The Tax Trap

"The State cannot cease to be a class State so long as its public finances remain class-bound at every level,” declared Rudolf Goldscheid, an Austrian novelist, economist, and socialist, in his 1925 essay “A Sociological Approach to Problems of Public Finance.” For Goldscheid, this binding took the form of the state’s fiscal dependence on taxes drawn from the incomes and profits of the wealthy. While liberals and social democrats waxed rhapsodic over the social programs that could be funded via progressive taxation, Goldscheid cautioned that this arrangement provided their opponents with the fiscal leverage needed to veto those very policies.