Further inference from the limitations of taxation

The argumentations above have not yet gone into details as to how such generalized

conditions of man are being demonstrated. However, a clarification of understanding of the multi-dimensional character of tax normality is still note-worthy.

Nevertheless, the paper tends to take a rather open attitude by listing out possibilities that this genuine limitation of taxation which grown out of human nature could be applied.

1. As rules or regulation

In terms of legal interpretation of concepts of taxation, there has been a long history of tug-of-war between formal and substantial approach of understanding the meaning, the former meaning the appearance of taxation power as regulations in comparison with the latter referring to the economic substance being regulated. The method of

wirtschaftliche betrachtungsweise is the product of this detachment between the

formality and substantiality of the two perspectives. However, what is to be taken into consideration in this sense usually depends on what kind of interpretation method is being chosen and has little to do with how actually economic effects are occurred afterwards due to the implementation of the chosen method.

2. As a source of state revenue

Different from the point above, taxation as a type of revenue-collecting device, should stick to its logic or its functional sense created so as to be recognized by its feature and distinct from other types of collecting devices. For example, taxation embodies the spirit of equal distribution which could only be understood when the principle of equality if being taken into account in terms of constitutional review. Moreover, the economic effect of imposing tax burden on certain conditions which alter the choice or even preferences of the individuals would risk sacrificing individual’s freedom to engage in acts which still seems to be a nice choice in a pre-taxed situation.

In other words, the interpretation of the concept itself should are restricted to the extent that derivations of the concept should not go against the original meaning which focus on its economic nature. Otherwise, the attention of the freedom nor equality of the taxpayers, which bears strong inclinations to the economic sense, would very likely to be drawn misleadingly back to the generalized protection of human rights postulated in the Constitution offered in Part A.

3. As a sociological factor—the limitation proper of the Steuerstaat

As Goldscheid and Schumpeter had pointed out, the sociological side of public finance has long been neglected regardless of how important a role such perspective might play.

The limitation of tax state, being the most demonstrative example, illustrating its dominant predictability of foreseeing the outbreak of World War I ten years before.¹ Such approach of certainly raised attention but yet to be concretized into methodology.

The difficulties of standardizing such perspective would be mentioned later in part D and the plausible application is to be expanded in the next few paragraphs.

Schumpeter had proposed that there is a certain limitation to the tax state system that once a penny taken away from people would no longer mean a raise in the state’s revenue but rather, only to the detriment of the productivity.² This visionary remark has made enormous impact on various thoughts in different academic fields. While the economists came up with a notion of “maximization” of tax revenue in total³, legal scholars had implemented such limitation in the judicial review, asserting that the motivation in pursuit of self-interest in the market are related to certain features of freedom, such as the freedom to work and freedom to conduct business, etc., and thus

1 Schumpeter(1918)

2 Schumpeter(1918).

should not be affected but to be protected by the Constitution.¹

However, the essence of such limitation is still yet to be refined and in turn, to be developed into theories. As was been stressed highly in advance in Schumpeter’s work, his analysis of the issue, namely, Crisis was based on the approach called Fiscal Sociology. It is the social psychological factor that the state should take heed to in order not to overpass the limitation of the tax state lest it break down the whole system.

By inference, the emphasis of such approach can be highlighted as a strong reflection and criticism on the methodology of tradition public finance theories then. It is interesting to follow the ins and outs of aftermaths of such propositions in the academic fields of public finance. Nevertheless, it is quite another topic to see how such approach could provide a different point of view of moralities in different societies. The latter, is the main theme addressed in part D.

4. As a representation of people’s moral mentality

People acts differently according to different social backgrounds in which they are

1 The most famous would be the concept of “Erdrosselungsteuer” and the half-half principle (“Halbteilungsgrundsatz”) proposed by P. Kirchhof.

nurtured or accustomed themselves to, and Schumpeter was being quite reticent as to the actual ways of how to approach these social factors. However, he never hesitated to leave a few clues for us to explore.

As stated above, the freedom and equality of taxpayers could not be sufficiently protected by means of the general protection of basic human rights. Taking part A and C into consideration, it stirs up the concern of how the image of “paying taxes” is rooted in people’s mind. In addition, focusing on the analysis in the limitation of taxation in

Discourse, the elements which dominate the thinking of taxpayers in Ancient Chinese will be of great concern.

When tax duty has been an obligation which can not be deprived of a person in modern age, it is common for a person nurtured by tradition Chinese values¹, to try to either justify or condemn the legitimacy of taxation with his/her interpretations of such traditional values; whereas the attempts above can never in any way change the historical factor of the legitimacy and the task for legal studies to ensure the

“what-comes-of-a-man” of taxpayers.

However, we can still ask, how such “makings” of a man present themselves in a Chinese-cultured society—that is, the appearance of freedom and equality of a taxpayer under the necessary evil of state’s ruling. Moreover, with respect to the legal issue of the protection of the makings of a human, the real question would be how to make a taxpayer either free from or out of the imposition from the environment of a specific society—that is, how to protect the equality and freedom of taxpayers with Constitution and the legal institutions sanctioned by it. Nevertheless, the content of this paper here can only extract two element factors, i.e., institutional concern and sociological concern.

Illustration 9 The four dimensions of limitation of taxation

A

B

C

D

D. Ethical values and thoughts C. Social psychological factor B. Source of state revenue

A. Legal rules of taxation Media ( Receptionability & Understandability)

P

V T

N

: A

I

C

—value judgments in tax law: the righteous-beneficial differentiation

It may be clear from the above that tax regulations are chiefly influenced by two elements, both institutional and societal factors. However, how to rationalize tax norms into a logical model is the next step. Such attempts expressed as the interaction between

tax normality and tax morality, reflecting the tension between substance and form of

tax norms, are developed in the following argumentations.

I. Substance and Form of a tax norm

Generally speaking, form(本) and substance(末) are just two sides of one same thing.

However, due to opposite standpoints they take, different observations are found and thus results in incoherent interpretations. Taking into account the same origin of two interpretations have, there still exist a certain kind of relationship interconnected. Such relations could be found both in jurisprudence, linguistics, and possibly in other academic disciplines. The following paragraphs focus on such dichotomy of form and substance in different disciplines which are mostly concerned with the theme of the paper, in search of similarities.