abovementioned functions of taxation can already be distinguished, at the same time, the relation between the fiscal purpose (the primary purpose) and policy purpose (the secondary purpose) has already turned from the “finance first, policy next” relation to the completely opposite “policy first, finance next” relation. 2
In other words, viewing the significance of taxation to a nation simply as the major source of financial revenue may be somewhat inadequate and supplementary
1 In the taxation functions of a social state (Sozialstaat), the purpose of control and guidance might even be the primary function and the purpose of fiscal revenue is only secondary. For related discussion, see Gee(2005b), from p.105 onward, especially p.109.
2 This development has been verified in German tax constitution practices. See Gee (2005a) for the Chinese version.
justification in other aspects is required.1 To speak simply, it is still a matter of constitutional justifiability of taxation. When thinking back, the emergence of this function was after all a prerequisite for expansion of state functions.2 This goes to show that the expansion of taxation functions has once again proved the assertion of “the state reversely enriches the content of taxation.”3 Thus, to understand the development of taxation, we have to observe the modes of development of modern nations.