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Liked It “This book is deep, very deep. Hayek is sometimes difficult to follow, and other times crystal clear. Yet this book contains one of the best arguments against progressive taxation I've ever read. |
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“This book is deep, very deep. Hayek is sometimes difficult to follow, and other times crystal clear. Yet this book contains one of the best arguments against progressive taxation I've ever read.
Ron B wrote this review Tuesday, February 19 2008. ( reply | permalink ) Was this review helpful? Yes | No
Chapter Twenty of the book is “Taxation and Redistribution,” wherein Hayek made a persuasive case against progressive taxation. Some of his more stinging criticisms follow:
"Redistribution by progressive taxation has come to be almost universally accepted as just. Yet it would be disingenuous to avoid discussing this issue. Moreover, to do so would mean to ignore what seems to me not only the chief source of irresponsibility of democratic action but the crucial issue on which the whole character of future society will depend. ...once the issue has been clearly stated, that it is here that, more than elsewhere, policy has moved toward arbitrariness.
It has come to be generally accepted once more that the only ground on which progressive scale of over-all taxation can be defended is the desirability of changing the distribution of income and that this defense cannot be based on any scientific argument but must be recognized as a frankly political postulate, that is, as an attempt to impose upon society a pattern of distribution determined by majority decision.
It would probably be true, on the other hand, to say that the illusion that by means of progressive taxation the burden can be shifted substantially onto the shoulders of the wealthy has been the chief reason why taxation has increased as fast as it has done and that, under the influence of this illusion, the masses have come to accept a much heavier load than they would have done otherwise.
In the last resort, the problem of progressive taxation is, of course, an ethical problem, and in a democracy the real problem is whether the support that the principle now receives would continue if the people fully understood how it operates. It is probable that the practice is based on ideas which most people would not approve if they were stated abstractly. That a majority should be free to impose a discriminatory tax burden on a minority; that, in consequence, equal services should be remunerated differently; and that for a whole class, merely because its incomes are not in line with those of the rest, the normal incentives should be practically made ineffective–-all these are principles which cannot be defended on grounds of justice. If, in addition, we consider the waste of energy and effort which progressive taxation in so many ways leads to, it should not be impossible to convince reasonable people of its undesirability. Yet experience in this field shows how rapidly habit blunts the sense of justice and even elevates into a principle what in fact has no better basis than envy." [End Quote from Hayek].
Because there is no objective way to measure social justice, there is no end to the redistribution that can occur under a progressive tax system. Envy seems to be the controlling factor. Helmut Schoeck points out in his treatise, Envy: A Theory of Social Behaviour, that the graduated income tax in the United States is the ultimate expression of the political force of envy. Schoeck distinguishes envy from jealousy. The jealous person says, “I wish I had what he has”; the envious person adds, “and if I can’t have it, I don’t want him to have it either.”
Envy is one of the Seven Deadly Sins, probably the most pernicious of all of them. Nothing good was ever built on envy, and Michael Novak argues in his works that envy has destroyed civilizations. Can there be a better example of envy, writ large, than the progressive income tax?
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