TAXATION AND THE ISSUE OF EQUITY IN PERCEIVED SACRIFICE

Tax reform, the incidence of taxation, and point be founded on assumptions, implicit or any implied restructuring of the rates at which explicit, about individual well-being. The individuals are taxed are recurrent issues assumptions are that total individual wellwhich public policymakers must address. The being results from the aggregation of the satisadvocation of reform or restructuring may be faction derived from the consumption of all couched in various terms or approaches, but ulgoods and services and thus is related at least timately it must be concerned with the inciin part to income, and that at some level of dence of taxation and the rate of taxation in consumption the law of diminishing utility will relation to income level. Arguments for hold for any particular good or service conchanges in a tax structure may range from unsumed. Hence, taxation becomes an issue of substantiated value judgments to comparisons income and goods or services foregone. of taxes paid in relation to income but, regardIf the concept of equity of perceived sacrifice less of the justification, each proposal is based from taxation and the economic concepts of on implicit or explicit evaluation criteria. An utility and diminishing marginal utility are to approach based solely on a comparison of tax be integrated, a conceptual framework must be paid in relation to income does not address one established which will allow this synthesis. of the central issues-the sacrifice which the Harper and Tweeten [7, p. 1000-1001] adtaxpayer perceives as he/she gives up income. vanced a quality of life index (QLI) as a public Since the development of a social indicator policy tool which with refinement would allow scale for anomie by Srole [13] which evinced a the resolution of equity questions arising from relationship between the indicator scale and proposed changes in the determinants of indisocioeconomic level, social scientists have devidual quality of life. The QLI then would beveloped and reported the relationships among come an evaluation framework for alternative social indicators of well-being, income, and varpolicies which would affect the individual's ious socioeconomic measures [3, 4, 5, 10]. socioeconomic environment. Focusing on an Given that individuals with different levels of equity dimension of the tax structure within a income attach different values to an additional QLI framework, the following analysis evaludollar of income, the amount of tax paid must ates the application of the QLI concept to vary to provide equality of sacrifice which the structural issues of personal taxation. A repreindividual perceives as a result of the tax paid. sentative personal tax structure is examined It seems reasonable to assume that within the context of a QLI. consistency in the sacrifice perceived as a result of taxes paid would ensure individual THE ANALYTIC STRUCTURE satisfaction with the personal tax system. T T rei A conceptualization of equity in taxation and of the incidence of taxation is attributed, The n in principle if not in fact, to the general public The nler Q moel ws ge a io by policymakers. During their first course in to be of following form: the principles of economics, students are QLI f(Y, ED, AGEI, NL, R S schooled in these concepts, and alternative PERFARMYi, NW, QTR, principles of sacrifice within the tax system are Ti, Ei) stated and formalized [11, p. 164]; however, inwhere dividual conceptions of the equity of the tax = the expected net quarterly structure and its functioning must at some income of the family unit