When tax policy becomes too toxic

I already spoke about fiscal policies and the need for them in my earlier blog post (Fiscal policies), and thus taxation being one of the ways in which governments obtain revenue. It shouldn't come at a surprise that tax policy is hotly contested, especially since left wing and right wing parties oppose one another in the role of taxation.

At the same time, there is debate even within the same political party on optimal tax policies. During the recent presidential campaign, I remember the Democrats discussing how they would require college students to begin paying taxes on their future potential earnings, before they signed a job contract and thus began receiving any salary. That was an utter head scratcher for me, and it almost seemed as if they wanted to penalise individuals that opted to go to college. It was a detrimental policy suggestion to say the least, and I am guessing college students probably got a whiff of the toxic tax policy suggestion.

It also reminded me of interactions I had with a service provider a number of years ago, where I wanted a subscription to get access to their content. During a particular price negotiation meeting, one of the sales people mentioned an astonishingly large price tag (in the tens of thousands of dollars) for a comprehensive subscription, and I instantly went quiet. They then ensued to explain away the large fee by mentioning, they know I will obtain a job with a high salary using the content to which I will have access through them. The level of certainty they seemed to place on my career prospects was a bit perplexing. How can they speak as if it were a sure thing?

Regardless, requiring people without current or future financial security to cough up large quantities of fees upfront, in the name of equality/ redistribution is not the way to go. It is entirely possible to devise tax policy objectives which are progressive without a castigating effect. Such type of policy making is surely only going to result in losses and a lack of popularity amongst the people.