The Language of Taxation

The economic analysis of taxation contains two disparate strands of theorizing. One strand is a scientific strand that seeks to explain the rhyme and reason of the pattern of taxation that governments create. The other strand is a normative or exhortatory strand that seeks to instruct governments as to how they should extract taxes from the population. There is no good reason why a theorist can’t contribute to both strands, only not at the same time because the position of political partisan requires different theoretical formulations than does the position of political observer. Yet the two distinct roles and their associated formulations are often confounded, with the result being that the language of taxation often entails commingling between ideological claims and scientifically based claims. After characterizing these two visions of tax theory, the remainder of this essay disentangles some of the conflicts between ideology and science with respect to taxation, particularly as these apply to personal income taxation and to commodity taxation.