The Justification for Taxation in the Public Finance Literature : an Unorthodox View

Public finance is the sub-discipline of economics that deals with taxes, fiscal policy and government enterprise in general. In order to assess the case in behalf of taxation commonly made in this field, I shall analyze the public finance textbooks of ATKINSON and STIGLITZ 119801, DUE [1963], MUSGRAVE I19591 and SHOUP [1969]'. I have chosen textbooks because they are a distillation of knowledge, methodology and perspective of an entire profession; they are the amalgamation of what is considered correct and important. I have chosen these four because they are a representative sample, and highly respected amongst the practitioners of economic orthodoxy in this domain. The category of economic study we shall consider is sometimes called government finance, sometimes public economics, and sometimes government economics. But whatever the name, this field is very different from all other sub-disciplines of economics in one important respect. In every other case, whether it is micro or macro, trade or labor, business cycles or money, resources or growth, development or industrial organization, managerial or accounting, the practitioner plunges right into the subject matter. In public finance, in contrast, and only in public finpce, there is first an attempt to justify the very existence of the topic. In every textbook on this theme I have examined, plus the four to be scrutinized here in detail, there is always an introductory chapter, and in some cases two or three, where