The Conception of Taxation : The Romantic versus the Realistic Point of View

This paper does not flesh out any single idea advanced by mainstream tax theory. Rather, it argues for a Copernican turn in our fiscal thinking. Whether optimal, Pigouvian, or paternalist, academic fiscal thinking is strongly idealized, and specific proposals are advanced on the assumption that (1) taxation is outside the very process it aims to regulate; (2) the people who populate this fiscal process are benignly motivated, and (3) knowledge of what is fair and how to maximize welfare lies within reach of the fiscal authorities. This article, in contrast, expounds that politics—and thus taxation—will be shaped and executed by people who are self-interested and face severe epistemological constraints to enhance the aggregated social welfare. Whereas, here, we employed this realization to debunk the general idea of discriminatory tax rates. Future researchers will need to scrutinize specific proposals as brought forward by conventional tax theory. Once the general assumptions that ground fiscal thinking have been unmasked as idealized, the prospective research task is indeed to confront the masses of contemporary tax proposals with realistic worries and limitations regarding the fiscal process in an in-depth analysis