Article IV. Supplements to the Doctrine

I. COROLLARIES.

113. According to the order of increasing perfection, we can distinguish a threefold form of the distribution of taxes. The first, now almost suppressed, is that of simple capitation, by which absolutely the same sum was exacted from each person; the second, that of proportional distribution, by which each person pays according to his incomes considered precisely, or without respect to the burdens or debts by which the possessor is perhaps oppressed; the third, toward which we strive at the third stage, in which the incomes themselves are assessed comparatively, with account also taken of the person using them.

How little is yet established concerning the form by which the total of taxes is governed, and according to what rationale the “proportionalists” themselves can nevertheless approve some progression in direct taxes by which the inequality of indirect taxes affecting necessary things is compensated,¹ is set forth above, nos. 102 and 104.2.a.

¹ In French you would say: “A corrective progressive tax, to compensate for taxes progressive in reverse.” Molina, vol. 3, disp. 668, no. 2, already acknowledges that inequality and from it discusses the justice of indirect taxes.

Observe also that it sometimes happens that a proportional tax is covered by a progressive appearance, as when progression affects merely the indications of incomes and not the incomes themselves. In Belgium, for example, for him who has two servants attached to his person, the sum exacted for one servant is more than doubled. The reason is that the law presumes more than doubled incomes to correspond to doubled servants; for this tax is placed upon incomes.

114. Other rules for determining the tax must be applied to the incomes of a bachelor and of a father of a family; and the various burdens of the latter—for example, what the number of children is—must be weighed. The same Existenzminimum [subsistence minimum] cannot, for example, be constituted for a man who must provide only for himself and for a man who has a large offspring to support; and you should say the same concerning the other functions which we have distinguished.

II. SCHOLIA.

115. Another question concerning the ordering of taxes. It can be asked whether citizens are to be equated in similar functions of goods, or whether he who is wealthier must pay more from his total income.

The matter does not appear free from doubt. For since certain portions of income have a use as necessary or useful among the wealthy as among the poor—even the wealthiest man suffers hunger and buys bread with his money—it appears that the same burden is to be imposed upon similar portions, whatever at last the total of the incomes may be. It is objected, however, that the comparative value of each portion varies according to the total to which it belongs.

The former manner of speaking pleases us more. Both, however—and this must be carefully noted—can be represented mathematically by the same diagram. This is shown by an easy calculation. Let there be, for example, a fixed income of 1,900 francs. If you exact nothing from 900 francs (0 percent), but 0.615 percent from 900 to 1,900 francs, it is the same as if you exact 0.32 percent from 1,900; for in either manner you will obtain 6.15 francs. Similarly, if 900 francs are made exempt, 900–1,900 pay 0.615 percent, and 1,900–2,900 pay 1.75 percent, it is the same as if you command payment of 0.815 percent upon 2,900 francs. The tax will reach 23.65 francs.

Nevertheless, it is preferable that, from the manner in which taxes are commanded, it be readily apparent according to what principles the ordering has been made.

116. By what characteristics the form which in French is called a degressive tax is distinguished from moderate progression was shown above, no. 104.2.

117. Concerning a tax imposed immediately upon incomes. Dissimilar, yet sufficiently connected with the progressive form of distribution, is the question concerning the immediate placement of a tax upon the totals of incomes themselves. In not a few regions—England, Prussia, Italy—a tax of this kind is in force.

Nor are there few among the various parties, including Catholics, who wish that tax to become as it were the cornerstone of the system,² so that it would become morally the sole tax, except only for certain duties which the rationale of the common good, sought from elsewhere, wishes to be preserved: such as customs duties by which national industry is protected, and sumptuary duties. Cf. the cited article in Rivista Internazionale [International Review], p. 201, note 1.

² They defend the general and sole tax upon income. Cf. its praises celebrated by H. Denis, p. 286 ff.

The supporters of that tax chiefly extol its justice. For since it appears to be without shifting, while the incidence of other taxes is various and uncertain, an equally equitable distribution of taxation is obtained in no other manner. They also praise the facility—its elasticity—which it furnishes for increasing the force of taxes for some public necessity: for since it immediately affects all according to their proportional share, the increase is felt less than if it first fell upon a few citizens, for example, owners of lands. Cf. H. Denis, pp. 294–295.

Against it they object: a) The very great difficulty of computing the incomes of citizens. If you wish to define them authoritatively, you subject the citizens to many vexations; they will be compelled to reveal secrets, etc. Hence the protests, such as those heard, for example, in Italy in the year 1897.³ If you entrust the matter to the declarations of citizens, the matter lies open to innumerable frauds. Hence the more honest will be burdened more than others, and evil habits of lying and defrauding will grow strong in society, to the detriment of the common good. b) Popular resentment. A tax which must be paid all at one time escapes this less than the various indirect taxes which are contributed gradually and imperceptibly. Let it suffice for us to have indicated these things.

³ Cf. the words of the minister Depretis, recited by Denis, op. cit., p. 279.

But, with these disputations permitted, this is established: today most commonwealths need too great an annual revenue to be able to provide for themselves through a single and direct tax affecting proceeds. For the political powers would have to exact such a proportional share of incomes that they would arouse the minds of all against themselves. Hence they need to conceal many burdens under indirect forms.

118. What is to be thought about heavy taxes.

There have been some who praised the utility of heavy taxes.⁴ But without merit. In reality it is by no means expedient that citizens be burdened more than is necessary. For: a) Heavy taxes give occasion to many complaints; it is in the interest of the commonwealth that the citizens be content; b) Besides the domestic difficulties which they produce, they bring it about that monies seek for themselves a milder climate where they are less burdened; c) They increase endeavors toward fraud; d) And it is established by experience that public money is easily squandered. Things which are done by private industry cost society far less. The statements of those who say that the State distributes again among the citizens what it exacts from them are dreams—as though it distributed it gratuitously, or at least usefully!

⁴ Hence to the maxim, “The best tax is the least,” they reply with the contraries: “The tax is the best of investments; the tax is the best stimulus of saving and production,” in Cauwès, no. 1226.