The Three Distributive Questions of (a Non-Ideal) Tax Theory

Despite the vital importance of taxation in determining the outcomes of distributive and allocative questions, the mutual impact of the tax and redistributive literatures on each other has been minor. This state of affairs skews the tax policy debate away from moral discussions about what are essentially normative questions regarding the scope of inequality in modern society. It results from the very limited manner in which tax scholars view normative reasoning—as one engaged solely with highly abstract and idealized theories, such as Rawls’ Theory of Justice. They neglect the re-emerging scholarly interest of important liberal political philosophers, such as Sen, that highlight the role of non-ideal theories in philosophic inquiries. 

This article reviews the novel scholarship of non-ideal theory, and places it in the context of redistributive taxation. It familiarizes the legal-tax reader with some of this literature’s basic concepts, and argues that there is a particularly urgent case for exploring its relevancy in the tax context, given the recent rapid growth of inequality. It explains why the non-ideal framework offers certain promising avenues for developing a more sophisticated and relevant distributive analysis of taxation. It then applies its analysis, and argues for a novel non-ideal distributive tax theory, which breaks down the tax distributive questions into three related but separate questions. It ends by explaining how tax theorists and policymakers should integrate the fiscal answers to these three distributive questions into a single, morally coherent, fiscal system.