Emil Sax, Die Progressivsteuer (1892)

Emil Sax’s German-language essay examines the justification of progressive taxation and the limits of determining its rates. Moving from criticism of sacrifice and ability-to-pay theories to subjective value, Sax argues that contributions should be equivalent in their value to different taxpayers. Progression follows where the subjective value of money declines faster than income rises, but this principle cannot establish an exact numerical schedule.

Sax distinguishes practical judgment from theoretical explanation:

Die Menschen können zwar praktisch richtig vorgehen, ohne sich einer Theorie ihres Handelns bewusst zu sein.

English translation: Men can indeed proceed correctly in practice without being conscious of a theory of their action.

Successful fiscal practice does not establish the validity of its stated rationale. Sax also distinguishes progressive income taxation from progression in the tax system as a whole. A progressive income tax may merely compensate for indirect taxes that weigh more heavily on poorer households; several taxes may produce progression collectively. The object of explanation is therefore the combined burden, not necessarily any single schedule.

The first part scrutinizes conventional justifications:

Am bequemsten machte sich die principielle Begründung der Steuerprogression nach der landläufigen Opfertheorie. Die oberste Prämisse bildete der Satz, dass die Steuer Allen das gleiche Opfer auferlegen, für Alle „thunlichst gleich empfindlich“ sein müsse.

English translation: The most convenient way of grounding tax progression in principle was by the current sacrifice theory. The supreme premise was the proposition that the tax must impose the same sacrifice on all, must be "as nearly equally perceptible as practicable" for all.

Equal sacrifice cannot be proved simply by observing that rich taxpayers surrender luxuries while poor taxpayers surrender necessities: the quantities surrendered differ too. Robert Meyer’s ranking of needs supplies relevant premises without adequately demonstrating progression. Pierson and Bok refine sacrifice theory by relating the loss imposed by taxation to each taxpayer’s total enjoyment. Yet Cohen Stuart’s counterexamples show that diminishing marginal utility alone can support progressive, proportional, or declining rates. A general tendency in valuation does not uniquely determine a fiscal rule.

Sax also challenges arguments that supplement an insufficient demonstration with another justification:

Wenn man einem Argumente sofort den Nachsatz beifügt: „Uebrigens ist das Behauptete schon aus diesem oder jenem anderen Grunde ersichtlich,“ so pflegt das Erstangeführte nicht besonders überzeugend zu sein.

English translation: If one at once appends to an argument the rider, "Besides, what is asserted is already evident on this or that other ground," then the thing first adduced is usually not particularly convincing.

The difficulty is substantive: proportional sacrifice itself requires justification, while the treatment of subsistence changes calculations of total utility. Ability-to-pay theories either return to sacrifice or assume proportional taxation of income remaining after subsistence. Neither an appeal to justice nor exemption for those living at subsistence proves that an identical deduction should apply to every income. Progression generated by such a deduction also rapidly weakens as income increases.

The second part asks what can be known about declining marginal utility. Sax rejects the inference that agreement among calculations based on hypothetical utility curves establishes a valid practical schedule. His alternative is qualitative: physical subsistence, culturally necessary living standards, class-specific requirements, habitual comforts, and luxury form broad groups of decreasing urgency. Initially, urgency falls faster than the inverse growth of income. Less urgent needs, however, become more numerous and absorb larger sums, moderating that decline. Introspection, conduct, and shared judgments may support comparisons without supplying precise numerical measures.

The final part reconstructs taxation as an allocation to collective needs, which are themselves needs of individuals. Taxes are not simply losses imposed from outside economic life. Under informed collective commitment and restrained egoism, individuals would contribute according to subjective valuations, conditional on comparable contributions by others. Equivalence concerns taxpayers’ contributions relative to one another, not a direct exchange between each payment and the services received. Justice describes the economically appropriate outcome rather than independently explaining it.

If monetary value declined exactly inversely with income, equivalent contributions would imply proportional taxation. Sax’s proposed stronger initial decline instead supports progression across broad income groups. Progression should nevertheless weaken irregularly and ultimately yield to proportionality at high incomes. Its detailed course must emerge through representative deliberation, complaints, and adjustment, with household-budget evidence helping coordinate direct and indirect burdens.

Sax closes by distinguishing physical subsistence from a social minimum whose exemption depends on collective solidarity, and by considering dependants, illness, and provision for the future. His contribution joins marginalist valuation to fiscal institutions while resisting spurious mathematical precision. Its central tension is that the positive case for progression depends on qualitative judgments about needs and on political institutions capable of translating those judgments into equivalent burdens.