Taking into account relative statutes in the constitutional texts examined in the previous section, three major elements (or key words) which play crucial parts in the discretion of tax policy could be noticed. They are private property, public welfare, and tax
obligation, and their interactions to be discussed respectively.
1. Recognition of private property, public welfare, and tax obligation
i. Private property—object being disciplined
The first and the most important element of all, is the object being disciplined, namely,
private property. By referring to the articles in various Constitutions listed above, the
enumeration thus the protection of property rights could be found in almost every version of the examined texts. What is to be emphasized here is the inference that such property right, being symbolic of taxpayer’s rights is the very essence of taxpayer’s
ability to pay, which relates taxpayers to the whole tax systems.
ii. Tax obligation—social cohesion—distribution
The second element is the concept of social cohesion, which justifies the essential meaning of modern taxation.1 Due to such feature, taxpayers ought to contribute what they have earned from market. What is to be emphasized is the function of distribution which taxation has characterized the social cohesion involving every taxpayer into the social network.
iii. Public welfare—social binding—redistribution
1 Wicksell(1896), in : R. Musgrave and A. Peacock (ed.), Classics in the Theory of Public Finance, St.
In addition to the distribution function, taxation serves an additional function of social
formation in order to promote public welfare such as balancing the inequalities
between the rich and poor. The focus here is the broader understanding or recognition of
“common good” to the extent of public welfare in the constitution level, inclusive of a
re-arrangement of the interrelationships among taxpayer’s property by means of
taxation. Such taxation in the form of tax obligation can be justified as “social
binding”.
2. Relations of the three elements
In terms of taxation, the three elements are internally connected in values. The picture below tends to show different versions of such connection.
Illustration 3 Relations among Tax Obligation, Private Property and Public Welfare
i. the individual-community-state triangle: contrasting positions
One of the ways of connecting the three elements is the individual-community-state triangle shown in three connected circles.
a. Individual－community
Individual indicating private interests of property rights stands in the opposite direction
TAX OBLIGATION
Public Welfare Private Property
I.SOCIAL COHESION
III. Social-policy-oriented taxes II. Revenue-orientated taxes
State
Individual Communities
of Community showing public welfare is actually a group of private interests comprised of individual concern, suggesting taking individual concern solely would not lead to a correct understanding of the legitimacy of tax obligation, namely, social
cohesion.
b. Individual－State
By first taking a closer look at the relation between individual and state, the collecting of taxes from private property should only be appropriated to the maintenance of the market. That is to say, the legitimacy of taxation does not exist in the social policy which its costs are financed by tax revenue in this fashion. Thus, the portrait of taxation remains its revenue-orientated character which in some degree resembles the idea of the neutrality of taxation.1
c. Community－State
As opposed to the neutral standpoint in the previous individual-state relationship, taxation in the relations between community and state has a broader meaning, inclusive
1 Also known as the leave-them-as-you-find-them-rule-of-taxation. See Gee(1997)
of the raising of state revenue. Briefly speaking, taxation has become a means of realization of state’s will. To be more explicit, the effect of taxation has been regarded as a useful tool for the state to induce people into engaging expected cooperation. Such kind of taxation is usually recognized as the policy-orientated taxation.1
In the individual-community-state triangle, the three sets of concepts are three different pairs of contrasting positions which indicates three separate standpoints. Notice that the interests these positions might represent have not yet reflected in the level of this discussion. In this triangle, the focus is the different views might be hold due to their different standpoints
ii. the property-welfare-obligation triangle: confrontation of interests
Another illustration of the three elements is to be shown in the property-welfare-obligation triangle which is characterized by the three pairs of confrontation of interests in the three sets of contrasting positions.
a. tax obligation and private property
According to the above-mentioned state-individual relationship, taxes are being imposed upon only for the sake of individuals. The function of the state is just to ensure the realization of individuality of people, meaning the disposition of one’s property free from being restricted. Thus taxation, being characterized above, is no less than a mechanism for the protection of the realization of taxpayer’s rights, especially property rights.
However, in terms of the quantity of one’s assets, it is obvious that the effect of taxation leads to a decrease in one’s property, creating an image of taxation that eliminates one’s property and thus shrinks one’s competence of exerting his/her property rights.
b. Tax obligation and Public welfare
If the purpose of taxation is to the fulfillment of public welfare, then public welfare could be reached or promoted by taxation. In this sense, tax obligation and public welfare could be taken as two different definitions of one same thing. That is to say, taxes are paid for the realization of public welfare. Like the explanation made in the previous triangle, if the purpose of taxation is to be limited only to the finance of basic
need for a community, such as, police, national defense, and public sanitary, etc., the concept of public welfare is thus defined in such a tax system. It could also be inferred that, once the aim of using tax revenues reaches beyond the basic need and tends to play a more active part such as the redistribution of wealth, the conception of public welfare is thus to be enlarged.
In other words, if the concept of public welfare is to be reconstructed or represented with time and space and values, and as long as tax obligation is still being defined as a
price (or reward) for the common good, then tax obligation could still be justified in
the name of public welfare.
In this section, what is to be emphasized is the fact that it is taxation which decides the
content of public welfare rather than vice versa. So being said, however, we don’t
deny the existing fact that oftentimes is public welfare that decides the amount of tax burden to be shouldered. The sequence of deduction from taxation to public welfare is recognized here.
c. private property and public welfare
In the property-welfare-obligation triangle, what is to be stressed is the confrontation of interests which different positions represent.