Emil Sax, Die Wertungstheorie der Steuer (1924)

Emil Sax’s German-language Die Wertungstheorie der Steuer (1924) develops taxation as a process of collective economic valuation. Revisiting his earlier theory and competing fiscal explanations, Sax connects the scale of public expenditure with the distribution of its costs. Neither state coercion nor an analogy with market exchange adequately explains taxation: public purposes must be evaluated against the private satisfactions displaced by their financing.

The methodological difficulty is to extend economic reasoning beyond its original domain:

Die ökonomischen Grundbegriffe und Grundgesetze waren bis dahin aus den Erscheinungen der Privatwirtschaft abgeleitet worden.

English translation: The fundamental economic concepts and fundamental laws had until then been derived from the phenomena of the private economy.

Sax does not simply transfer individual exchange to the state. He rejects the conception of the state as an autonomous being with purposes independent of its members, while recognizing political authority’s distinctive role. Collective institutions organize individual actions, but coercion does not remove scarcity or the need to compare alternative uses of resources. Class domination can distort fiscal relations without furnishing their universal economic explanation.

This distinction also limits fiscal theory’s scope:

Nur eine gewisse Kategorie von staatlichen Betätigungen bedarf der wirtschaftlichen Erklärung, nämlich diejenigen, welche die Wirtschaft selbst zum Objekte haben.

English translation: Only a certain category of state activities requires economic explanation, namely those which have the economy itself as their object.

Political and social processes establish collective purposes; valuation theory addresses the economic relations involved in carrying them out. Sax thus distinguishes an explanation of public finance from a comprehensive theory of the state.

A central revision concerns collective needs. Sax acknowledges that his earlier account too readily assimilated them to individually experienced needs. Where public activity yields identifiable personal benefits, individuals can compare these with private alternatives. With genuinely collective purposes, however, personal shares of utility cannot be isolated in the same way. Security, justice, and disease prevention require judgments about common life rather than calculations of each person’s separate return.

The underlying logic remains a ranking of ends and the resources needed to achieve them:

Demgemäß zieht man auch ein Gut, von dessen Besitz und Verwendung die Erreichung des erstgedachten Zweckes abhängt, einem Gute vor, welches dem anderen Zwecke dient.

English translation: Accordingly, one also prefers a good upon whose possession and employment the attainment of the first-mentioned purpose depends to a good which serves the other purpose.

For taxation, this comparison becomes a Gesamtwertung, or collective appraisal. Public expenditure displaces private satisfactions, while reductions in expenditure forgo public purposes. An economically appropriate arrangement balances these alternatives without sacrificing more important ends to less important ones. Expenditure therefore cannot be treated as a fixed requirement whose distribution among taxpayers is merely a subsequent problem.

Sax’s classification of revenues clarifies taxation’s distinctive place. Public-enterprise prices, fees, and assessments permit different degrees of reference to identifiable benefits and beneficiaries. Taxation finances collective benefits whose individual shares cannot be separated. The relevant comparison concerns both the value of resources in their intended use and the value of the uses relinquished.

Distribution enters this valuation through what Sax calls mutualism. Participants share an interest in collective provision while resisting the transfer of others’ costs onto themselves. The resulting demand is for equivalence in the subjective value of contributions, not equality of money payments. Total expenditure and individual burdens condition one another: the distribution of payments determines which private satisfactions are lost and consequently affects the acceptable scale of public provision.

Because interpersonal valuations cannot be measured exactly, Sax relies on approximate judgments informed by resources and circumstances, including household needs, illness, age, and working conditions. Mutual tolerance makes practical agreement possible without precise psychological measurement. His theory nevertheless distinguishes ordinary revenue provision from taxation primarily directed toward confiscation or other policy objectives.

The controversies with Wicksell and Lindahl sharpen this argument. Sax denies that an individually measurable marginal utility of collective services can generally supply a tax-price. Against sacrifice and ability-to-pay approaches, he seeks to explain both the demand for equivalent burdens and its connection to expenditure. Progression follows where the value of additional resources declines sufficiently as holdings increase, but concerns the combined burden rather than necessarily each separate tax. No universal mathematical schedule results. The work treats expenditure, distribution, and collective judgment as interdependent parts of one fiscal process, while retaining a tension between explaining actual taxation and specifying economically appropriate taxation.