TH majority, inequities

Efforts to Achieve Fairness.
Because no single form of wealth is a perfect indicator of taxpayer ability to pay, most modern nations try to diversify their tax systems. Many people think of ability to pay largely in terms of income. This assumption, however, is losing ground as the inequities in modern income tax systems become increasingly apparent. The property tax has also come under considerable criticism, particularly in the U.S. A comprehensive form of taxation on consumption expenditures has gained support among tax specialists, but public acceptance has been lacking.

No tax is levied with perfect evenness or on a completely comprehensive base; its burden inevitably falls more heavily on some taxpayers than on others. The exemptions, exceptions, and other loopholes in tax laws are partly the result of humanitarian concern for those who might be overburdened; partly, they reflect political pressures; and partly, they come from administrative inefficiency or inability to deal with the extremely complex tax structure. By using a variety of taxes, governments can spread out the inequities and mitigate their impact.

As pressure on revenue systems rises and taxpayers chafe under perceived inequities in the most heavily used taxes, concomitantly interest grows in levies designed to achieve fairness in terms of benefits received. Aside from simple user charges such as public golf course greens fees and city marina boat-docking fees (which may be thought of more as prices than as taxes), the benefits standard is apparent in many major levies. In this category are included gasoline taxes that are earmarked for road maintenance and construction; business levies collected to provide unemployment insurance; and social security taxes allocated to worker casualty-insurance and retirement funds. The effectiveness of earmarking is a much disputed issue, but it tends to appeal to politicians. Although earmarking can make raising new revenue easier, it can also create budgetary distortions, especially in times of economic stress, when the general fund may be in need while special funds are more than adequately filled.