Wealth Taxes, Capital Gains Taxation and the Right to Private Property. On the Moral Boundaries of Taxation.
Abstract
In many Western countries tax justice currently fuels the public debate. In the aftermath of Piketty’s Capitalism in the 21st Century, tax law has left the lecture room of legal specialists to attract widespread moral and political interest. Recent findings on growing economic inequality incentivized politicians, international organizations and academics to propose tax reforms. To stop the increasing wealth gap two major reform strategies are put forward: (1) wealth taxes that diminish concentration of wealth by means of a levy on the value of one’s fortune; (2) increasing the capital gains taxation by imposing (additional) fiscal duties on the profits one gains from e.g. real estate, stocks, bonds, intangible assets etc.
However, an integrated view on tax justice does not only depend on the redistributive effects of specific measures; but equally needs to asses taxation policies on their consistency with people’s personal rights. Regarding the impact of particular tax measures on personal (economic) rights, current tax debate has remained rather silent. I aim to fill that gap by analyzing whether the abovementioned proposals are acceptable from the viewpoint of a particular classic liberal right. Moreover this paper will scrutinize both the idea of a wealth tax and a capital gains tax from the perspective of the right to private property. This former right will serve as evaluative basis, for which extensive justification will not be given here.
Classically, the right to property has been presented as a bundle of several incidents, e.g. use, management, income, etc. Over the last 30 years, Anglo-Saxon legal literature has stressed the conceptual disintegration of the right to private property, maintaining that the right to private property has no fixed meaning, and the particular incidents which constitute a person’s claims over a good, are those granted by prevailing legislation. This article wishes to challenge this approach, and will argue that the appearance of complex proprietorial entitlements in legislation, does not exclude the conceptualization of an integrated (prior) moral right. My means of a personal analysis, I will show that a particular hierarchy can be envisaged between the respective incidents that construct a traditional moral right to property.
The former framework will be used to elucidate that wealth taxes target the most evident and quintessential aspect within that hierarchy : the right to possession. Since wealth taxes indeed penetrate the very foundation of property, I will show they nullify the right as such. On the other hand, I will exhibit that capital gains taxation respects several essential incidents of the right to private property and only relate to an additional aspect – income. Therefore, capital gains taxation can be qualified as a lesser infringement, and a measure which is sensibly more compatible with the crux of people’s claims over their goods.
