Taxing the Working Poor
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Taxing the Working Poor

The Political Origins and Economic Consequences of Taxing Low Wages

Achim Kemmerling

In most industrialized countries the tax burden of poor people has increased dramatically over the last few decades. This book analyses both the political origins of this increase and its consequences for the labour market.
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Chapter 2: A Comparative Welfare State Analysis of Tax Mixes

Achim Kemmerling

Extract

2. A comparative welfare state analysis of tax mixes to tax – about 1300 taxen to assess, put a tax on; borrowed from Old French taxer, learned borrowing from Medieval Latin taxare, from Latin, and borrowed directly into English from Latin taxare evaluate, estimate, assess, handle, probably a frequent form of tangere to touch. (Barnhart, 1988: 1118) (be-)steuern – steuern ‘mit dem Steuer lenken’, [. . .] stiuren ‘lenken, leiten, (unter)stützen, helfen, beschenken, ausstatten, eine Abgabe entrichten, [. . .]’ stiuren ‘in eine Richtung bringen, lenken’, [. . .] stiuren/stieren ‘steuern, richten’. (Pfeifer et al., 1993: 1359)1 The ultimate question of this book is simply why national governments differ in taxing (low-wage) labour. For an answer we first need to know what choices governments have when they decide how to tax labour. Second, we need to know what shapes political actors’ preferences for different forms of taxation. In a political economy tradition, the latter will depend on the basic functions of taxation in a society, and the differences between different tax forms in performing these functions. This calls for conceptual work, and for ‘taxonomy’ in particular. A look into the etymological history of the word ‘taxation’ may hence be doubly illuminative. Comparing the English and German etymology of the word ‘tax’, ‘taxation’, as the two quotes from above show, has two different roots. In one perspective, taxes are used to levy resources in order to pursue other policies. Hence, taxes are merely the means for achieving different goals, and should be considered as political and economic...

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