A Just Tax

If you believe in redistributive justice, why not redistribute income and wealth absolutely equally in the society? Following your logic, government can simply intervene into the lives of people whenever it finds it appropriate (whenever it finds some people too rich, too clever, or too beautiful) for the sake of some intangible common good. The opposition claims that no rights are absolute and they can just interpret them in a way that would benefit the society. This is exactly the kind of reasoning that had build socialist societies in the past. And as far as the history tells us, these societies did not endure for very long and they were not too successful. Let us point out that the very essence of opposition's argument is "Let's tax rich, because they are rich". First, the opposition has no sense of the essential human rights that are usually recognized in our society and there is an fundamental clash between our viewpoint and theirs. Let us note that we do not oppose taxation. We support taxation when it is equal for all people - for instance, flat income taxes or value added taxes - then the collection to create some form of public good and to correct for externalities can be justified. We defy taxation when its whole point is simply to tax the ones who are more wealthy than you. We defy taxation when it intervenes into the most private areas of our lives - transactions between us and our family members. Second, the opposition has no sense to which extent the rich are already being taxed. For example, top 1% in the United States are paying more in income taxes than the bottom 95% [[http://www.taxfoundation.org/taxdata/show/24955.html]]. These are the people who already effectively finance the budgets of our countries with income taxes. The inheritance tax is a double taxation on the income that had been previously taxed. We do not believe that taxing the same thing twice is just, so do some other people - the EU, for instance, calls for elimination of double taxation in various instances [[http://europa.eu/legislation_summaries/taxation/l26038_en.htm]]. Third, the revenues from the tax, which the opposition find so important, are negligible, raising a question whether they exceed the administrative costs of the tax. This was investigated by scholars previously [[Munnell, Alicia H. “Wealth Transfer Taxation: The Relative Role for Estate and Income Taxes.” New England Economic Review (November/December 1998): 3-28.]]. Munnell contends that the costs are of roughly the same magnitude as the revenues raised. The revenues raised are small indeed - even in the US, which has one of the highest inheritance tax rates, 2008 revenues from inheritance tax combined with gift tax contributed only 1.1% to the federal budget [[http://www.heritage.org/research/features/BudgetChartBook/Social-Insurance-Taxes-Account-for-36-percent-of-All-Revenues.aspx]]. The opposition was quick to point out that if there is substantial evasion, there are various ways how to stop that - for example, taxing gifts. Such efforts will ultimately increase the administrative costs for something that has little contribution the country's revenues. Finally, some scholars have concluded that raising more revenues from income tax instead of estate tax would enhance efficiency [[Holtz-Eakin, Douglas, and Donald Marples. “Distortion Costs of Taxing Wealth Accumulation: Income vs. Estate Taxes.” NBER Working Paper No. 8261. Cambridge, MA: National Bureau of Economic Research, 2001.]]. The bottom line is, even if we buy the opposition's premise that the only important thing is governmental revenues (which we don't, because of our value differences), the inheritance tax is a very lousy way of collecting these revenues.