Chapter 6

Framework and Principles Behind Moral Disposition

Introduction:

Whatever can be demanded on the ground of Law is a Civil Obligation but, in so far as moral grounds are
to be observed, it is a Duty. The word ‘duty’ is frequently used of legal relationships. Legal Duties are
defined as perfect and Moral Duties as imperfect because the former must be done, and have an
external necessity, while the latter depend on subjective will. But one might with good reason, invert
this classification in as much as the Legal Duty as such demands only an external necessity, in which the
disposition is not taken into account, or n which we may even have a bad motive. On the contrary, for a
Moral Duty both are demanded, the right deed as regards its content and, likewise according to form,
the subjective side, the Good Intention.

Law, in general, leaves the disposition out of consideration. Morality, on the other hand, is concerned
essentially with the intention and demands that the deed should be done out of simple regard for Duty.
So too the legally right conduct is moral in so far as its moving principle is the regard of the right.

With legally right conduct the moral aspect should also be essentially connected. It may, however, be
the case that with legally right action there is the sentiment of Law present; nay, more, that an immortal
intent may accompany it. The legally right act, in so far as it is done out of regard for the Law, is, at the
same time, also moral. The legally right action, associated at the same time with a moral disposition, is
to be carried out unconditionally before there can be room for the moral action in which there is no
legal command, that is legal obligation. Men are very ready to act from a merely moral ground, for
example, to give away with an air of generosity rather than pay their honest debts; for in a generous
action they congratulate themselves on account of a special perfection, while on the contrary, in the
performance of just action they would only perform the completely universal act which makes them
equal with all.

Objective:

At the end of the chapter, the students will be able to:

1. Differentiate justice from fairness;

2. Critique justice and fairness;
3. Make use of justice and fairness; and
4. Understand the ethical principles of taxation.

Lesson 1

Righteousness and Equality

Introduction

Taken in its broader sense, justice is action in accordance with the requirements of some law (Vice,
1997). Some maintain that justice stems from God’s will or command, while the others believe that
justice is inherent in nature itself. Still others believe that justice consists of rules common to all
humanity that emerge out of some sort of consensus. This sort of justice is often thought of as
something higher than a society’s legal system. It is in those cases where an action seems to violate
some universal rule of conduct that we are likely to call in “unjust.”

Justice and Fairness

The definitions of “fairness: and “justice” are very similar but are not identical- something like fraternal
(non-identical) twins.

Justice is often about to overriding principles and fairness is more commonly about how those principles
are applied to a specific set of circumstances or a particular situation. Just as philosophy is about
overriding principles and ethics is about how those principles are applied.

When it comes to how we expect to be treated and how others expect us to treat them, there is broad
agreement that “fairness” should be the standard for addressing those situations. The fairness question
is often raised when people differ over how they believe a situation should be addressed or resolved, or
when decisions are being made regarding the distribution of benefits and burdens.

In an organized context, fairness usually comes down to applying the same rules, standards and criteria
in similar situations. The purpose is to reduce the role of bias in one’s decision making, thus levelling the
playing the field.

Fairness is concerned with actions, processes, and consequences, that are morally right, honorable, and
equitable. In essence, the virtue of fairness establishes moral standards for decisions that affect others.
Fair decisions are made in an appropriate manner based on appropriate criteria.

We tend to think and speak in terms of fairness when we are dealing with the behavior of individuals
and everyday interpersonal relationships. We talk about justice and equity in the context of broader
social issues and institutional obligations to individuals. Yet all three words apply to virtually any
situation where we want to judge whether an action contributes to a good, rational, caring society.

Fairness and fair play are less lofty terms than just justice or equity yet, on the level on which most of us
cooperate, the desire to be treated fairly and the duty to be fair and play fair are far more relevant.

The moral obligations arising from the core ethical value of fairness are almost always associated with
the exercise of power to render judgements that bestow benefits or impose burdens. Almost everyone
has the power to give or withhold benefits (including approval, praise, honor, and support) and to
impose burdens (including disapproval, criticism, blame, and condemnation). Parents, teachers,
employers, college administrators, building inspectors, and innumerable others make daily judgements
that significantly affect our lives.

The moral duty to be fair places constraints on our judgement and actions. There are two aspects of
fairness: fair results (substantive fairness) and fair procedures (procedural fairness).
Principles of Fairness

Fairness requires that we:

1. Treat people equitably based on their merits and abilities and handle all essentially similar
situations similarly and with consistency.
2. Make all decisions on appropriate criteria, without undue favoritism or improper prejudice.
3. Never blame or punish people for what they did not do; and appropriately sanction those who
violate moral obligations or laws.
4. Promptly and voluntarily correct personal and institutional mistakes and improprieties.
5. Not take unfair advantage of people’s mistakes or ignorance.
6. Fully consider the rights, interests, and perspectives of all stakeholders, approach judgements
with open-minded impartiality (setting aside prejudices and predispositions), conscientiously
gather and verify facts, provide critical stakeholders with an opportunity to explain or clarify,
and carefully evaluate the information.

Justice means giving each person what he or she deserves or, in more traditional terms, giving each
person his or her due. Justice and fairness are closely related terms that are often today used
interchangeably. They have, however, also been more distinct understandings of the two terms. While
justice usually has been used with reference to a standard or rightness, fairness often has been used
with regard to an ability to judge without reference to one’s feelings or interests; fairness has also been
used to refer to the ability to make judgements that are not overly general but that are concrete and
specific to particular case. In any case, a notion of desert is crucial to both justice and fairness.

In its narrower sense, justice is fairness. It is action that pays due regard to the proper interests,
property, and safety of one’s fellows (Rescher, 1982). While justice in the broader sense is often thought
of as transcendental, justice as fairness is more context-bound. Parties concerned with fairness typically
strive to work out something comfortable and adopt procedures that resemble rules of a game. They
work to ensure that people receive their “fair share” of benefits and burdens and adhere to a system of
“fair play.”

People often frame justice issues in terms of fairness and invoke principles of justice and fairness to
explain their satisfaction or dissatisfaction with the organizations they are part of, as well as their state
or government (Tyler et. al, 1995). They want institutions to treat them fairly and not to operate
according to fair rules. What constitutes fair treatment and fair rules is often expressed by a variety of
justice principles.

But saying that justice is giving person what he or she deserves does not take us very far. How do we
determine what people deserve? What criteria and what principles should we use to determine what is
due to this or that person?

Principles of Justice

The most fundamental principle of justice, one that has been widely accepted since it was first defined
by Aristotle more than two thousand years ago is the principle that “equals should be treated equally
and unequal equally.” In its contemporary form this principle is sometimes expressed as follows.”
Individuals should be treated the same, unless they differ in ways that are relevant to the situation in
which they are involved.” For example, if Pedro and Juan both do the same work, and there are no
relevant differences between them or the work they are doing, then in justice they should be paid the
same wages. And if Jack is paid more than Jill simply because he is a man, or because he is white, then
we have an injustice – a form of discrimination- because race and sex are not relevant to normal work
situations.

The principles of justice and fairness can be thought of as rules of “fair play’ for issues of social justice.
Whether they turn out to be grounded in universal laws or ones that are more context-bound, these
principles determine the way in which the various types of justice are carried out. For example,
principles of distributive justice determine what counts as “fair share” of particular good, while
principles of retributive or restorative justice shape our response to activity that violates a society’s rules
of “fair play.” Social justice requires both that the rules be fair, and also that people play by the rules.

Rawls identified two principles of justice namely (Wolf, 1997).

1. Each person is to have an equal right to the most extensive total system of equal basic liberties
compatible with a similar system of liberty for all. This principle is mainly concerned with
distribution of rights and liberties, the basic liberties of citizens are the political liberty to vote
and run for office, freedom of speech and assembly, liberty of conscience, freedom of personal
property and freedom from arbitrary arrest, however, it is a matter of some debate whether
freedom of contract can be inferred to be included among the basic liberties.
2. Social and economic inequalities are to be arranged so that they are both: (a) to the greatest
benefit of the least advantaged, consistent with just savings principle, and (b) attached to offices
and positions open to all under conditions of fair equality of opportunity.

These principles are lexically ordered, and Rawls emphasizes the priority of liberty. The first
principle is often called the greatest equal liberty principle. The second, until (a), the difference
principle and the final addendum in (b) the equal opportunity principle.

On the other hand, there are also criteria that we believe are not justifiable for giving people
different treatment. In the world of work, for example, w generally hold that it is unjust to give
individuals special treatment on the basis of age, sex, race, or their religious preferences. If the
judge’s nephew receives a suspended sentence for armed robbery when another offender
unrelated to the judge goes to jail for the same crime, or the brother of the Director of Public
Works gets the million-peso contract to install a new building adjacent to the ,municipal hall
despite lower bids from other contractors, we say that it’s unfair. We also believe it isn’t fair
when a person is punished for something over which he or she had no control, or isn’t
compensated for a harm he or she suffered. And the people involved in the “brown lung
hearings” felt that it wasn’t fair that some diseases were provided with disability compensation,
while other similar diseases weren’t.

Different kinds of Justice

There are different kinds of justice, namely:
1. Distributive justice refers to the extent to which society’s institutions ensure that benefits
and burdens are distributed among society’s members in ways that are fair and just. When
the institutions of a society distribute benefits or burdens in unjust ways, there is a strong
presumption that those institutions should be changed. For example, the American
institution of slavery in the pre-civil war South was condemned as unjust because it was a
glaring case of treating people differently on the basis of race.
2. Retributive or corrective justice. Refers to the extent to which punishments are fair and
just. In general, punishments are held to be just to the extent that they take into account
relevant criteria such as the seriousness of the crime and the intent of the criminal, and
discount irrelevant criteria such as race. It would be barbarously unjust, for example, to
chop off a person’s hand for stealing a dime, or to impose the death penalty on a person
who by accident and without negligence injured another arty. Studies have frequently
shown that when blacks murder whites, they are much more likely to receive death
sentences than when whites murder whites or blacks murder blacks. These studies suggest
that injustice still exists in the criminal justice system in US.
3. Compensatory justice. Refers to the extent to which people are fairly compensated for their
injuries by those who have injured them; just compensation is proportional to the loss
inflicted on a person. This is precisely the kind of justice that at stake in brown lung
hearings. Those who testified at the hearings claimed that the owners of the cotton mills
where workers had been injured should compensate the workers whose health had been
ruined by conditions at the mils.

The foundations of justice can b traced to the notions of social stability, interdependence,
and equal dignity, as the ethicist John Rawls has pointed out, the stability of a society- or
any group, for that matter- depends upon the extent to which the members of that society
feel that they are subject to the unequal treatment, the foundations have been laid for
social unrest, disturbances, and strife. The members of a community, Rawls holds, depend
on each other, and they will retain other social unity only to the extent of that their
institutions are just. Moreover, as the philosopher Immanuel Kant and others have pointed
out, human beings are all equal in this respect: they all have the same dignity, and in virtue
of this dignity they deserve to treated as equals. Whenever individuals are treated unequally
on the basis of characteristics that arbitrary and irrelevant, their fundamental human dignity
is violated.
Justice then, is a central part of ethics and should be given due consideration in our moral
lives. In evaluating any moral decision, we must ask whether our actions treat all persons
equally. If not, we must determine whether the difference in the treatment is justified: are
the criteria we are using relevant to the situation at hand? But justice is not the only
principle to consider in making ethical decisions. Sometimes principles of justice may need
to be overridden in favor of other kinds of moral claims such as rights or society’s welfare.
Nevertheless, justice is an expression of our mutual recognition of each other’s basic dignity,
and an acknowledgement that if we are to live together in an independent community we
must treat each other as equals.
Political Doctrines

Introduction
In theory, “equal justice under law” is difficult to oppose. In practice, however, it begins to
unravel at several key points, beginning with what we mean by “justice” is usually taken to
mean “equal access to justice,” which in turn is taken to mean access to law, but as is
frequently noted, a purely procedural understanding by no means capture our aspirations.
Those who receive their “day in court” do not always feel that “justice has been done,” and
with reason. Money often matters more than merits, in all the ways that Marc Galanter
described in his classic article on “why the haves come out ahead” (Galanter, 1974).
Substantive rights and procedural obstacles can be skewed, and even those who win in
court can lose in life, given post-judgement power-relations. These difficulties are seldom
acknowledged in bar discussions of access to justice, which assume that more is better, and
that the trick is how to achieve it.

Egalitarian Justice
Egalitarianism is a trend of thought in political philosophy. An egalitarian favors equality of
some sort. People should get the same, or be treated in the same, or be treated as equals, in
some respect. An alternative view expands on this last-mentioned option: People should be
treated as equals, should treat one another as equals, should relate as equals, or enjoy an
equality of social status of some sort. Egalitarian doctrines tend to rest on a background idea
that all human persons are equal in fundamental worth or moral status. So far as the
Western European and Anglo-American philosophical tradition is concerned, one significant
source of this thought is the Christian notion that God loves all human souls equally.
Egalitarianism is a protean doctrine, because there are several different types of equality, or
ways in which people might be treated the same, or might relate as equals, that might be
though t desirable. In modern democratic societies, the term “egalitarian” is often used to
refer to a position that favors, for any of a wide array of reasons, a greater degree of
equality of income and wealth across persons than currently exists.

As a view within political philosophy, egalitarianism has to do both with how people are
treated and with distributive justice. Civil rights movements reject certain types of social and
political discrimination and demand that people be treated equally. Distributive justice is
another form of egalitarianism that addresses life outcomes and the allocation of valuable
things such as income, wealth and other goods.

To judge two things equal, we must also specify the relevant qualities they have in common.
Therefore, egalitarianism is the belief that all humans share an essence or quality that
makes them equal. Although all egalitarians believe in equality, they often differ in their
understanding of the qualities all humans share.

Every form of egalitarianism is cosmopolitan and inclusive. Those who see only the
members of their own group as equal are not egalitarian. Because egalitarianism is always
based on a theory of universal human commonality and because such universal human
qualities are difficult to define, their essence is often unspecified by egalitarian thinkers.
Nonetheless, anyone who believes all humans are equal must also believe all humans have
some kind of essence or quality in common, because without commonality there can be no
equality.

The term is derived from the French word “egal”, meaning “equal” or “level”, and was first
used in English in the 1880s, although the equivalent term “equalitarian” dates from the late
18th century.

Types of Egalitarianism
1. Economic Egalitarianism (or Material Egalitarianism) is where the participants of a
society are of equal standing and have equal access to all the economic resources in
terms of economic power, wealth and contribution. It is a founding principle of various
forms of socialism.
2. Moral Egalitarianism is he position that equality is central to justice, that all individuals
are entitled to equal respect, and that all human persons are equal in fundamental
worth or moral status.
3. Legal Egalitarianism is the principle under which each individual is subject to the same
laws, with no individual or group or class having special legal privileges, and where the
testimony of all persons is counted with the same weight.
4. Political Egalitarianism is where the members of a society are of equal standing in terms
of political power or influence. It is a founding principle of most forms of democracy.
5. Luck Egalitarianism is a view about distributive justice (what is just or right with respect
to the allocation of goods in a society) espoused by a variety of left-wing political
philosophers, which seeks to distinguish between outcomes that are the result of brute
luck (e.g. misfortunes in genetic makeup, or being struck by a bolt of lightning) and
those that are the consequence of conscious options (e.g. career choices, or fair
gambles).
6. Gender Egalitarianism (or Zygarchy) is a form of a society in which power is equally
shared between men and women, or a family structure where power is shared equally
by both parents.
7. Racial Egalitarianism (or Racial Egalitarianism) is the absence of racial segregation (the
separation of different racial groups in daily life, whether mandated by law or through
social norms).
8. Opportunity Egalitarianism (or Asset-based Egalitarianism) is the idea that equality is
possible by a redistribution of resources, usually in the form of a capital grant provided
at the age of maturity, an idea which has been around since Thomas Paine (1737-1809).
9. Christian Egalitarianism holds that all people are equal before God and in Christ, and
specifically teaches gender equality in Christian church leadership and in marriage.
Socialism (Socialist Justice)

In contrast with libertarians, socialists take equality to be the ultimate political ideal. In the Communist
Manifesto (1848), Karl Marx (1818-1883), and Friedrich Engels (1820-1895) maintain that the abolition
of bourgeois property and bourgeois family structure is a necessary first requirement for building a
society that accords with the political ideal of equality. In the Critique of the Gotha Program (1891),
Marx provides a much more positive account of what is required to build a society based upon the
political ideal of equality. Marx claims that the distribution of social goods must conform, at least
initially, to the principle from each according to his/her ability, to each according to his/her contribution.
But when the highest stage of communist society has been reached, Marx adds, distribution will
conform to the principle from each according to his/her ability, to each according to his/her need.

Socialism is populist economic and political system based on the public ownership (also known as
collective or common ownership) of the means of production. Those means include the machinery, tools
and factories used to produce goods that aim to directly satisfy human needs.

Socialism’s mantra is “From each according to his ability, to each according to his contribution.”
Everyone in the society receives a share of the production based on how much each has contributed.
That motivates them to work long hours if they want to receive more.

Workers receive their share after a percentage has been deducted for the common good. Examples are
transportation, defense, and education. Some also define the good as caring for those who can’t directly
contribute to production. Examples include the elderly, children, and their caretakers.

Socialism assume that the basic nature of people is cooperative. That nature hasn’t yet emerged in full
because capitalism or feudalism has forced people to be competitive. Therefore, a basic tenet for these
qualities to emerge.

In a purely socialist system, all legal production and distribution decisions are made by the government,
and individuals rely on the state for everything from food to healthcare. The government determines
output and pricing levels of these goods and services.

Socialists contend that shared ownership of resources and central planning provide a more equal
distribution of goods and services, and a more equitable society.

Origins and Development

Socialism developed in opposition to the excesses and abuses to liberal individualism and capitalism.
Under nearly capitalist economies during the late 18 th and 19th centuries, western European countries
experienced industrial production and compound economic growth at a rapid pace. Some individuals
and families rose to riches quickly while others sank in poverty, creating income inequality and other
social concerns.

The most famous early socialist thinkers were Robert Owen, Henri de Saint-Simon, Karl Marx and
Vladimir Lenin who expounded on the ideas of earlier socialists and helped bring socialist planning to
the national level after the 1917 Bolshevik Revolution in Russia.
Following the failure of socialist central planning in the Soviet Union and Maoist China during the 20 th
century, many modern socialists adjusted to a highly regulatory and redistributive system, sometimes
referred to as market socialism or democratic socialism.

Advantages

1. Workers are no longer exploited, since they own the means of production. All profits are spread
equitably among all workers, according to his or her contribution. The cooperative system
realizes that even those who can’t work must have their basic needs met, for the good of the
whole.
2. The system eliminates poverty.
3. Everyone has equal access to health care and education. No one is discriminated against.
4. Everyone works at what one is best at and what one enjoys. If society needs jobs to bee done
that no one wants, it offers higher compensation to make it worthwhile.
5. Natural resources preserved for the good of the whole.

Disadvantages
1. Th biggest disadvantage of socialism is that it relies on the cooperative nature of humans to
work. It negates those within the society who are competitive, not cooperative. Competitive
people tend to seek ways to overthrow and disrupt society for their own gain.
2. It doesn’t reward people for being entrepreneurial and competitive. As such, it won’t be as
innovative as a capitalistic society.
3. The government set up to represent the masses may abuse its position and claim power for
itself.

Capitalism

Capitalism is an economic system where private entities own the factors of production. The four factors
are entrepreneurship, capital goods, natural resources, and labor. The owner of capital goods, natural
resources, and entrepreneurship exercise control through companies. The individual owns his or her
labor. The only exception is slavery, where someone else owns a person’s labor. Although illegal
throughout the entire world, slavery is still widely practiced.

Capitalism, also called free market economy or free enterprise economy, economic system, dominant in
the Western world since the breakup of feudalism, in which most of the means of production are
privately owned and production is guided and income distributed largely through the operation of
markets.

Characteristics of Capitalism

1. Two-class system: Historically a capitalist society was characterized by the split between two
classes of individuals – the capitalist class, which owns the means for producing and distributing
goods (the owners) and the working class, who sell their labor to the capitalist class in exchange
for wages. The economy is run by the individuals (for corporations) who own and operate
 companies and make decisions as to the use of resources. But there exists a “division of labor”
which allows for specialization, typically occurring through education and training, further
breaking down the two class system into sub-classes (e.g., the middle class).
2. Profit motive: Companies exist to make a profit. The motive for all companies is to make and sell
goods and services only for profits. Companies exist solely to satisfy people’s needs. Even
though some goods or services may satisfy needs, they will only be available if the people have
the resources to pay for them.
3. Minimal government intervention: Capitalist societies believe markets should be left alone to
operate without government intervention. However, a completely government-free capitalists
exists in theory, only. Even in the US—the poster child for capitalism, the government regulates
certain industries, such as the Dodd-Frank Act for financial institutions. By contrast, a purely
capitalist society would allow the markets to set prices based on demand and supply for the
purpose of making profits.
4. Competition: true capitalism needs a competitive market. Without competition, monopolies
exist, and instead of the market setting the prices, the seller is the price setter, which is against
the conditions of capitalism.
5. Willingness to change: The last characteristic of capitalism is the ability to adapt and change.
Technology has been a game changer in every society, and the willingness to allow change and
adaptability of societies to improve inefficiencies within economic structures is a true
characteristic.

Advantages

Capitalism results in the best products for the best prices. That’s because consumers will pay more
for what they want the most. Business provide what customers want at the highest prices they’ll
pay. Prices are kept low by competition among businesses. They make their products as efficient as
possible to maximize profit.

Most important for economic growth is capitalism’s intrinsic reward for innovation. This includes
innovation. This includes innovation in more efficient production methods. It also means innovation
of new products. As Steve Jobs said, “You can just ask customers what they want and then try to
give that to them. By the time you get it built, they’ll want something new.”

Disadvantages

Capitalism doesn’t provide for those who lack competitive skills. This includes the elderly, children,
the developmentally disabled, and caretakers. To keep society functioning, capitalism requires
government policies that value the family unit.

Despite the ides of a “level playing field,” capitalism does not promote equality of opportunity.
Those without the proper nutrition, support, and education may never make it to the playing field.
Society will never benefit from their valuable skills.
In the short term, inequality may seem to be in the best interest of capitalism’s winners. They have
fewer competitive threats. They may also use their power to “rig the system” by creating barriers to
entry. For example, they will donate to elected officials who sponsor laws that benefit their industry.
They could send their children to private schools while supporting lower taxes for public schools.

In the long term, inequality will limit diversity and the innovation it creates. For example, a diverse
business team is more able to identify market niches. It can understand the needs of society’s
minorities, and target products to meet those needs.

Capitalism ignores external costs, such as pollution and climate change. This makes goods cheaper
and more accessible in the short run. But over time, it depletes natural resources, lowers the quality
of life in the affected areas, and increases cost for everyone. The government should impose
Pigouvian taxes to monetize these external costs and improve the general welfare.

Capitalism and Private Property

Private Property rights are very important in capitalism. Most modern concepts of private property
stem from John Locke’s theory of homesteading, in which human beings claim ownership through
mixing their labor with unclaimed resources. Once owned, the only legitimate means of transferring
property are through trade, gifts, inheritance or wages.

Private property promotes efficiency by giving the owner of resources an incentive to maximize its
value. The more valuable a resource, the more trading power it provides the owner. In a capitalist
system, the person who owns property is entitled to any value associated with the property.

When property is not privately owned, but shared by the public, a market failure can emerge,
known as the tragedy of the commons. The fruit of any labor performed with a public asset does not
belong to the laborer, but is diffused among many people. There is a disconnect between labor and
value, creating a disincentive to increase value or production. People are incentivized to wait for
someone else to do the hard work and then swoop into reap the benefits without much personal
expense.

For individuals or business to deploy their capital goods confidently, a system must exist that
protects their legal right to own or transfer private property. To facilitate and enforce private
property rights, capitalist societies tend to rely on contracts, fair dealing and tort law.

Lesson 3

Taxation

Introduction

The power of taxation is inherent power of the state. It rests upon necessity, the significance of
which stems from the recognition that since governments have been established to promote and
protect the general welfare, it is necessary that government should be provided with the means by
which it could carry out its exercise the power of taxation.

Government financial operations are well-nigh impossible without taxation. Apart from this,
taxation can be a powerful means in order to achieve the goals of social progress and the objectives
of economic development.

Taxation is very important to maintain the society we live in. people are always criticizing the
government for this but it is very important.

Meaning of Taxation

Taxation is the supreme power of a sovereign state through its law-making, body, to impose
burdens or charges upon persons, property or property rights for public purpose. It is the power
vested upon the legislature of the purpose of raising revenues to finance government expenditures
and for the general welfare and protection of its citizens.

Henceforth, taxation is a State power that is exercised only through its law-making body, of the
State of the Legislature. Neither the President nor the Judiciary has the power to impose taxes.
Taxes are levied by Congress by means of laws.

Taxation is the method of apportioning the cost of government among those who, in some measure
are privileged to enjoy its benefits and must therefore, bear its burden. (Cooley, ).

Taxation does not confine itself on government expenditures. It also regulates the flow of income in
our economic system. When there is too much money in the system, the government withdraws
some of this money to check inflation.

Philosophical View of Taxation

In the Philippines, the proportion of the economy controlled by the state has grown enormously
over the last century, and pressures on the set are set to rise as people live longer, meaning that tax
will continue to rise for the great majority of the population. What are the rights and wrongs of
asking so many people to pay so much? To answer this question, let us use the arguments from
political philosophy, and the ff. three approaches to ethics:

1. Utilitarianism, which tell us to aim for the greatest total happiness across the population. In
the economic sphere, we can ‘interpret’ happiness as the satisfaction of our desires; and so
utilitarianism is aiming for maximum satisfaction of desires.
2. Deontology, which bases ethics on the idea of duty.
3. Virtue ethics, which focuses on the virtues we should have, and on what constitutes a
virtuous life. A broad conception of the virtues must be used here, encompassing not only
virtues such as honesty, but also virtues such as using one’s talents and leading a fulfilled
life.
For a utilitarian the most important economic goals are to ensure that goods and services are
available to allow everyone to have a decent life, and to ensure that these resources are
distributed wisely enough for all or most people to enjoy them. A true utilitarian would only care
about total satisfaction, not about the evenness of its distribution, but with taxation we’re
discussing the distribution of resources. If each person has modest resources, that should
generate more satisfaction in total than if the same total resources are concentrated in the
hands of a few people. Taxation plus government spending are an obvious way to achieve
redistribution to ensure that everybody gets something.

However, taxation and spending help to achieve wide resource distributions, but high rates of
tax reduce investment and incentives, which makes it hard to generate sufficient total
resources. Too much redistribution may thus mean too small a pie to share out. Utilitarians must
therefore strike a balance. Economists, rather than philosophers, are the ones to advise them on
how to do this balancing of interest to get the most productive result. This is not surprising.
Utilitarianism merely lays down a computational rule. Utilitarians need experts from other
disciplines to do the computation for them.

Unlike the utilitarian, the deontologist does not tell us to make computations. Instead, he or she
lays down absolute duties. One common such duty is to respect other people’s property rights.
This could be interpreted to mean that there should be no tax at all, because tax is the forcible
transfer of property away from taxpayers. But it is difficult to make this argument watertight. Is
it realistic to ask people to opt out of using public roads if they don’t want to pay tax? They
would have to move to a wilderness somewhere. But why should they be made to do that, when
they already own their homes? Deontology therefore does here what it often does. it offers
arguments which pull in opposite directions, and leaves us completely uncertain about what to
conclude.

Virtue ethics can be a bit more helpful on the question of the justice of taxation. Several virtues
seem more likely to be exercised of tax rates are moderate if they are very high. One should use
one’s talent to the full. Financial incentives can encourage people to use their talents, but very
high taxation dampens down those incentives by reducing take-home pay. Another virtue is to
charity, either in cash or in time. The more take-home pay people have, the more likely it is that
they will feel able to afford charitable donations; and the higher people’s pay rates, the easier it
will be for them to take time away from paid work to perform charity work or other forms of
civic service, as school governors or magistrates for example. A third virtue is independence. It is
good to earn what one needs rather than to depend on subsidies from others. Lowe rates of
taxation make independence more easily achievable.

Are Taxes Moral

One of the arguments against the existence of special government powers such as the
power to ta is that taxing is no different from theft. Since theft is wrong, so is taxing. A
careful examination of this argument shows that it assumes that there is no moral
difference between an individual under government. There is good reason to believe that
this assumption is false, and that taxation is sometimes morally acceptable if our
relationship with the common good of our society must be fair.

The argument against morality of special government powers claims that if I (as a person in
society) protected by neighbors from criminals I could not demand that they pay me for
service. I could not take money from them if they refused to pay, nor I kidnap them until
they did pay. If I did any of these things, I would be acting immorally. I agree. In this specific
situation, I would be acting immorally were I to do any of these things. And if this were
similar to the government’s actions on taxation, then the government would be taxing
immorally. But this is not analogous to the real acts of government (Torgler, 2007).

First, suppose that there was no government at any level. Suppose that a strong man agreed
to protect himself and his neighbors from criminals and predators as a full-time job. Before
doing so, he requested some basic assistance from his neighbors. This included enough
money to buy weapons and maintain a standard of living similar to that of his neighbors. All
of his neighbors agreed to do so. One of them disagreed. (This is the local anarchist.) Is it
acceptable for the neighbors to set the local anarchist an ultimatum: either pay assistance
(or help to perform the assistance) or leave the neighborhood? I say yes. If it is, then it is this
situation that is similar to government. By beginning this process, the neighbors are
establishing a government. By agreeing to take on the responsibility of protecting the
community from criminals, an element of common good is being entrusted to this person.

In our situation, the common good has already been entrusted to governments. So our
situation is not similar to a state prior to all governments. Individuals in that state are
different from individuals in our state. So when we imagine a person who protects
neighbors from criminals, we imagine a person in our state doing so. If such a person were
to demand compensation, then it would either take the form of the contract or be theft.
Since government is cannot be justified by contract, such a situation could never justify a
government. But individuals without a state are different from individuals with a state.
Therefore, the analogy of the anarchist is flawed.
The analogy brings us from a situation in which we have a government, supposes that a
third party assists in the duties of government that demands payment for that assistance.
Since we agree that this is wrong, this simply means that third parties may not demand
assistance for performing the duties of government. But it has nothing to do with the actual
justification of government powers whether special or not. The true situation is the one
given above or one like it.

Legitimate Objective of Tax

Tax can be used for all sorts of purposes, and it is often clear what ethicists of any particular
kind would say about these purposes. We can start with the provision of law and order and
the more extensive public services such as healthcare and education. Utilitarians will
approve of taxation for these things because they allow more goods and services to be
produced, and they also allow more non-materialistic desires to be satisfied. Virtue ethicists
will approve because these services enhance people’s opportunities to use their talents and
to lead flourishing lives.

When we return to aid to the poor, utilitarians will approve because transferring resources
from rich to poor increases the happiness of the poor more than it reduces the happiness of
the rich. Virtue ethicists will approve because with redistribution the poor can be helped to
flourish and develop virtues, and because looking after the less fortunate itself a virtue
(although voluntary charity may be a greater virtue than forced payment). And
deontologists can recognize a duty to care for the poor. The greatest of all deontologists,
Immanuel Kant, certainly believed in duty to the poor, although he did not have a tax-
funded welfare state in mind as a response. However, none of this means that any kind of
ethicist would favor unlimited provision of any of these good things through the tax system.
As we have already seen, one has to consider the consequences of the overall level of
taxation.

A more controversial objective is the promotion of equality, in the sense of equality of

economic outcome example wealth, rather than of equality of opportunity. Taxation can
very easily be used to make the distribution of incomes and wealth more equal, either by
transferring cash from the rich to the poor, or by providing the same state services to
everyone while taxing the rich more than the poor in order to pay for them. Greater equality
may also be an accidental outcome of using the tax system to do other things. But is can also
be a goal in itself (Baron, 2012).

Tax Evasion and Tax Avoidance

Most taxpayers pay their taxes, without fuss. But not all taxpayers act in this way. So lastly
let’s look at whether two other forms of behavior can be ethically acceptable: tax evasion
and tax avoidance.

Tax evasion involves knowingly misreporting the facts: for example, declaring an income of
P1,000,000.00 when the true figure is P5,000,000.00; or declaring that an asset is owned by
one company in a group when it’s really owned by another, so paying less tax.

Unlike tax evasion, tax avoidance does not involve concealing information or lying. Instead,
it involves structuring business transactions to ensure that less tax is payable that one might
otherwise expect. The most ethically challenging examples in this area are to be found in the
complex schemes used by some groups involving networks of companies and partnerships
in several countries. Tax avoidance works through compliance with the precise letter of the
law, not through breaking the law. That is to say, tax savings achieved may be accord with
the words of the law, but it is clear that if Parliament of other Legislative bodies in other
countries had thought about such schemes, it would have passed different laws in order to
defeat them.
Benefits of Paying Taxes

The word tax comes from the Latin word taxare but the Romans were not the first
civilization to impose taxes on their citizens. We know the ancient Greeks and Egyptians
levied taxes on their own people and foreigners, as did the Hebrews. Other civilizations also
left records of tax-keeping, along with many names for the fees they assessed.

The direct benefit of paying taxes for everyone is that they are used to pay for services that
governments provide to communities. In a modern society a government needs
administrators and clerks, police forces, emergency forces such a s firefighters, engineers
and maintenance workers for streets and buildings, politicians, and to pay for property used
and goods consumed by the government services. In ancient times, there were fewer
government specialists but all of these basic needs had to be met.

As large cities in the ancient world rulers and their communities had to devise ways to
compensate the people who delivered services to the communities. We don’t know what
the earliest forms of government revenue were but the options were few until the money
was developed. As an example, if a city of 30,000 people needed to pay someone to clean
streets, they might rely on community donations of food and shelter. Temples became
centers of collection for food and other donations and so in many early civilizations the
temples were the leading institutions of the cities.

Taxes are classified as regressive if they affect poor more than wealthy people and as
progressive if they affect wealthy people more than poor people. Progressive taxes have
been popular throughout history, probably because wealthy people were easier to tax and
the taxes would weaken their ability to raise their own armies.

The benefit of paying taxes is to ensure that everyone in a community enjoys the services
provided by government. Whether the taxes pay for defense, infrastructure, education, or
public safety the intention is that they create a safe and stable environment in which people
can live.

In practice this does not always happen. In fact, we can easily find many examples where
“poor” neighborhoods receive less benefit from taxation than “wealthy” neighborhoods. But
the reasons for these disparities in government services are complex. The distribution of
taxation benefits is not directly tied to the purpose for which taxes exist.

In a perfect world we would only pay enough taxes to ensure that everyone receives equal
benefits from their communities. In reality we pay because that is most efficient way to
provide services, safety, and infrastructure to large populations.
Basic Principle of a Sound Tax System
A sound tax has the following basic principles namely;
1. Fiscal adequacy. This means that the source of revenue should be sufficient to address
the demands of public expenditures.
2. Equality or theoretical justice. This means that the tax burden should be proportionate
to the taxpayer’s ability to pay.
3. Administrative feasibility. This means that the tax should be capable of convenience,
just and effective administration.

Essential Characteristics of Taxation

1. It is an enforced contribution. All citizens are required to pay their taxes. Failure to do so
Is subjected to penalty provided by law.
2. It is generally payable in money. Payments of checks, promissory notes, or in kind are
not accepted. The taxpayer must pay their taxes in terms of prevailing currency.
3. It is proportionate in character. Collection of taxes is based upon the income and the
property of the taxpayer. The higher the income, the higher the tax and the lesser the
income, the lesser the tax.
4. It is levied on persons, property or property rights. A person who receives an income
based on skills and practice of profession are required to pay their taxes. He is also taxed
based on acquired properties deemed as taxable.
5. It is levied by the state, which has jurisdiction over the person or property. In real
property taxation, the rule is: “the place or state where the property subject to tax is
located has authority and jurisdiction to impose tax.” In movable property, the rule is:
“mobilia sequntur personan,” a Latin phrase which means “movables follow the law
around.” (Black Law Dictionary, 5th ed., 2002).
6. It is levied by the legislative branch of the state. There must be a law enacted by
Congress before assessment and collection may be implemented. The power of taxation
may be delegated by Congress to local government units subject to conditions and
terms prescribed by law.
7. It is levied for public purposes. It is intended to raise revenue for public purposes. It is
considered for public purposes if the proceeds thereof are used for the support of the
government, or for the welfare of the community.