TAILIEUCHUNG - Luận án kinh tế - "Human and action" - Chapter 28

XXVIII. INTERFERENCE BY TAXATION 1. The Neutral Tax keep the social apparatus of coercion and compulsion running requires expenditure of labor and commodities. Under a liberal system of government these expenditures are small compared with the sum of the individuals | XXVIII. INTERFERENCE BY TAXATION 1. The Neutral Tax To keep the social apparatus of coercion and compulsion running requires expenditure of labor and commodities. Under a liberal system of government these expenditures are small compared with the sum of the individuals incomes. The more the government expands the sphere of its activities the more its budget increases. If the government itself owns and operates plants farms forests and mines it might consider covering a part or the whole of its financial needs from interest and profit earned. But government operation of business enterprises as a rule is so inefficient that it results in losses rather than in profits. Governments must resort to taxation . they must raise revenues by forcing the subjects to surrender a part of their wealth or income. A neutral mode of taxation is conceivable that would not divert the operation of the market from the lines in which it would develop in the absence of any taxation. However the vast literature on problems of taxation as well as the policies of governments have hardly ever given thought to the problem of the neutral tax. They have been more eager to find the just tax. The neutral tax would affect the conditions of the citizens only to the extent required by the fact that a part of the labor and material goods available is absorbed by the government apparatus. In the imaginary construction of the evenly rotating economy the treasury continually levies taxes and spends the whole amount raised neither more nor less for defraying the costs incurred by the activities of the government s officers. A part of each citizen s income is spent for public expenditure. If we assume that in such an evenly rotating economy there prevails perfect income equality in such a way that every household s income is proportional to the number of its members both a head tax and a proportional income tax would be neutral taxes. Under these assumptions there would be no difference between them. A

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