Choice of Values in Fiscal Constitution – In Search of Intrinsity in Tax Normality

The Constitution is our responses to the challenges of different eras.

Gee, Tax Avoidance and Legal Methodology 1993^∗

Like other disciplines, there constantly exist in jurisprudence several fundamental key questions worthy of continuous investigation. How to observe from different angles to impart in these questions meanings in line with new eras is above all fascinating. It is the same with tax jurisprudence. Aside from the fact that the concept of “taxation” was originally the result of the intersection of various disciplines and there are therefore all kinds of cut-in points, it is also closely related to the life of people because of its use as a ruling instrument in historical development. This paper is unable to cover all aspects but hopes to extend from studies on certain basic issues in jurisprudence to comprehend and interpret them from a modern view.

How a Chinese society, having been dominated by Confucian traditions for such a long period of time, has been able to interact with the transformation glorified under the

reform and opening up policy in recent years is significantly different from what happened in the West. But even so, on the fundamental question of “whether the state exercises market intervention” in a constitutional system, the historical experience in the West still has its referential value. This paper, setting its focus through the contrast between two written works and analyzing the constitutional meaning of the system through the debates in the “Discourse on Salt and Iron” and “The Crisis of the Tax State”, reaches the conclusion that, as a system of state capitalism transforms into one with policies oriented toward market socialism, the transformation has to meet certain constitutional requirements in order to avoid or buffer unnecessary crises.

Finally, to borrow Rawls’ maximin concept¹ – the justifiability of any financial reform relies on whether the reform is to the advantage of the least fortunate in the society - the constitutional predicament a socialistic market economy system will face will probably be how to prevent or ease the alerting “prediction’ from the “tax state limits” through rule-of-law construction. The solidity of such construction lies in an enforceable

“system of obligations of equal burdens” that will work only through precise stipulation in each and every regulation. In the realm of fiscal constitution, only when the basic taxation ethics of the ability-to-pay principle are realized in every tax regulation, will it

1 Rawls, J., A Theory of Justice, Cambridge, 1971.

be possible to ensure constitutional equality in taxation.

Under the premise that legal construction has to come after economic development, the problems the entire Chinese society faces today are no longer how to stimulate economic growth, but how to ensure economic achievements and sustain economic activities through the construction of legal system. Most importantly, mentality-wise, we have to stay calm to figure out a way to harmonize the contradictions between Chinese and Western cultures.

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－focusing on the relation between tax obligation and tax morality

[I]f one wishes to settle with this devil, one must not take to flight before him as so many

like to do nowadays. First of all, one has to see the devil's ways to the end in order to

realize his power and his limitations.

Max Weber, Science as a Vocation, 1919^∗

Indeed, tax obligations reflexive of taxpayer’s values which varies with time and space, however, through interactions with alien tax systems might be adopted for reasons of

“modernization”. Despite the fact that whether such application is either necessary or its grounds being justified or not, the possibility of communication between the two sets of values is to be reassured as a prerequisite.

II. Mission of Modern Constitutional State—construction in public finance

∗ The first part of the excerpt：“I personally by my very work answer in the affirmative, and I also do so from precisely the standpoint that hates intellectualism as the worst devil, as youth does today, or usually only fancies it does. In that case the word holds for these youths: 'Mind you, the devil is old; grow old to understand him.' This does not mean age in the sense of the birth certificate. It means that (…)”

Tax regulations are targeted at economic affairs, yet the purpose is to sustain the possibility of economic life. The former expresses the necessity of independence of tax law, whereas the latter explains the special considerations in tax legislation that are different from other laws. ¹However, in common recognition, a rather noticeable degree of detachment is often found between the purpose and the target of tax regulations². Such detachment may be attributed to neglect in tax jurisprudence in constitutional jurisprudence³, or the contradiction between the regulations (things that should be done) and existing social laws (the phenomena)⁴. How to resolve this contradiction – a haunting phantom hiding amidst the myriad of tax clauses and related explanatory paragraphs, interfering the judgment of judicial and executive department, and obscuring the focus of concern of legislative and executive departments – has become an urgent mission of fiscal constitutions today.