Research Questions Fairness Of Current Tax System
Embargoed until Thursday 16 October 2008
Maxim Institute Releases New Research Questioning The Fairness Of Our Current Tax System
“Deciding how to tax, what to tax and how to spend the money are issues that all democratic governments have to grapple with,” says Alex Penk, Maxim Institute’s Policy and Research Manager. “These issues involve bigger questions about justice, freedom and compassion, which are the subject of our latest discussion paper, Is it Just Tax? The shaping of our society.”
“Working for Families, different tax brackets for different levels of income, interest-free student loans, daycare subsidies, KiwiSaver incentives—the decisions we make are constantly moderated and influenced by the way we are taxed and the way our taxes are spent, raising important issues of justice and freedom,” says Mr Penk, the author of the paper.
“Current tax policy paints an overall picture of increasing limitations on justice and freedom. This is due in particular to the growing reliance on tax incentives and the priority given to outcomes such as increased income equality. Different policy directions accompanied by individuals and communities assuming greater responsibility for their well-being and the well-being of those around them, may do a better job of reconciling the interests of justice, freedom and compassion. Such cultural change could enhance the flourishing of individuals and communities strengthening the social fabric and the common good.”
“There’s a lot of talk about ‘fair’ tax, but often without a clear understanding of what fairness or justice really is. Justice should go hand-in-hand with compassion for those in need, but the current debate often confuses the two concepts, resulting in tax policy that tries to equalise people regardless of their actual need,” says Alex Penk.
“Tax ultimately places limits on freedom—for example, collecting taxes involves coercion—and given the centrality of freedom to democracy, the impact of tax on freedom is an important issue, yet it is rarely talked about.”
“Meaningful discussions about the relationship between tax, justice and freedom are not exactly commonplace. Yet informed debate about tax is vital in a strong democracy, as tax reflects the relationship between government and citizens. Discussion about foundational principles like these is even more important during the current testing economic crisis,” says Alex Penk.