A National Taxonomy of Fiscal Doctrines

Coinciding with the rise of marginal utility analysis in the early 1880s, many European political economists turned their attention to fiscal theory. In less than 20 years, a vast literature was generated, which manifested the different emphases British, German, Austrian, Italian, and Swedish authors placed on the fiscal process. Writers in the British tradition, having long considered the taxation side of the public account independently from the expenditure side, and having deemed the services provided by the State inherently unproductive, concentrated their energy to minimize the burden that public expenditures would inflict upon taxpayers’ budgets. With this objective in mind, British writers experimented with different concepts of equal sacrifice — equal absolute, equal proportional, equal marginal — to ascertain which would produce most effective outcomes. Seen from another perspective, these writers were striving to transform a fiscal precept they inherited from their classical predecessors, ability to pay, into a workable paradigm of tax policy. Italian fiscal scientists, meanwhile, were dwelling on the benefit principle of taxation, which had originated in their country as a principle of social justice by Tommaso Campanella,1 if not even earlier by Thomas of Aquinas,2 and which, in the 1850s, had been reformulated as a principle of taxation by Francesco Ferrara.3