The money that the state needs to fulfil its duties, for instance, providing public services, guaranteeing general interest public services or even public investments, doesn’t grow on trees. Rather, in most countries, taxes are the main source of government revenue to finance public functions at all levels. Tax evasion or avoidance isn’t just unfair; it robs the community of urgently needed financial resources.
The effect of taxes can also be to provision. Because the state can use them to promote socially and ecologically sustainable action by, for example, favouring the expansion of renewable energies through taxation or imposing a tax on emissions of climate-damaging carbon dioxide. It can also tax higher incomes and lofty inheritances and wealth more heavily in order to reduce social inequality. An unfair tax system, on the other hand, widens the social gap – not only endangering democracy and societal cohesion but also weakening economic development.
A fair tax policy is characterised by high earners bearing a greater tax burden, which means that those who have more take on more responsibility in financing the community. This maxim stands in contradiction to tax cuts in favour of higher incomes and wealth. A fair tax system also creates transparency and prevents tax avoidance, both nationally and internationally. Wherever undesirable developments are evident, reforms are therefore in order – not only in Germany but also in other countries in Europe and the rest of the world.