Part 1 - AL-Tax

International Taxation Handbookmight be justified in certain cases, such as when the tax causes prices to increase(tariffs and sales taxes) and where the tax is on income, which destroys incentives.But conversations with some Islamic scholars reject this interpretation of the Quran,the Muslim holy book. Murtuza and Ghazanfar (1998) also discussed the Muslimview on paying taxes but they confined their discussion to zakat, the duty to cometo the aid of the poor. They did not discuss the relationship between the taxpayerand the state.McGee critiques the various Christian views (1998c) and various religious views(1999a). Leiker (1998) examined the work of Rousseau and speculated as to whatRousseau’s view on the ethics of tax evasion might be.Not much has been written about the view that people have no duty to pay taxes.Although anarchists take this position, they generally do not focus on tax evasionissues. They tend to discuss the general relationship between the individual andthe state. Lysander Spooner, a nineteenth century American lawyer and anarchist,is a case in point. He took the position that the state is always and everywhereillegitimate and that individuals therefore have absolutely no duty to obey anylaws (1870). Spooner totally rejected the social contract theories of Locke (1689),Rousseau (1762), and Hobbes (1651).Block (1989, 1993) examined the public finance literature and could not findany adequate justification for taxation, although he conceded that such justificationmight exist. It just did not exist in the public finance literature. Public financewriters start with the assumption that taxation is legitimate and go forward fromthere. They never examine the underlying philosophical foundation of taxation.A few studies have applied ethical theory to various taxes to determine whetherthey may be justified on ethical grounds. If one begins with the premise that thestate has an obligation to provide services in exchange for tax revenue, the estatetax is on shaky ground, since estate taxes are paid out of the assets of dead people(McGee, 1999b) and the state cannot provide any services to this subgroup of thepopulation. Individuals are being used as means rather than ends in themselves,which violates Kantian ethics (Kant, 1952a, b, c, 1983). The ‘fair share’ argumentalso violates Kantian ethics for the same reason. McGee (1999c) examined this issue.Tariffs might also be an ethically suspect form of taxation if the main purposeis to protect domestic producers at the expense of the general public, which is themain use of tariffs today (McGee, 1999d). Arguing that there is an ethical duty topay a tax that benefits a special interest at the expense of the general public (generalwelfare) is an uphill battle.The capital gains tax might also be challenged on ethical grounds, especiallywhen it is not indexed for inflation (McGee, 1999f). Depending on the facts and296