Taxation - It's proper purpose

Recent pushes for increases in taxes on various products has refocused my attention on the proper use of taxation by the government. The power to tax has long been recognized as the power to destroy. Taxation has a single legitimate purpose. That purpose is to generate revenues for the operation of the government.

But beyond that single legitimate purpose, special interest groups are pushing, and have pushed governments to use the power of taxation illegitimately. Taxation is used to reduce consumption, to control behaviors through the use of excessive penalites on those who are taxed.

Legitimate taxation may be used solely to generate revenues. There is a tax rate versus revenue curve. Upon that curve there exists a maxiumum. On either side of that maximum are points where the consumption rate times the tax rate will generate a certain income and equivalent income. The lowest rate which generates the desired income is the proper rate. The higher rate does nothing to increase revenue but merely serves to force people to reduce consumption. Taxation to be legitimate must impose the lowest burden upon its subjects. Thus when those who levy taxes do so, they are obligated out of proper application of the power to tax to set the tax rate at the lowest level that generates the desired income. To do otherwise is to violate the trust of the people and to place an unfair, imbalanced burden upon the shoulders of those who pay the tax.

Calls to tax cigarettes at greater and greater levels are in violation of the public trust. Calls to raise gas taxes to force changes in the driving habits of the people are violations of the public trust. It is not legitimate to use a revenue generating power as a power to control behaviors. Those who do so violate the public trust and they violate their oath to the people who elected them to serve.

NBoC