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Taxation and Democracy
WOLFGANG SCHON*
INTRODUCTION
This Article is meant to be a contribution to comparative constitu-

tional law and policy in the area of taxation. It is devoted to the rela-
tionship between taxation and democratic decision-making. The
starting point is the assumption that the democratic process-in par-
ticular the general franchise and the leading role of parliaments and
similar legislative bodies-forms the central building block to protect
taxpayers from excessive or inequitable taxation. Throughout, the
overlap of the persons who determine democratic inputs, the persons
who bear the burden of taxation, and the persons who enjoy the bene-
fit of public expenditure shall be referred to as "congruence."' The
import of congruence has been firmly rooted in political philosophy
since the days of Locke and Montesquieu and has been at the core of
major historic events like the founding of the United States in 1776
and the French Revolution in 1789. Over the past 200 years, the state-
ment "no taxation without representation" has been globally accepted
and explicitly enshrined in widespread constitutional language.
* Director, Max Planck Institute for Tax Law and Public Finance, Honorary Professor,
Munich University, Global Professor of Tax Law, NYU School of Law. This Article is an
enlarged version of the author's Max Weber Lecture given at the European University
Institute on October 11, 2017; it has further been presented at the conference on tax
competition celebrating the Seventy-Fifth Anniversary of the Tax Institute at the
University of Cologne in October 2017, at the Tax Policy Colloquium at NYU School of
Law in April 2018, and at the Maarten J. Ellis Leiden Graduation Lecture on International
Tax Law in August 2018. I am grateful to those who granted me advice, comment,
encouragement, and inspiration including hosts and participants of the above-mentioned
academic events: Lily Batchelder, Richard Bellamy, Stephen Daly, Charles Delmotte,
Peter Diamond, Stefan Grundmann, Johanna Hey, Mitchell Kane, Ariel Jurow Kleiman,
Kai Konrad, Yvette Lind, Liam Murphy, Christine Osterloh-Konrad, Alex Raskolnikov,
Kees van Raad, Carina Schwarz, Ayelet Shachar, Daniel Shaviro, Johanna Stark, and Mats
Tjernberg. The usual disclaimer applies.
I The term congruence has been adopted from the work of Wallace Oates, who applied
the term in the context of fiscal federalism specifically. See Wallace E. Oates, Fiscal Feder-
alism 37 (1972); see also Charles B. Blankart, Offentliche Finanzen in der Demokratie
[Public Finance Office] 86-89 (9th ed. 2017). A similar idea in the fiscal federalism litera-
ture is captured by Mancur Olson's use of the term equivalence. Mancur Olson Jr., The
Principle of "Fiscal Equivalence": The Division of Responsibilities Among Different
Levels of Government, 59 Am. Econ. Rev. 479, 483 (1969); see also Mancur Olson Jr.,
Toward a More General Theory of Governmental Structure, 76 Am. Econ. Rev. 120, 123-
24 (1986).
235
236 TAX LAW REVIEW [Vol. 72:
Parts I and II of this Article describe the historical commitments to
the notion of congruence as well as the erosion of congruence, as a
practical matter, based on the evolution of economic and political con-
ditions over time. The Article then turns to analyze three basic issues
regarding the actual realities of congruence, as manifest in current do-
mestic and global conditions. The analysis begins with a discussion of
isolated domestic issues, then proceeds to analyze the complications
that arise under globalization.
First, in the wholly domestic context the question is whether demo-
cratic procedures as established around the world are sufficient to
protect individual taxpayers or whether one requires material consti-
tutional constraints on the content of tax law. From a comparative
perspective, constitutional law and practice differ widely in this re-
spect. Most European countries, but also Latin American countries,
have endorsed substantive principles of taxation under their respec-
tive constitutional laws. 2 These include general instruments like the
protection of property against excessive taxation and the equal treat-
ment of taxpayers but also specific provisions prescribing adherence
to the ability-to-pay principle or the establishment of a progressive tax
system. These material principles work as counter-majoritarian obsta-
cles to tax legislation, making the validity of a tax law dependent on
its content. At the opposite end of the spectrum, in the United King-
dom or in the United States, democratic decision-making in the area
of taxation is hardly constrained by any material constitutional limita-
tions. Part III of this Article explores the historical trajectories that
have led to these different approaches and tries to evaluate their re-
spective merits. This requires a deep exploration of fundamental ele-
ments of the political system, including the justification of taxation as
such, the relationship between the citizens and the state, and the rela-
tionship between the concepts of private property and community-
wide solidarity. The basic conclusion here is that a normative case for
material constitutional constraints can be defended given the substan-
tial erosion of congruence observed in the domestic sphere over time.
Second, the migration and movement of individuals under condi-
tions of globalization places increased strain on congruence. Individu-
als move in the current economy for many reasons that have nothing
to do with taxation. But the consequences for taxation and democracy
are profound. Part IV of this Article analyzes the "mismatches" be-
tween territorial and political allegiance that become visible once we
recognize the coexistence of multiple tax jurisdictions composed of
multiple citizenries. Most constitutions around the world provide that
2 See notes 15, 44, 45, 44, 92, 93, and 110.
2019] TAXATION AND DEMOCRACY 237
voting rights are attached to citizenship. 3 But most countries do not
tax their own nationals when they live abroad. There are two broad
ways to counter the erosion of congruence here. One could attempt to
achieve greater alignment of taxation with voting rights. This ap-
proach, in turn, has two manifestations. There is the question of
whether countries should assert greater taxing claims over (voting)
nonresident citizens. And, there is the question of whether countries
should grant greater voting rights to (taxpaying) resident noncitizens.
Alternatively, in the absence of achieving greater congruence, there is
the question of whether nonvoting taxpayers should be protected
against excessive or inequitable taxation by material principles of con-
stitutional law. Again, the conclusion reached here is that material
constitutional constraints can be justified in these circumstances.
Third, the tax-motivated movement of individuals and capital raises
distinctive challenges for congruence. Jurisdictions frequently engage
in purposeful fiscal policies of tax competition to lure foreign individ-
uals and capital. Foreign individuals and capital (frequently owned by
multinational companies) may respond accordingly but will typically
lack voting rights in their host countries. Part V analyzes this seeming
breakdown in congruence. The distinct element here is that the rele-
vant taxpayers are, by definition, mobile and tax sensitive. Thus, they
can call on self-help measures in the face of excessive taxation. For
4
these taxpayers, the exit option can substitute for voice. The widely
used parlance of citizens and companies "voting with their feet"
points directly to the impact of cross-border movements on the demo-
cratic process. 5 Here, we see the breakdown in congruence inverted.
The original concern dating back to the Enlightenment philosophers
was that the unrepresented would be over-taxed. With globalization
and taxpayer mobility, the concern evolves such that the unrepre-
sented (because typically more mobile on average) will be under-
taxed.
Again, this brings up the issue of material constitutional constraints.
If mobile taxpayers are under-taxed, then it is the body of immobile
taxpayers who will have to make up the difference. Although these
taxpayers may have ample democratic representation, such voice may
be inadequate to protect their interests. This invites the question of
whether material constitutional constraints should limit the scope of
discretion granted to legislators to give in to the pressure of mobile
capital and mobile individuals. Such legislation may result in tax bene-
3 Voting rights are the "crucial mark of citizenship." Richard Bellamy, Citizenship: A
Very Short Introduction 22 (2008).
4 See Albert 0. Hirschman, Exit, Voice, and Loyalty 21 (1970).
5 Charles A. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416 (1956).
fits for powerful groups. These benefits may be out of sync with the
principle of equality of taxation. From an international perspective,
tax privileges that were meant to have been abandoned long ago
under domestic tax law seem to be on the rise again. Given the pres-
sures of globalization, though, it is unlikely that domestic constitu-
tional constraints could be an effective counterweight to this
phenomenon.
II. CONGRUENCE: TAXATION, REPRESENTATION, AND PuBLIc

SPENDING
Both from a historical and a comparative perspective, the starting

point for any debate on taxation and democracy is the well-known
claim "No taxation without representation!" This world-famous battle
cry stemming from the American War of Independence against British
oppression springs to mind immediately when we start thinking about
the relationship between taxation and democracy. Taxation shall be
legitimized by the people's consent. To phrase it differently, the
mandatory character of the tax shall be mitigated by the voluntary
dimension of (parliamentary) representation. Similar demands have
been raised in manifold historical situations. The agreement on the
Magna Carta in 12156 and the enactment of the Bill of Rights after the
Glorious Revolution in 16897 successfully limited the taxing power of
the Kings of England. The convention of the ttats G6ndraux in
1789-the first time after 1614-was the starting point of the French
Revolution, driven by the monarch's need to gain approval of his fis-
cal plans by the three Estates of the Kingdom." In Germany, the as-
cent of constitutional monarchy during the nineteenth century circled
to a large extent around the fiscal and budgetary power game between
the rulers and the propertied classes. 9
6 Magna Carta, 1 12 (1215), https://www.bl.uk/magna-carta/articles/magna-carta-english-

translation ("No 'scutage' nor 'aid' may be levied in our kingdom without its general
consent. . . .").
7 English Bill of Rights, 1 Will. 3 (1689), http://avalon.law.yale.edul17th-century/en-
gland.asp ("That levying money for or to the use of the Crown by pretence [sic] of preroga-
tive, without grant of Parliament, for longer time, or in other manner than the same is or
shall be granted, is illegal.").
8 Benoit Jean-Antoine, Les normes constitutionelles financibres en droit frangais de
1789 A nos jours [Constitutional Norms in French Financial Law from 1789 to Present] 9
(2010); see Thomas J. Sargent & Frangois R. Velde, Macroeconomic Features of the French
Revolution, 103 J. Pol. Econ. 474 (1995) (providing a "political economy" account of the
revolutionary events of 1789).
9 Werner Heun, Staatshaushalt und Staatsleitung [State Budget and State Leadership]
54-65 (1989); see also Isaac William Martin & Monica Prasad, Taxes and Fiscal Sociology,
40 Ann. Rev. Soc. 331, 337 (2014) (providing a review of whether fiscal issues drive democ-
racy-building in a similar fashion in today's developing world).
Today, the link between democratic decision-making and the fiscal
powers of the state, or what is termed congruence throughout this Ar-
ticle, is taken for granted and enshrined in most constitutions of the
world. In the United States, only Congress has the power to establish
federal taxes. More specifically, the Origination Clause provides that
"All Bills for raising Revenue shall originate in the House of Repre-
sentatives[.]"1o Since 1787, in order to rest legislative power in fiscal
matters with the institution closest to the American people, neither
the President nor the U.S. Senate has been entitled to initiate the leg-
islative process."
Two years later, in 1789, the French Declaration of Human and
Civil Rights established the rule that, "Each citizen has the right to
ascertain, by himself or through his representatives, the need for a
public tax, to consent to it freely, to know the uses to which it is put,
12
and to determine the proportion, basis, collection, and duration."
The French constitutions of the revolutionary age stuck to these prin-
ciples that safely survived the restorative periods of the early nine-
teenth century without fundamental changes. 13 In a similar vein, but
in a more hesitant fashion, the German Empire's first draft constitu-
1o U.S. Const. art. I, § 7.

11 J. Michael Medina, The Origination Clause in the American Constitution: A Compar-
ative Survey, 23 Tulsa L. Rev. 165, 170-71 (1987); Priscilla H. M. Zotti & Nicholas M.
Schmitz, The Origination Clause: Meaning, Precedent, and Theory from the 12th to 21st
Century, 3 Brit. J. Am. Legal Stud. 71, 73 (2012).
12 "All citizens have the right to participate in the establishment of taxes, to watch over
the employment of them, and to demand an account of them to be rendered ... " D6clara-
tion des Droits de l'Homme et du Citoyen [Declaration of the Rights of Man and of the
Citizen], art. 14 (Fr. 1789), https://www.legifrance.gouv.fr/Droit-francais/Constitution/Dec-
789
laration-des-Droits-de-l-Homme-et-du-Citoyen-de-1 (translation by author); see Jean-
Antoine, note 8.
13 1793 Const. art. 1 ("Public contributions shall be deliberated upon and fixed annually
by the legislative body, and unless expressly renewed, they may be effective only until the
last day of the following session.") (translation by author). The restorative Constitutional
Charter of June 14, 1814, strengthened the Royal Prerogative without fundamentally di-
minishing the position of the House of Deputies. 1793 Const. art. 47 ("The Chamber of
Deputies receives all proposals in regard to taxes; only after these proposals have been
accepted can they be carried to the Chamber of Peers.") (translation by author); see also
1793 Const. art. 48 ("No tax can be imposed or collected, unless it has been consented by
the two chambers and sanctioned by the king.") (translation by author); 1793 Const. art. 49
("The land tax is consented to only for one year. Indirect taxes can be established for
several years.") (translation by author). A nearly identical wording can be found in articles
39 and 40 of the Constitutional Charter of August 14, 1830. In the Second Republic's 1848
Constitution, a more revolutionary language was reestablished: "All taxes are imposed for
the common good. Everyone is to contribute in proportion to his means and fortune." 1848
Const. art. 15 (translation by author); see also 1848 Const. art. 16 ("No tax can be levied or
collected except by virtue of the law.") (translation by author); 1848 Const. art. 17 ("Direct
taxation is only consented to for one year. Indirect taxes can be consented to for several
years.") (translation by author).
tion of 1849, the "Paulskirchenverfassung," opted for shared legisla-
tion of the King and the Chambers of Parliament in fiscal matters. 14
The twentieth century has seen the rise of nearly uniform constitu-
tional language around the world confirming the people's ultimate
power in the area of taxation. But it is worth noting that the founda-
tion of the principle of democracy in the area of taxation runs deeper
than the generally accepted notion that all acts of state vis-A-vis the
individual citizen shall be covered by a legal basis and that this legal
basis shall be traced back to a voluntary act by the people themselves
or their elected representatives.
First of all, it is widely accepted that in fiscal matters, formal legisla-
tion by the legislature itself is required to lay out the substantive ele-
ments of tax law.15 This power must not be delegated to other
institutions-for example, the executive branch of government.16
Secondly, the taxing power of the democratically elected legislature
is complemented by the power of the same legislature to pass the
state's budget. This ensures that both the revenue side and the expen-
diture side of the public sector are under the control of the people and
their representatives respectively. The legislature holds, to use a
phrase from U.S. constitutional practice dating back to James
Madison's contributions to the Federalist Papers, the "power of the
purse. "17
14 Simon Kempny, Die Staatsfinanzierung nach der Paulskirchenverfassung [The Public

Finance After Paulskirchenverfassung] 55 (2011).
15 See, e.g., Grundloven [Constitution] May 28, 1953 § 43 (Den.); Suomen perustuslaki
[Constitution] Mar. 1, 2000 § 61 (Fin.); 1958 Const. art. 34 (Fr.); Constitution du Grand-
Duch6 de Luxembourg [Constitution] Oct. 17, 1868, art. 99 (Lux.); Constituiqgo Politica da
Repdblica Portuguesa [Constitution], Apr. 25, 1974, art. 106 § 2 (Port.). For a recent court
case on article 23 of the Constitution of Italy, see Corte Cost., 15 aprile 2015, n. 20, G. U.
(It.).
16 Andreas Kallergis, La comp6tence fiscale [The Tax Jurisdiction] paras. 80-97 (2018).
In a paradigmatic fashion, article 127 of the 1999 Swiss Constitution provides that "the
design of taxes, in particular the definition of taxable persons, the object of the tax and the
measurement of the tax base, has to be set by the legislator itself, at least with regard to its
main features." Bundesverfassung [BV] [Constitution] Apr. 18, 1999, art. 127 (translation
by author). For a comparison between the German and the Swiss understanding of this
principle, see Christian Waldhoff, Verfassungsrechtliche Vorgaben fur die
Steuergesetzgebung im Vergleich Deutschland-Schweiz [Comparison of the Constitu-
tional Requirements for Tax Legislation in Germany and Switzerland] 110-35 (1997). This
principle has even been the subject of recent extensive debate in China's National People's
Congress, addressing the existing practice of Chinese administrative bodies to introduce
new levies by themselves. According to the new wording of China's Legislation Law as
amended in 2015, "[t]he establishment of any category of tax, determination of tax rates,
tax collection administration, and other basic taxation rules" have to be determined by the
legislature itself. Legislation Law of the People's Republic of China (promulgated by the
Ministry of Defense, Mar. 15, 2015) art. 8, ¶ 6.
17 The Federalist No. 58 (James Madison).
2019]1 TAXATION AND DEMOCRACY 241
1II. THE EROSION OF CONGRUENCIE
It is interesting to see that the apparently happy interaction be-

tween "taxation" and "representation" doesn't fully hold when we
take a closer look at political theory and political reality. This is true
both at the domestic level and in the international context.
A. Domestic Erosion of Congruence and the Call for Redistribution

The reason for conflict at the domestic level lies in the fact that the
beneficial character of the link between those who vote on the tax,
those who pay the tax, and those who enjoy the spending of the tax is
to a large extent only true for the community in question as an aggre-
gate. But for the individual taxpayer within any given community, this
relationship will typically not hold. With homogeneity among the citi-
zenry eligible to vote and required to pay taxes, this distinction may
not make much of a difference. As the franchise and the reach of the
tax system expand to include a more diverse range of citizens, how-
ever, this is no longer true. Taxation is not a simple quid pro quo for
an individual benefit like a user's fee or a social security contribution,
but an "unrequited" financing tool for public goods and redistributive
measures.18 Asymmetrical effects wil be not the exception but the
rule. Some taxpayers will win; others will lose. Public goods will be
enjoyed with different intensity by the members of the community of
taxpayers. Redistribution by its very definition reallocates wealth
among taxpayers. Thus, any tax, which might conceptually be labeled
a voluntary transfer at the aggregate level, can be characterized as a
mandatory taking at the individual level. 19 This leads to the question
of whether individual taxpayers have to accept any burden imposed
on them on the basis of democratic procedures, such as financing pub-
lic goods they are not interested in or implementing redistributive pol-
icies to their detriment.
This issue has been addressed by economists Daron Acemoglu and
James A. Robinson in their magisterial study Economic Origins of
Dictatorshipand Democracy.20 The starting point of their findings is
the assumption that in any given country we find a conflict between
18 See OECD, Revenue Statistics 1965-2016, at 11 (2017) ("[T]axes are defined as com-
pulsory, unrequited payments to general government.").
19 See Nicolas Delalande, Les batailles de l'imp6t: consentement et r6sistances de 1789 A
nos jours [The Tax Battles: Consent and Resistance From 1789 to the Present Day] 8-13
(2011) ("Since the French Revolution all governments, or almost all of them, have tried to
conceal the coercive character of taxes to facilitate their social acceptance.") (translation
by author); Richard A. Epstein, Taxation in a Lockean World, 4 Soc. Phil. & Pol'y 49,49-51
(1986).
20 Daron Acemoglu & James A. Robinson, Economic Origins of Dictatorship and De-
mocracy (2006).
the ruling elite ("the rich") and the citizens ("the poor") about the
allocation of wealth within the society. The people press for redistri-
bution from the top to the bottom, while the elites try to defend their
vested rights. 2 1
According to their theory, over time the rich will share some of
their wealth with the poor in order to fend off threats of a revolu-
tion. 22 But the ordinary citizens will not be persuaded by those infor-
mal and revocable transfers in the long run and will demand credible
commitments for the future. The strongest device for a credible com-
mitment is constitutional change. 2 3 Against this background, a move
toward a democratic constitution involving substantial influence of the
whole citizenry of a nation on the legislature will grant the majority of
voters the power to implement a distributive tax system for the fore-
seeable future. From a historical perspective, the concomitant exten-
sion of the franchise throughout the nineteenth century and the rise of
the (progressive) income tax during the same period can be regarded
as but one example of the relationship described under this model. 24
In this world, democratic procedures are not primarily safeguards for
the individual or the people (conceptualized as a homogeneous aggre-
gate of taxpayers) against some autocratic regime. They work, rather,
as tools for the (poor) majority within a society to appropriate the
wealth of the (rich) minority. 25 This invites the question of whether
further constitutional provisions ought to be adopted to protect mi-
21 To quote from Acemoglu & Robinson's exposition: "To facilitate the initial exposition
of our ideas, it is useful to conceive of society as consisting of two groups-the elites and
the citizens-in which the latter are more numerous. Our framework emphasizes that so-
cial choices are inherently conflictual. For example, if elites are the relatively rich individu-
als-for short, the rich-they will be opposed to redistributive taxation; whereas the
citizens, who will be relatively poor-for short, the poor-will be in favor of taxation that
would redistribute resources to them. More generally, politics or social choices that benefit
the elites will be different from those that benefit the citizens. This conflict of social choices
and policies is a central theme of our approach." Id. at 15.
22 For a similar account, see Sharun Mukand & Dani Rodrik, The Political Economy of
Liberal Democracy 3 (Nat'l Bureau of Econ. Research, Working Paper No. 21540, 2015)
(extending the Acemoglu-Robinson model to majority-minority conflicts under ethnic, re-
ligious, and similar cleavages not related to wealth).
23 Under the assumption that the political elite has an incentive to observe the limita-
tions set by the constitution, this leads to specific requirements of "self-enforcement" of
constitutional norms. See James D. Fearon, Self-Enforcing Democracy, 126 Q.J. Econ.
1661, 1665 (2011); Barry R. Weingast, The Political Foundations of Democracy and the
Rule of Law, 91 Am. Pol. Sci. Rev. 245, 251 (1997).
24 Edgar Kiser & Steven M. Karceski, Political Economy of Taxation, 20 Ann. Rev. Pol.
Sci. 75, 79 (2017).
25 Major studies in the field of comparative fiscal history pleading for a cautious case-by-
case approach include Sven Steinmo & Caroline Tolbert, Do Institutions Really Matter?
Taxation in Industrialized Democracies, 31 Comp. Pol. Stud. 165 (1998) and Kenneth
Scheve & David Stasavage, Taxing the Rich 12 (2016).
2019]1 TAXATION AND DEMOCRACY 243
nority interests. This basic question will be analyzed in detail in Part
IV below.
B. Globalization and the Erosion of Congruence

The mobility of both certain individuals and capital broadly under
conditions of globalization places additional, substantial strain on con-
gruence. Dani Rodrik has written about this phenomenon in his
description of the "globalization paradox." 26 Rodrik looks into the fu-
ture of the democratic nation-state, in particular with respect to the
impact of free trade and free capital flows. He builds on a broad tradi-
tion of research on regulatory competition-including tax competi-
tion-and describes the pressures on local policymakers that arise
from their willingness to exploit the benefits of a global market on the
one hand, while retaining full sovereignty in legislative matters on the
other hand. 27 His analysis results in what he calls the "trilemma of
globalization." It states that, "democracy, national sovereignty and
global economic integration are mutually incompatible: we can com-
bine any two of the three, but never have all three simultaneously and
in full." 2 8
For Rodrik, the ongoing worldwide race to the bottom for corpo-
rate tax rates is just one clear example of policymaking being stuck
between the demands of a globalized market for capital and domestic
policy goals of redistribution, environmental protection, and other
public policy goals. States have to decide. They can retain state sover-
eignty and democratic decision-making, but then they have to lock
themselves in and withdraw from the globalized economy. Or they can
shift democratic institutions and decision-making to a higher level, but
then they have to leave the sovereign nation-state behind and go for
"global government." 2 9 Or they can try to exercise state sovereignty in
a globalized world, but then the people will not be able to sustain full
democratic control of domestic policies. The last of these possibilities
is an apt description of much of the status quo. There is no global tax
authority. According to the globalization trilemma, democracy must
give way. As a practical matter, this manifests as an erosion of congru-
26 Dani Rodrik, The Globalization Paradox (2011).

27 For the state of the art of economic research in this area, see Michael Keen & Kai A.
Konrad, The Theory of International Tax Competition and Coordination, 5 Handbook of
Pub. Econ. 257 (2013).
28 The Inescapable Trilemma of the World Economy, Dani Rodrik's Weblog (June 27,
2007, 9:49AM), https://rodrik.typepad.com/dani-rodriks-weblog/2007/06/the-
inescapable.html.
29 For an "International Tax Organization" on the basis of Rodrik's analysis, see
Thomas Rixen, Globalisierung und fiskalische Demokratie [Globalization and Fiscal De-
mocracy], 59 Politische Vierteljahresschrift 103 (2018).
ence on a global scale. Anybody who has witnessed tax policy in
America, Europe, and around the globe in recent years is fully aware
of the enormous pressure tax competition exerts on national tax legis-
lation, going far beyond the corporate tax straight into the world of
personal taxation of high-net-worth individuals and mobile high-
skilled labor. 30 Mobile capital and mobile individuals thus create a sit-
uation in which both labor and capital may be taxed by jurisdictions in
which the owners of these factors may not vote. The question of how
this phenomenon affects the demand for material constitutional con-
straints on the tax law will be addressed in Parts V and VI below.
IV. DOMESTIC TAx LEGISLATION AND CONSTITUTIONAL CONSTRAINrs
The following part of this Article is devoted to the interaction be-

tween democratic decision-making, tax legislation, and material con-
stitutional constraints at the domestic level. It is built on the
distinction between two major trajectories of taxpayer protection that
have evolved over time, which I call protection by "content" and pro-
tection by "consent." While the first concept points to material consti-
tutional principles of taxation that are meant to defend the taxpayer
against excessive or inequitable taxation, the second concept puts the
voluntary dimension of taxation in the foreground.
Countries such as the United Kingdom and the United States em-
phasize the latter concept, relying on representative bodies like Parlia-
ment and Congress to defend taxpayers' rights against the overreach
of the executive branch. Countries such as Germany, on the other
hand, emphasize the concept of protection by content and establish
additional constitutional constraints on tax legislation in order to pro-
tect the individual taxpayer.
The distinction between these trajectories is deeply rooted in the
respective political and philosophical traditions regarding the role of
the state and the fundamental justification of taxation in the first
place. Constitutional theory and practice in countries such as France
or Germany accepts that the mere existence of the state is justified as
such and requires citizens to pay for the state's activities. Common-
law countries, however, do not regard the existence of the state to be
sound without some justification. If that justification is lacking, so too
is the legitimacy of taxation generally.
At first sight, the consent-based approach might seem most tax-
payer protective. At the extreme, countries adopting such an ap-
proach may even contemplate a "government shutdown" to protect
30 Wolfgang Sch6n, Tax Competition in Europe-General Report, in Tax Competition

in Europe 1 (Wolfgang Schdn ed., 2003).
taxpayer interests. Having a closer look, however, it turns out that the
consent-based approach as practiced in the United Kingdom and the
United States runs into problems in the typical case where the govern-
ment is up and running. Once majoritarian rule has been established,
individual consent no longer plays a meaningful role. No individual
can shut down the government alone, of course. This leaves the indi-
vidual without defense as powerful majorities or minorities can easily
take over the political agenda to the detriment of others. From the
perspective of constitutional policy, this suggests that content-based
approaches may in fact be more taxpayer protective, as they contem-
plate material constitutional tools to protect the taxpayer against ex-
cessive and inequitable tax legislation.
In this part of the Article I address four basic points. First, the dis-
tinction between content-based and consent-based understandings of
taxpayer protection is further elaborated and situated within distinct,
long-standing philosophical traditions tracing back to Hobbes (con-
tent) and Locke (consent). Second, I describe plausible constitutional
commitments for these two approaches as a theoretical matter. Third,
the erosion of congruence in the domestic sphere is brought to bear in
a normative assessment of such constitutional commitments. The basic
claim here is that the erosion of congruence bolsters the claim for ma-
terial constitutional constraints. Fourth, I offer a comparative analysis
of the constitutional practice in England, the United States, and Ger-
many. This analysis demonstrates that in these three countries, at
least, current approaches are largely loyal to the commitments of the
historical trajectories out of which the systems emerge, notwithstand-
ing the normative implications of the erosion of congruence.
A. Content Versus Consent: Two Different Concepts of Taxpayer

Protection
Starting from first principles, there are two different ways to think
about taxation, each of which has major implications for the way tax-
payer protection can be conceptualized. One can take the state and its
fiscal needs as a given and try to formulate material principles guiding
fiscal policies, thus establishing a substantive framework for taxpayer
protection. This is what I call taxpayer protection by "content." Or,
one can think of taxation as requiring the involvement of citizens at all
stages, making the mere existence of taxation dependent on demo-
cratic procedures and voluntary acts by the citizenry. This is what I
call taxpayer protection by "consent."
Without claiming to be comprehensive, it seems fair to say that we
can relate both concepts to the two leading political philosophers of
seventeenth-century England: Thomas Hobbes and John Locke. Hob-
bes's work is the starting point for the evolution of protection by con-
tent while Locke's theory of taxation is systematically built on
taxpayers' consent. 31 We can then, with a grain of salt, draw a line
through some centuries of tax policy leading to today's constitutional
conflicts.
1. Protection by Content-The Evolution of Material Tax

Principles 3 2
In Thomas Hobbes's Leviathan 33 the state is not (necessarily) a
democratic state. It may be built on some mythical social contract, but
it does not require ongoing legislation or even confirmation by a rep-
resentative body to exercise its power. The ruler's sovereignty is abso-
lute, and the people have to obey. Taxes are levied without any
voluntary decision-making on the side of the taxpayers. If one accepts
the fundamental necessity to establish a government to secure internal
and external peace, it follows logically that one also accepts the funda-
mental necessity to provide funds for the sovereign power, and this
justifies taxation eo ipso. This line of thinking was met with agreement
on the Continent. 3 4
The sovereign power in Hobbes's world is not (necessarily) con-
strained by democratic institutions, but it is constrained by the mate-
rial requirement:
that Justice be equally administered to all degrees of the

People; that is, that as well the rich, and mighty, as poor and
obscure persons, may be righted of the injuries done
them.... For in this consisteth Equity; to which, as being a
Precept of the Law of Nature, a Soveraign is as much subject,
as any of the meanest of his People. 35
This prevailing role of the principle of equality, still today the "vir-
tue of sovereigns," 36 has consequences for taxation:
31 For an overview of taxation and the Enlightenment, see Jane Frecknall-Hughes, The
Concept of Taxation and the Age of Enlightenment, in 2 Studies in the History of Tax Law
253 (John Tiley ed., 2007).
32 For a thorough analysis of the notion of the "state" in the context of taxation, see
Klaus Vogel, The Justification for Taxation: A Forgotten Question, 33 Am. J. Juris. 19
(1988).
33 2 Thomas Hobbes, Leviathan, ch. XVIII, at 264 (Noel Malcolm ed., Oxford Univ.
Press 2012) (1651).
34 Marc Leroy, Taxation, the State and Society: The Fiscal Sociology of Interventionist
Democracy 127 (2011) (offering the writings of Jacques-B6nigne Bossuet in France as an
example).
35 2 Hobbes, note 33, ch. XXX.
36 Ronald Dworkin, Sovereign Virtue: The Theory and Practice of Equality 6 (2000).
To Equall Justice, appertaineth also the Equall imposition

of Taxes; the Equality whereof dependeth not on the Equal-
ity of riches, but on the Equality of the debt, that every man
oweth to the Common-wealth for his defence.. . . For the
Impositions, that are layd on the People by the Soveraign
Power, are nothing else but the Wages, due to them that hold
the publique Sword, to defend private men in the exercise of
severall Trades, and Callings. . . . Which considered, the
Equality of Imposition, consisteth rather in the Equality of
that which is consumed, than of the riches of the persons that
consume the same. . . . But when the Impositions, are layd
upon those things which men consume, every man payeth
Equally for what he useth. 37
Equality of taxation (according to Hobbes on the basis of "benefit")

is a material standard that tax lawyers know quite well and apply to
this day. For Hobbes this requirement was built on equal justice being
part of natural law (and there has been a lot of debate by modem-day
scholars as to the reasons why this approach has led him to propose a
tax on consumption). 38
Throughout the eighteenth century, the evolution and refinement of
this material tax principle abounded. When Vauban presented the
highly innovative "Dime Royale" (a unitary flat tax on all categories
of income meant to replace the existing thicket of levies) in 1707, he
both confirmed the fundamental obligation of all subjects of the state
to contribute to the King's funds and the allocation of this burden in
39
proportion to the income or the industry of the taxpayers. Moving
fast forward, it suffices to take a short look at Adam Smith's enor-
mously influential "four canons of taxation," which reconfirmed in
1776 the paramount principle of equality of taxation, citing both a
40 This material
benefit-related and a means-related perspective.
benchmark is complemented by his three procedural canons on the
"certainty," the "convenience," and the "economy" of taxation, which
37 2 Hobbes, note 33, ch. XXX. Hobbes further claims that "[t]he subject of every state
ought to contribute towards the support of the government as early as possible in propor-
tion to their respective abilities that is in proportion to the revenue which they respectively
enjoy under the protection of the State. In the observation or neglect of this maxim con-
sists what is called the equality or inequality of taxation." Id.
38 Dudley Jackson, Thomas Hobbes' Theory of Taxation, 21 Pol. Stud. 175 (1973).
39 S6bastien Le Prestre de Vauban, La dime royale, maximes fondamentales de ce sys-
tbme (1707) ("From this necessity, it follows: First, a natural obligation of all subjects to
contribute in proportion to their income or to their industry without anyone being able to
evade this obligation using reasonable means.") (translation by author).
40 2 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, bk.
V, ch. II, pt. II, at 349-52 (Edwin Cannon ed., Univ. of Chi. Press 1976) (1776).
jointly demanded the tax burden to be foreseeable, easy to comply
with, and cheap in regard to administrative costs. Again, taxpayer pro-
tection is of importance, but we find no mention of democratic proce-
dures in this part of his work.4 1 Rather, these tax principles seem to
work well under any form of government, oscillating between
prescripts of natural law, economic justifications, and prudential max-
ims for a monarch who intends to rule both effectively and efficiently.
In a similar vein, German thinkers of the eighteenth century com-
bined the notion of a natural duty of the state's subjects to pay taxes
with the duty of the state to allocate the tax burden according to the
subjects' fiscal capacities. 42
Beyond theoretical thinking, the principle of equality gained enor-
mous political momentum throughout the eighteenth century. It be-
came a highly controversial issue during the bitter fight of the rising
bourgeoisie against fiscal privileges for the nobility and for the
church. 43 This omnipresent source of social conflict made world his-
tory in the run-up to the French Revolution. The French constitutions
of the revolutionary age used unambiguous language in prohibiting
any form of tax privilege for individuals and social classes. 44 This abo-
lition of personal tax exemptions was later copied by constitutional
texts throughout Europe, including Germany's Article 134 of the Con-
stitution of the Weimar Republic. 45 An explicit ban on tax privilege can
still be found in Europe-for example, in the constitutions of Belgium
and Luxembourg. 46
But the fight for equality in taxation went beyond the abolition of
unjustified privilege for certain individuals and social classes. In his
Principles of Political Economy, published in 1848, John Stuart Mill
highlighted the fundamental nature of the principle of equality in the
41 But see his remarks on the status of the American colonies. Id. bk. IV, ch. IV, pt. VII.
42 Johann Heinrich Jung-Stilling, Die Grundlehre der Staatswirtschaft, ein Ele-
mentarbuch fUr Regentensbhne und alle, die sich dem Dienst des Staats und der Gelehr-
samkeit widmen wollen §§ 818--820 (Marburg 1792).
43 Delalande, note 19, at 24-28; see also Rafe Blaufarb, The Politics of Fiscal Privilege in
Provence, 1530s-1830s (2012); Michael Kwass, Privilege and the Politics of Taxation in
Eighteenth-Century France (2000); Gary B. McCollim, Louis XIV's Assault on Privilege:
Nicolas Desmaretz and the Tax on Wealth (2012).
44 Cf. 1793 Const. art. 20 (Fr.); Delalande, note 19, at 29-33.
45 1919 Const. art. 134 (Weimar Republic) (providing that taxes had to be levied "with-
out making distinctions" in order to prohibit any tax privilege for specific social classes or
individuals).
46 La Constitution [Constitution] 1994 Const. art. 172 (Belg.); Constitution du Grand-
Duch6 de Luxembourg [Constitution] art. 101; see also Bundesverfassung
[BV][Constitution] Apr. 18, 1999, art. 127, para. 2 (Switz.).
47
tax area as "it ought to be so in all affairs of government." The tax
system as a whole was meant to be shaped by this notion.
Two major sub-principles of tax equality stand out to this day:
Equality according to the benefits received from the state, and equal-
ity according to the individual capacity to contribute to the common
good. 48 The most prominent manifestation of the latter dimension of
the principle of equality in fiscal matters is the "ability-to-pay" princi-
ple, which rose to worldwide recognition throughout the nineteenth
and the twentieth centuries, widely replacing the "contractarian" view
of a tax as a consideration for a benefit received. 49
In this content-oriented world governed by general principles of
taxation, democratic decision-making is not a self-evident factor. To
the contrary, the more economists and lawyers elaborated on "scien-
tific principles" for taxation at the end of the nineteenth century, the
more skeptical some of them became regarding the value of parlia-
mentary influence. Adolph Wagner, Germany's most prominent polit-
ical economist of the time, viewed the ascent of "Parlamentarismus"
as an inroad for class warfare into the rational process of tax alloca-
tion.50 For these writers, public finance seemed to be the realm of a
scientifically informed "benevolent dictator.""5 But for their counter-
parts, protection by consent became paramount.
47 John Stuart Mill, Principles of Political Economy, bk. V, ch. II, § 2, at 169 (Johnathan
Riley ed., Oxford Univ. Press 1994) (7th ed. 1871).
48 Richard A. Musgrave, The Theory of Public Finance: A Study in Public Economy 61-
115 (1959).
49 For its history in nineteenth-century England, see Martin Daunton, Trusting Levia-
than: The Politics of Taxation in Britain 1799-1914, at 136-61 (2001); for its history in the
United States, see Ajay K. Mehrotra, Making of the Modern American Fiscal State: Law,
Politics, and the Rise of Progressive Taxation, 1877-1929, at 96-118 (2013); for its history in
Germany, see Dieter Birk, Das Leistungsfdhigkeitsprinzip als Mapstab der Steuernormen
(1983). A comparative analysis has been provided by Scheve & Stasavage, note 25, at 26-
33. This Article cannot discuss the material aspects, in particular the fundamental vague-
ness and uncertainty of the concept of "ability-to-pay." See Johan A. Kay & Mervyn A.
King, The British Tax System 89-102 (5th ed. 1990); Wolfgang Gassner & Michael Lang,
Das Leistungsfshigkeitsprinzip im Einkommensteuer- und Kdrperschaftsteuerrecht, in
Verhandlungen des 14. Osterreichischen Juristentages Vol.111/1 (2000); Louis Kaplow, The
Theory of Taxation and Public Economics 404-05 (2008).
50 Adolph Wagner & Hermann Deite, Finanzwissenschaft, vol. III/1, Steuergeschichte
§ 100 (1910).
51 See the critical comment by Knut Wicksell, Finanztheoretiche Untersuchungen nebst
Darstellung und Kritik des Steuerwesens Schwedens 102 (Jena, Verlag von Gustav Fischer
1896).
2. Protection by Consent-Taxes as Voluntary Payments
As I said before, a different line of thinking links the justification of

taxation to the consent of the taxpayer. 5 2 Enjoying good government
and having good tax principles is not enough, as can be read in John
Locke's Second Treatise of Government:
It is true, governments cannot be supported without great

charge, and it is fit every one who enjoys his share of the
protection, should pay out of his estate his proportion for the
maintenance of it. But still it must be with his own consent,
i.e. the consent of the majority, giving it either by them-
selves, or their representatives chosen by them: for if any one
shall claim power to lay and levy taxes on the people by his
own authority, and without such consent of the people, he
thereby invades the fundamental law of property, and sub-
verts the end of government: for what property have I in that
which another may by right take, when he pleases, to
himself?53
Reading Locke from the perspective of modern political economy,

it is apparent that he conflates individual consent by the taxpayer,
whose property is taken, and democratic consensus as afforded by a
majority of the voters. Thus, Locke seems to ignore the erosion of
congruence arising from the conflict between minority and majority
that seems so salient today. For Locke, though, this issue could be
assumed away to a large extent. Firstly, he was only willing to allocate
voting rights to persons if and to the extent to which they actually paid
taxes. In his view, a part of the people is allowed to participate in
legislation solely "in proportion to the assistance which it affords to
the public." 54 In Locke's time, this greatly reduced the number of citi-
zens entitled to participate in political decision-making.5 5 Secondly,
this smallish set looked rather homogeneous to him. It was the landed
gentry.5 6 These landowners presumably showed concurring political
52 For the early history of this concept, see Leroy, note 34, at 115-16 (including his analy-
sis of the unresolved tension between the state's fiscal sovereignty and individual consent
in the writings of Jean Bodin).
53 John Locke, The Second Treatise of Government, ch. XI, § 140, at 74 (C. B. Macpher-
son ed., Hackett Publishing Co. 1980) (1690). The influence of Locke's theory on continen-
tal Europe, in particular the fiscal ideals of the French Revolution, is widely accepted. See
Delalande, note 19, at 26; Jean-Antoine, note 8, § 48.
54 Locke, note 53, ch. XIII, § 158.
55 Customs and excises on goods were not regarded as "taxes" in this sense, which
meant that the fiscal burden on the common man was largely outside the picture.
56 Edward Andrew, Possessive Individualism and Locke's Doctrine on Taxation, 21
Good Soc'y 151 (2012); Edward Andrew, Locke on Consent, Taxation and Representation,
preferences, and the will of the majority of this class represented
pretty accurately the interest of all its members. The potential for con-
flict as to the allocation of the tax burden and the way revenue was
spent was substantially smaller among such a well-connected class of
57
landowners than in modern anonymous and diverse democracies.
The late eighteenth century and the whole nineteenth century, how-
ever, witnessed a constant fight about the enlargement of the
franchise, first from the landowning nobility to the urban bourgeoisie,
and then, at a later stage, from the capitalist businessmen to their em-
ployees.5 8 A constant theme in this period was the concept that voting
rights should be granted in proportion to the amount of tax paid by a
citizen to the state. This carried major implications for the level of
redistribution and also for the size of the public sector and the quan-
59
tity and quality of public goods being provided by the state.
At the U.S. Constitutional Convention in 1787, the issue of multiple
voting rights according to wealth was seriously discussed. In the end,
James Madison convinced the framers of the U.S. Constitution that a
Senate representing the aristocracy of his time-the "landed proprie-
tors"60-would sufficiently serve as a limiting factor to the taxing
power of the House of Representatives. 6 1 In Democracy in America,
Alexis de Tocqueville strongly supported limiting voting rights to the
middle classes who would look for parsimony and efficiency in public
spending. 62 Even John Stuart Mill, a staunch supporter of broad
equality in fiscal matters, not only pleaded in 1861 for a restriction of
voting rights to those who actually pay the tax, he also wanted to take
away any electoral rights from those who lived on public (church) wel-
fare. 6 3 In practice, the function of graduated voting power was ful-
62 Theoria 15 (2015). For a more progressive reading of Locke's writings see Sagit Leviner,
The Normative Underpinnings of Taxation, 13 Nev. L.J. 95 (2012).
57 In Locke's time leading economists believed that not only direct taxes on land but all
other taxes would ultimately fall on the landowners. David Hume, Essays, Moral, Political,
and Literary, pt. II, Essay VIII ("Of Taxes") at 342-43 n.1 (Eugene F. Miller ed., Liberty
Fund rev. ed. 1987) (1777).
5s Daunton, note 49, at 51, 148.
59 The "contractual" nature of tax payments in this period was reinforced by widespread
"earmarking" of contributions to a specific purpose. Kiser & Karceski, note 24, at 82.
60 Notes of the Secret Debates of the Federal Convention of 1787, taken by the Late
Hon Robert Yates, Chief Justice of the State of New York, and One of the Delegates from
That State to the Said Convention, Yale Law School Lillian Goldman Law Library, http://
avalon.Iaw.yale.edu/l8th-century/yates.asp.
61 Noam Chomsky, Requiem for the American Dream: The 10 Principles of Concentra-
tion of Wealth and Power, 1st Principle (2017); Eric A. Posner & E. Glen Weyl, Radical
Markets 86-90 (2018).
62 1 Alexis de Tocqueville, Democracy in America, pt. II, ch. 5, at 199-200 (Harvey C.
Mansfield & Delba Winthrop eds. & trans., Univ. of Chi. Press 2000) (1835).
63 John Stuart Mill, Considerations on Representative Government, ch. VIII, at 169
(Cambridge Univ. Press 2010) (1861).
filled in the United Kingdom by the constitutional status of the House
of Lords. This body only lost its right to veto "money bills" passed by
the House of Commons in 1911 following a political crisis after the
Lords had voted down in 1910 the government's budget in full. 64
Although France and Germany largely adhere to a content-based
approach to taxpayer protection, these countries as well experimented
with various approaches to proportionality during this time. The
French Constitution of 1791 made voting rights dependent on a fiscal
contribution, a limitation to voting that was abolished only in the
1850s. 6 5 In Germany, from 1849 until 1918, the impact of votes on the
elections to the Prussian House of Representatives was built on the
"Dreiklassenwahlrecht," which provided for three separate ballots,
each of them dedicated to the election of one-third of the members of
the House. 66 As each ballot was allocated to one out of three classes
of taxpayers-each of them providing one-third of the overall tax rev-
enue-it granted disproportionate voting power to the rich. At the
same time, elections to the Imperial Diet, which had been established
after German unification in 1871 and held virtually no taxing powers,
followed the "one man, one vote" rule. A male Prussian would have
different voting power depending on which assembly he was voting
for. It is thus not surprising that the Social Democrats turned out to
hold a much larger faction in the Imperial Diet than in the Prussian
House of Representatives. 67
In our time, concepts like the Prussian "Dreiklassenwahlrecht" are
widely ridiculed as an atavistic remnant from bygone days of class
struggle. Today, equality of voting rights irrespective of the size of the
voters' fiscal contributions to the state is accepted as self-evident, the
result of social and moral assumptions about the equal value of human
beings. 68 But one should not overlook that this result stems from "in-
bred value judgment rather than logic." 69 The result is also at odds
64 Parliament Act of 1911, 1 & 2 Geo. 5 c. 13 (Eng.); see also Chris Ballinger, Hedging
and Ditching: The Parliament Act 1911, 30 Parliamentary Hist. 19 (2011).
65 Jean-Antoine, note 8, paras. 600-617 (2010).
66 At the time of its introduction, the "Dreiklassenwahlrecht" was regarded by liberal
politicians to constitute progress when compared to the previous electoral system, which
was built on the notion of different social classes. Erwin von Beckerath, Die Preussische
Klassensteuer und die Geschichte ihrer Reform bis 1851, at 66 (1912), calls it the "victory
of capitalism over feudalism."
67 Thomas Kiihne, Handbuch der Wahlen zum preup3ischen Abgeordnetenhaus 1967-
1918 (1994); Gerhard A. Ritter & Merith Niehuss, Wahlgeschichtliches Arbeitsbuch:
Materialien zur Statistik des Kaiserreiches 1971-1918 (1980).
68 For a theoretical critique, see Steffen Ganghof, Does Public Reason Require Super-
majoritarian Democracy? Liberty, Equality, and History in the Justification of Political
Institutions, 12 Pol. Phil. & Econ. 179 (2012).
69 Musgrave, note 48, at 116. In a similar vein, see F.A. Hayek, The Constitution of
Liberty 160 (Ronald Hamowy ed., Routledge 2011) (1960).
with the basic premise of congruence. From the standpoint of political
economy, these bygone institutional constraints thus made sense inso-
far as they tried to forge a compromise between the necessity to en-
gage in collective action for the common good on the one hand and
the goal to avoid exploitation of the wealthy minority by a rent-seek-
ing majority.7 0
Taking these issues seriously in a manner consistent with the com-
mitments of the consent-based approach, one should consider further
voting mechanisms that might garner modern endorsement. The
founding father of modern political economy and public choice, the
Swedish scholar Knut Wicksell, pleaded in 1896 for a supermajority
requirement in budgetary and fiscal matters.7 1 He proposed that no
fiscally relevant action should be taken unless there was (nearly)
unanimous consent among the representatives of the different social
constituencies. His work laid the conceptual foundations for the pub-
lic choice approach championed since the 1960s by James Buchanan
and his school. Importantly, Wicksell did not put much trust in mate-
rial principles of taxation, in particular the concept of equality, as
tools of taxpayer protection. From his perspective, once broad consen-
sus among the people's representatives had been reached, the delinea-
tion of the tax base and the shaping of the tax rate could have any
form. Moreover, the allocation of the tax burden would also take into
account the asymmetrical distribution of benefits received by the tax-
payers financed from the tax revenue, which for him rendered the
concept of tax equality even more precarious. 72 Wicksell therefore
had a rather critical view of concepts such as tax justice, which seemed
to him vague and subjective. 73 In his world of (near) unanimity, con-
sent fully substitutes for content.
Twentieth- and twenty-first-century history has seen different theo-
retical and practical attempts to establish alternative models of con-
sent-oriented rules for taxpayer protection. 74 Friedrich August von
Hayek proposed a division of competence between a "legislative as-
sembly" responsible for defining the tax base in the long run and a
"governmental assembly" setting the tax rate and the budget on an
70 See Part III.A.

71 Wicksell, note 51, at 110.
72 Id. at 113.
73 Id. at 118 ("Since the resolution has always to produce a positive result here, the same
can, if a vote on the coverage of such expenses has to be taken at all, be passed no different
than by a simple majority; it would still be equally desirable that the majority, when placing
such a burden, would be guided by feelings of justice and fairness; at the same time, it is
difficult to make an appropriate statement for all cases in this regard.") (translation by
author).
74 James M. Buchanan, The Power to Tax: Analytical Foundations of a Fiscal Constitu-
tion 202 (1980).
annual basis.75 Most recently, Eric Posner and E. Glen Weyl presented
the concept of "quadratic voting," which is meant to enable voters to
emphasize their preferences by "buying votes" at a cost rising in a
"quadratic" mode for every additional voting right.76 From a practical
point of view, the (in)famous Proposition 13 in California gained high
visibility when it created the requirement of a supermajority for the
introduction of new taxes.77
Sometimes procedural help for taxpayers similar to a supermajority
requirement comes from increasing the number of decision-making
bodies involved in tax legislation. In the United States the presidential
model of government, which makes successful tax legislation depen-
dent on agreement between the two chambers of the U.S. Congress
and the President, generally helps protect the tax system against
highly volatile attacks.78 To put this in general terms, the more "veto
players" exist under the institutional setup of a country's fiscal consti-
tution, the less leeway exists to increase the level of taxation. 79
The historical evolution of the Lockean consent-based strand shows
that over the past three centuries countries such as the United King-
dom and the United States have routinely developed and considered
mechanisms to protect taxpayers through the vote. Whereas countries
such as France and Germany likewise deployed voting mechanisms to
bolster congruence at various points in their histories, they ultimately
came to see the adoption of substantive constitutional constraints as a
superior defense against exploitation. Why did the United Kingdom
and the United States not follow a similar path? One way of under-
standing this divergence is that it is grounded in a continuing divide
regarding views on the very essence of the state-citizen relationship
and the way in which this manifests itself in differential views about
75 3 F.A. Hayek, Law, Legislation and Liberty 441 (1979).

76 Eric A. Posner & E. Glen Weyl, Radical Markets 80-126 (2018).
77 For a critical assessment, see David Gamage, Coping Through California's Budget
Crises in Light of Proposition 13 and California's Fiscal Constitution, in After the Tax
Revolt: California's Proposition 13 Turns Thirty 54-56 (Jack Citrin & Issac William Martin
eds., 2009).
78 For a comparative empirical analysis of the choice between a purely parliamentarian
and a presidential system, see Torsten Persson & Guido Tabellini, The Economic Effects of
Constitutions 158-69 (2003).
79 Andrew C. Gould & Peter J. Baker, Democracy and Taxation, 5 Ann. Rev. Pol. Sci.
87, 100 (2002); Kiser & Kaceski, note 24. Another trajectory of research has tried to show
that proportional election systems rather than majoritarian election systems produce repre-
sentative bodies furthering redistribution. See Gould & Baker 93. In Germany, the in-
volvement of the Federal Council (representing the subnational "Lnder") in tax
legislation created a powerful "veto player" in fiscal matters. Although the Federal Council
has been established to safeguard the fiscal interests of the "Lander," it factually works for
the benefit of taxpayers as well given the frequent case of the current opposition party in
the Federal Parliament dominating of the Federal Council. See Steffen Ganghof, The Polit-
ics of Income Taxation: A Comparative Analysis 112-37, 141-46 (2006).
the power of the people to shut down the government over fiscal
conflict.
3. The Enduring Divide Between Content and Consent-The

Prospect of "Government Shutdown"
The obligation to pay tax as such is the main difference between the
Hobbesian and the Lockean approach to taxation. The Hobbesian
view is that the obligation arises from the mere fact that the taxpayer
is a subject of the state, irrespective of the form of government in
place. The Lockean view is built on the individual consent given by
taxpayers or their group of peers on a voluntary basis. Although the
Hobbesian view need not be embodied in a democratic state, it may
be. But what happens if citizens, in exercising their voice over fiscal
choices, come to question the very right of the state to be financed?
This problem became topical in the nineteenth century. Its contrasting
theoretical solutions can be found in the writings of two influential
public intellectuals of the time-John Stuart Mill in England and
Friedrich Julius Stahl in Germany-and explain, in part, the continu-
ing vitality of the divide between content-based approaches and con-
sent-based approaches.
In his Principles of Political Economy, starting from a rather
Hobbesian baseline, Mill emphasized the general but equal obliga-
tions of all citizens toward their state. Their contribution should not
reflect any benefit received but an equal sacrifice toward the common
good.80 In a similar vein and only two years earlier, Friedrich Julius
Stahl expressed his concurring view in different words when he laid
out that being a subject of the state justifies in full being subject to
taxation. The very essence of the state leads consequentially to taxa-
tion, not as a quasi-contractual consideration but as an obligation aris-
81
ing from the individual's membership in the nation.
so Mill, note 47, bk. 5, ch. 2, § 2 ("Government must be regarded as so pre-eminently a

concern of all, that to determine who are most interested in it is of no real importance. If a
person or class of persons receive so small a share of the benefit as makes it necessary to
raise that question, there is something else than taxation which is amiss, and the thing to be
done is to remedy the defect, instead of recognizing it and making it a ground for demand-
ing less taxes."); see also John Ramsay McCulloch, A Treatise on the Principles and Practi-
cal Influence of Taxation and the Funding System 1 (London, Longman, Brown, Green
&
Longmans 1845).
81 Friedrich Julius Stahl, Rechts- und Staatslehre auf der Grundlage christlicher Weltan-
schauung, 419 (1849) ("The legal ground for taxes-the reason why a state is entitled to
impose them and the subjects to pay them-is the subjection as such. Just as such monetary
expenditures are necessarily founded in the nature and the aim of the state, so must its
members cover the expenses. The nation provides as a spiritual whole the means for its
calling as a state and each and every one must donate because he is a member of the
nation. Likewise objectionable in this context is the legal ground that the subjects pay the
How does this relate to the fact that both Mill and Stahl accepted
the existence of parliamentary powers in fiscal matters? How did they
solve the conflict between the widely accepted notion that the state as
such deserves to be financed by its citizens a priori and the interest of
the citizens to get involved in the decision-making? John Stuart Mill,
in his Considerationson Representative Government, allocated to the
executive the power to shape the fiscal affairs of the state in the first
place. Thus, it should be up to the King of England to deliver the first
shot. Parliament, on the other side, should not be allowed to make
amendments to the budget or to pursue its own policies by budgetary
means, but crucially Parliament retains a veto power. In the United
States, the power of the legislature extends even further, as the option
of an explicit "government shutdown" provoked by Congress, in its
refusal to pass legislation funding the government, has been regarded
as part and parcel of the fiscal constitution for centuries. 82
For Stahl, who sought to preserve the Prussian monarch's preroga-
tive, even the notion of a parliamentary veto right endangered the
stability of the state as such. When speaking in the Prussian First
Chamber in 1849 on constitutional reform,83 he fervently dismissed
the proposal that Parliament should have the power to reject the
King's annual budget proposal, including tax legislation, altogether. A
Parliament-driven government shutdown would not only jeopardize
central functions of the state, it would lead to a "Demokratismus,"84
which was bound to destroy the finely tuned separation and balance of
powers within the state. According to Stahl, parliamentary powers in
the field of taxation only enabled the people's representatives to have
a word on incremental increases of the annual tax revenue, in particu-
lar the introduction of new types of taxes, but not to force their will on
other branches of the government. In his view, the budgetary powers
of the Parliament were not meant to question the raison d'tat as such.
The Lockean notion practiced in England and supported by Mill, that
Parliament may decline any financial contributions demanded by the
King, was explicitly rejected by Stahl as an atavistic remnant of medie-
taxes as an equivalent for the protection of their property, as if they would enter into a
contract with the state.") (translation by author); see also Lorenz von Stein, Lehrbuch der
Finanzwissenschaft 302 (3d ed. 1875).
82 Katharine G. Young, American Exceptionalism and Government Shutdowns: A
Comparative Constitutional Reflection on the 2013 Lapse in Appropriations, 94 B.U. L.
Rev. 991, 1000 (2014); see also Werner Heun, Das Budgetrecht im Regierungssytem der
USA (1989) (providing a German perspective on shutdowns).
83 Friedrich Julius Stahl, Das Steuerverweigerungsrecht: Rede des Dr. Stahl, Abge-
ordneten ffr Angermfinde, Ober-und Nieder-Barnim, Prenzlow, Templin, in der
fdnfundfanfzigsten Sitzung der preupischen Ersten Kammer am 16. Oktober 1849 (Berlin,
Decker 1849).
84 Id. at 14.
val customs, under which different estates (landowners, urban bur-
ghers, etc.) negotiated individually with the King of England their
respective contributions for the King's outlays in his political and mili-
tary ventures.8 5
Following this constitutional debate, the "imposed" Prussian Con-
stitution of 1850 remained ambiguous on this matter, supporting both
the budgetary powers of the representative and the power of the King
86
to carry on levying existing taxes on the basis of previous legislation.
But Stahl's theoretical question became highly topical in the 1860s
when the King of Prussia and the Prussian House of Representatives
disagreed on costly military reform. 7 Otto von Bismarck, then the
Prussian prime minister, deplored what he named a "constitutional
gap" and argued for this to be filled by royal prerogative, "as the life
of the State cannot stand still for a single moment," and sealed the
outcome with a crackdown on the aspiring liberal movement in Prus-
sia.8 8 Ten years earlier, Bismarck had already explicitly rejected the
"powerless position held by the English Crown" 9 as a model for
Prussia.
90
This move set the German stage for more than 150 years. It
shaped the fiscal constitution of the Weimar Republic enacted in
1919,91 and even under the postwar fiscal constitution of the Federal
Republic of Germany, Bismarck's plea that the "state engine" has to
be kept going, has not lost its force. Article 111 of the German Basic
Law empowers the Federal Administration to move on without a for-
mally confirmed budget on a provisional basis in order to keep the
executive branch capable of acting. Moreover, existing tax laws re-
main in force pro futuro until they are formally suspended by the leg-
islator. A similar constitutional framework applies in France 92 and in
other countries in Europe. 9 3
85 Id. at 10-14.
86 Verfassungsurkunde [Constitution] Jan. 31, 1850, arts. 99, 100, 109 (Prussia). See also
von Beckerath, note 66, at 53-57.
87 Karl-Heinrich Friauf, Der Staatshaushaltsplan im Spannungsfeld zwischen Parlament
und Regierung 223 (1968); Hans-Christof Kraus, Ursprung und Genese der "Lockenthe-
orie" im preupischen Verfassungskonflikt, 29 Der Staat 209 (1990).
88 Otto von Bismarck, Rede vor dem Abgeordnetenhaus des Preupischen Landtags vom
27.1.1863, in Die Reden des Grafen von Bismarck-Schbnhausen, Erste Sammiung, Reden
der Jahre 1862-1866, at 20 (Berlin, 2d ed. 1870).
89 Otto von Bismarck, 10 Die gesammelten Werke 44 (1924) (translation by author).
90 Adolph Wagner, Lehr- und Handbuch der politischen Okonomie § 117 (Leipzig, C.F.
Winter'sche Verlaghandlung 2d ed. 1890).
91 Gerhard Anschiitz, Die Verfassung des Deutschen Reiches vom 11. August 1919, ein
Kommentar flir Wissenschaft und Praxis (14th ed. 1933).
92 1958 Const. art. 47 (Fr.); Jean-Antoine, note 8.
93 Bundes-Verfassungsgesetz [B-VG] [Constitution] art. 51 (Austria); Constituci6n Es-
pafilola (C.E.) [Constitution], B.O.E. n. 311, Dec. 29, 1978, art. 134, para. 4 (Spain).
In sum, one way to understand the continued reluctance to adopt
material constitutional protections in consent-based systems is that a
view has been taken that the prospect of government shutdown oper-
ates as a protective measure of last resort. In systems where that pro-
tective measure is lacking, one observes, by contrast, the adoption of
material constitutional constraints. Whether the option of legislative
veto or explicit government shutdown is a sufficient protective mea-
sure is a complicated question. I turn to this question in the next two
sections of the Article. I first analyze the constitutional structures that
have evolved in countries committed alternatively to content-based
systems and consent-based systems. I then describe the pressures
placed on these constitutional structures by the erosion of congruence
as a practical and political matter.
B. Property, Redistribution, and Constitutional Commitments
Two of the main differences between the content-oriented frame-

work and the consent-driven theory of taxation are their basic as-
sumptions as to the relationship between private property and the
state and their basic assumptions as to the relationship between tax-
payers and the community of their fellow citizens. These assumptions
have profound implications for the constitutional commitments one
encounters regarding matters of taxation.
1. Private Property and the State
Locke, as noted, deduces the necessity of taxpayer consent from the

protection of private property vis-A-vis the state. 94 He envisions a
world in which individuals hold property in advance of the existence
of the state and thus hold rights over such property against the state.
Hobbes, by contrast, is of the opinion that property rights can only
work between citizens but not toward the sovereign power:
Every man has indeed a Propriety that excludes the Right

of every other Subject: And he has it onely from the Sover-
aign Power; without the protection whereof, every other man
should have equall Right to the same. But if the Right of the
Soveraign also be excluded, he cannot performe the office
they have put him into; which is, to defend them both from
94 John Snape & Jane Frecknall-Hughes, John Locke: Property, Tax and the Private
Sphere, in 8 Studies in the History of Tax Law 1 (Peter Harris & Dominic de Cogan eds.,
2017).
forraign enemies, and from the injuries of one another; and
consequently there is no longer a Common-wealth. 95
It is visible from this quotation that Hobbes regards the property of

individuals to rest on the overarching dominion of the state. One hun-
dred years later, Germany's most prominent counselor in fiscal mat-
ters in the eighteenth century, Johann Heinrich Gottlob von Justi,
established a similar line of thinking. His System des Finanzwesens,
published in 1766, started out from the assumption that the state or
the regent is entitled to all wealth located on the state's territory, ei-
ther being "direct" property of the state (like a domain) or "indirect"
property owned and administered by the citizens. 96 Under this theory
of the state, there is no conceptual foundation for making taxation
dependent on individual or aggregate consent of taxpayers. It is suffi-
cient to accept that the state has to fulfill its functions and that the
necessary funding has to be allocated to the citizens in an equitable
and economic fashion. 97 In 1846 Friedrich Julius Stahl transposed this
view into nineteenth-century Germany. Again, the Hobbesian as-
sumption, that the state's right to tax is not dependent on consent, and
the assumption, that individual wealth forms part of societal wealth
available for public use, come together. Unlike in the Lockean world,
property as such is not a pre-constitutional entitlement preceding the
existence of the state and negatively affected by any tax but requires
98
the existence of the state and its emanations to come into being.
95 2 Hobbes, note 33, ch. XXIX.

96 Johann Heinrich Gottlob von Justi, System des Finanzwesens: nach vernuinftigen aus
dem Endzweck der blirgerlichen Gesellschaften und aus der Natur aller Quellen der
Einkinfte des Staats hergeleiteten Grundsitzen und Regeln ausftihrlich abgehandelt § 13
(Halle, Zu finden in der Rengerischen Buchhandlung 1766).
97 2 Friedrich Julius Stahl, Rechts- und Staatslehre auf der Gurndlage christlicher Welt-
anschauung 420-21 (Heidelberg, Mohr 1846) ("Following the first principle, the taxes are
mainly to be collected from the wealth producing society the observation of which is the
harmonious state between the branches of business and the possibility of enjoyment. For
there is a national wealth or common wealth which is not the sum of the wealth of the
individuals but only consistent as a whole which belongs originally and only to the society
as an unseparated as well as unformed, partially as a mere possibility of a particular wealth
which is only transformed into the property of individuals and only comes into shape in
their possession. . . . The state takes the taxes from the society and their wealth and thus
from each and every one, to the extent of which he benefits from it, i.e. by the possibility of
acquisition and enjoyment.") (translation by author).
98 Liam Murphy and Thomas Nagel defend a similar view in their book The Myth of
Ownership: Taxes and Justice. They try to embed taxation solidly in the context of owner-
ship. From their point of view, private property is not conceivable without the state and its
functions and cannot be conceptualized outside the social context. Taxation is necessary to
keep the state afloat and therefore taxation is justified. On this view, "Pretax income . ..
has no independent moral significance. It does not define something to which the taxpayer
has a prepolitical or natural right, and which the government expropriates from the indi-
vidual in levying taxes on it. All the normative questions about what taxes are justified and
Given the pre-constitutional status of property in the Lockean view,
one might expect to see constitutional protections of property in sys-
tems loyal to that view. The Takings Clause enshrined in the U.S.
Constitution ensures that holders of private property will receive just
compensation when their property is taken under a power of eminent
domain. But this provision doesn't stand in the way if the state effec-
tively encroaches on property rights when it demands particularly high
rates of taxation, the proceeds of which could be used to finance an
ever larger public sector.9 9 Even under the Lockean model, the pow-
ers of a democratically elected legislature to establish taxes are not
limited to the definition of the tax base and the tax rate. It is also
within the scope of parliamentary powers to set the public policies of
the state, which in turn require financial contributions by the citizens.
One way to limit the state's power here would be through a consti-
tutional requirement that taxes must only be levied for the "general
welfare"1 0 0 or "public purposes."10 1 But without elaboration of the
content of such vague terms, clauses such as these would not seem to
provide much meaningful constraint. What counts as in the "general
welfare"? Who decides? One could imagine attempting to elaborate
such a standard through some type of cost-benefit framework, but
there has been only one constitution, to my knowledge, which seri-
ously tried to introduce the additional material requirement that taxes
can only be levied if the envisaged public benefit surpasses the private
benefits derived otherwise. The Constitution of Pennsylvania, enacted
in 1776, provided:
No public tax, custom or contribution shall be imposed

upon, or paid by the people of this state, except by a law for
that purpose: And before any law be made for raising it, the
purpose for which any tax is to be raised ought to appear
clearly to the legislature to be of more service to the commu-
nity than the money would be, if not collected; which being
well observed, taxes can never be burthens. 102
what taxes are unjustified should be interpreted instead as questions about how the system
should define those property rights that arise through the various transactions-employ-
ment, bequest, contract, investment, buying and selling-that are subject to taxation."
Liam Murphy & Thomas Nagel, The Myth of Ownership 74 (2002); see also Leviner, note
56, at 96.
9 See Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain
283-305 (1985) (defending a more expansive reading of the Takings Clause); see also Alex-
andre Mangiavillano, Le contribuable et I'ltat: L'imp6t et la garantie constitutionelle de la
propri6t6 (Allemagne-France 2013) (comparing French and German judicial practices);
Pierre-Lonard Rouzaud, L'imp6t confiscatoire: Notion et jurisprudence (2016).
100 U.S. Const. art. 1, § 8.
101 1793 Const. art. 20 (Fr.).
102 Pa. Const. of 1776, § 41.
This rule never gained any traction in the real world. 103 It would
seem that systems in the Lockean strand largely gave up on the notion
of constitutionalizing protections of private property via limitations on
the taxing power. In part, this may be explained by the backstop pro-
tection of government shutdown discussed above. In part, this may be
explained by the resort to pragmatic, rather than constitutional argu-
ments. And after World War II, the optimistic notion of the state as a
central planner and as a social engineer emboldened legislators to ap-
ply ever higher tax rates on personal income and wealth in most West-
ern countries including the Anglo-American world in order to achieve
distributive goals and a steep increase of the public sector. Old-style
libertarians like Hayek'0 were regarded as outsiders while social
planners like Richard Musgrave10 5 held center stage. While it is true
that in the Reagan-Thatcher era the pendulum swung back in the di-
rection of libertarian theories and a critical view on the role of the
state, this movement was again motivated by the realm of practical
politics and less by constitutional concepts.
It is interesting to learn that the protection of property vis-a-vis the
fiscal powers of the state has taken a different route on the European
continent. The state-oriented view, in regard to the lack of protection
of private property vis-a-vis the tax legislator, was initially the purview
of conservative theorists of the state, like Stahl, and this view held
sway for more than a century. Against this background, during and in
the aftermath of World War I, industrialized countries witnessed an
enormous rise in the overall and average tax burden, described by Jo-
seph Schumpeter as early as 1919 in his seminal article on the "crisis
of the taxing state." 10 These developments overcame concerns as to
07
the overreach of the taxing powers toward the individual taxpayer.1
In this unruly postwar world, Schumpeter uttered a fervent plea for
upper limits on taxation. But his argument was not founded on theo-
retical or legal concepts of individual entitlements or constitutional
constraints. Rather, the argument rested on the sheer practical neces-
sity of leaving private business some space to breathe, in the interest
103 Note that comparative scholarship on the constitutional protection of private prop-
erty typically leaves out issues of taxation. See, e.g., Tom Allen, The Right to Property, in
Comparative Constitutional Law 504 (Tom Ginsburg & Rosalind Dixon eds., 2011).
104 Hayek, note 69, at 430-50.
105 Musgrave, note 48, at 17-22.
106 Joseph Schumpeter, Die Krise des Steuerstaats [Crisis of the Taxing State] (1918);
see also Leroy, note 34, at 55-61.
107 The thesis that major increases in the overall tax burden-including high tax rates on
high-income earners-are correlated to war efforts and the need to deliver a sacrifice fairly
"compensating" for the loss of life and health by others is at the center of Scheve and
Stasavage's book. Scheve & Stasavage, note 25.
of the nation as a whole. 108 Socialist governments in Europe before
and after World War II did not accept any material limitation to the
taxing power, and-taking a closer look-it seems fair to say that the
socialist governments of the twentieth century built their tax policy on
the remnants of a conservative theory, which had immunized the fiscal
state against individual concerns. 109
Notwithstanding this Hobbesian approach to taxation visible in
many countries, the wish to establish some "content"-oriented barrier
against excessive taxation gained ground during the twentieth century.
In many jurisdictions, constitutions contain provisions prohibiting "ex-
propriating" or "confiscatory" taxation. 110 But these are rather vague,
limited to extreme cases, and therefore hardly play a practical role."'
Even in a content-driven state such as Germany, the constitutional
protection of private property did not play any meaningful role in fis-
cal matters for nearly fifty years after the entry into force of the Basic
Law. As late as 1995, the German Constitutional Court tried to cut
the Gordian knot by establishing the "half income principle," which
was meant to prohibit a tax rate on income exceeding roughly 50%.112
But only a decade later, in 2006, the judges of the Constitutional
Court explicitly retreated from their far-reaching earlier statements
and abandoned this highly debated concept.1 13
2. Redistribution
In political and constitutional discourse, the Hobbesian notion that

the state or the sovereign power is the "true owner" of all assets be-
longing to its citizens has been replaced over time by the concepts of
community and solidarity. The citizenry of a state has been named a
"social union," 114 an "organism,"1 15 whose members are expected to
show responsibility for one another and who are willing to "sacrifice"
their personal wealth (to a limited extent) for the general good. This
108 Schumpeter, note 106.

109 See Wolfgang Schon, Steuergesetzgebung zwischen Markt und Grundgesetz, in Die
Erneuerung des Verfassungsstaats: Symposion aus Anlass des 60. Geburtstages von Profes-
sor Dr. Paul Kirchhof 143, 147-48 (Rudolf Mellinghoff et al. eds., 2003).
110 See, e.g., Constitution of the Kingdom of Spain art. 31, para. 1; Constitution of Brazil
art. 150, para. 4.
Ill See Mangiavillano, note 99, and Rouzaud, note 99, for a comparison between French
and German court practice.
112 Bunderverfassungsgericht [BverfG] [German Constitutional Court] Jun. 22,
1995,
Entscheidungen des Bundesverfassungsgerichts [BverfGE] 121 (138), 1995.
113 Bunderverfassungsgericht [BverfG] [German Constitutional Court] Jan. 18,
2006,
Entscheidungen des Bundesverfassungsgerichts [BverfGE] 97 (113-114), 2006.
114 Mill, note 47, bk. V, ch. II, § 2.
115 Adolph Wagner, Finanzwissenschaft § 27 (1883).
social model of the state and society is particularly important in the

context of redistribution as a major goal of taxation.1 16
The concept of taxation as a means of redistribution finds its origin
in Jean-Baptiste le Rond d'Alembert's Essai sur les Elemens de
8
Philosophie"7 and in Jean-Jacques Rousseau's Discours11 where they
pleaded for a tax-free threshold for the poor in order to allow for their
basic needs and a progressive tax system for the rich.119 In 1793, the
French Jacobins were the first to translate this concept into actual tax
legislation. 12 0 The notion of progressive taxation gained ground in the
nineteenth century on the basis that the state and its functions are
strongly related to the "nation" as a rather homogeneous and coher-
ent social entity. 12 1 Nineteenth-century socialist philosophers, includ-
ing Karl Marx, happily hopped on the bandwagon and pressed for
12 2 From the per-
high progressive taxes as a means of class struggle.
spective of German mainstream thinking, the notion of the social wel-
fare state as a framework for a redistributive tax system was most
prominently developed in the late nineteenth century by public fi-
nance theorist Adolph Wagner. For him, the state represented the
"highest form of human co-existence," the "highest form of a compul-
sory community" as opposed to what he called a contractarian and
"Smithian" perception of the state.1 2 3 In France, a similar philosophi-
cal movement in the second half of the nineteenth century inextrica-
4
bly linked "solidarit6" and "redistribution." 1 2
Against this historical background, many countries that I describe
as adherents to a content-based approach came to stress this mutual
obligation of taxpayers in their constitutional texts, starting with the
116 Tsilly Dagan, International Tax Policy Between Competition and Cooperation 18
(2018).
117 Jean-Baptiste le Rond d'Alembert, Essai sur les tl6ments de Philosophie, in 5 Me-
langes de Litt6rature, D'histoire, et de Philosophie 94-96 (Amsterdam, Zacharie Chatelain
& Fils 4th ed. 1767). 1 owe this reference to Moritz Epple, D'Alembert Philosophe Engage:
In6galit6s, Frontieres, et la Societe des Gens de Lettres et des Grands (2017) (unpublished
manuscript).
118 Jean-Jacques Rousseau, Discours sur I'Economie Politique, 1 Economie Politique
337 (1755), https://www.rousseauonline.chlText/discours-sur-1-economie-politique.php.
119 See also Jean-Pierre Gross, Progressive Taxation and Social Justice in Eighteenth-
Century France, 140 Past & Present 79 (1993); Audrey Rosa, Solidarit6 et Imp6t:
Recherche sur les fondements de l'imp6t moderne (2015).
120 Delalande, note 19, at 34-49.
121 Von Stein, note 81, at 321-27.
122 Karl Marx & Friedrich Engels, Das kommunistische Manifest 20 (1848). This text is
still regarded as "seminal" for modern tax sociology. See Martin & Prasad, note 9.
123 Wagner, note 115, § 27; see also Adolph Wagner, Zweiter Theil: Theorie der
Besteuerung, Gebaihrenlehre und allgemeine Steuerlehre in Lehr- und Handbuch des
Politischen Okonomie § 82 (2d ed. 1890).
124 Delalande, note 19, at 34-49.
French constitutions of the revolutionary age. 125 Taking this demand
for equal sacrifice as a starting point, a fair number of constitutions,
such as the constitutions of Brazil, Italy, Spain, and Switzerland, ex-
plicitly provide for progressive taxation as a matter of principle. 1 2 6
Under German constitutional law, this approach is implicitly related
to the concept of the "social welfare state" laid down in the Basic
Law, which obliges the legislator to level factual inequality and to pur-
sue public welfare. 1 2 7 Building on this concept of the "social welfare
state," in a recent dissenting vote on the constitutionality of inheri-
tance taxation, three judges of the German Constitutional Court em-
phasized a constitutional requirement to implement a meaningful
minimum of redistribution under the German tax system.1 28 These fis-
cal instruments feed into the growing demand for constitutional de-
vices that are meant to limit the scope of economic inequality within a
constituency.1 2 9
Interestingly, the evolved Hobbesian view that embraces a concept
of solidarity eventually took root in countries more firmly connected
to the Lockean conception of the role of the state as well. In the
United States, public finance scholars (some of which had returned
from their studies in Europe) at the turn of the nineteenth century
pressed for progressive taxation on the basis of solidarity among the
citizens of a state in their home country. 13 0 In the work of Edwin R.
A. Seligman and Richard T. Ely, one can clearly see how the Hobbes-
ian concept of being a subject of the (absolute) state morphed into the
concept of solidarity owed to other members of that state. The Lock-
ean contractarian view is clearly dismissed while the concept of tax as
a sacrifice takes center stage. 1 3 1 As with the case of property protec-
125 1793 Const. art. 101 (Fr.) ("No citizen is excluded from the honorable obligation to
contribute towards the public expenses.") (translation by author).
126 Italian Constitution art. 31, para. 1; Constitution of the Kingdom
of Spain art. 31,
para. 1; Swiss Constitution art. 127, para. 2; Constitution of Brazil art. 145, para. 3(1).
127 German Basic Law art. 20, para. 1.
128 Bunderverfassungsgericht [BverfG] [German Constitutional Court] Dec. 17,
2014,
Entscheidungen des Bundesverfassungsgerichts [BverfGE] 136 (252-255), 2014 (Baer, J.,
Gaier, J. & Masing, J., dissenting).
129 Cf. Rosalind Dixon & Julie Suk, Liberal Constitutionalism and Economic Inequality,
85 U. Chi. L. Rev. 369 (2018).
130 Mehrotra, note 49, at 97-118; Edwin R. A. Seligman, Progressive Taxation in Theory
and Practice, 9 Pub. Am. Econ. Ass'n 7, 7-222 (1908); Edwin R. A. Seligman, The Income
Tax, 9 Pol. Sci. Q. 610, 610-48 (1894).
131 See Richard T. Ely, Taxation in American States and Cities 13 (New York, Thomas
Y. Crowell & Co. Publishers 1888) ("Man, as a human being, owes services to his fellows,
and one of the first of these is to support government, which makes civilization possible.
Only an anarchist can take any other view. To the ordinary man it appears right that he
should be called upon to give not only his property for the promotion of common interests,
but even his life, if need be."); Edwin R. A. Seligman, Essays in Taxation 72 (New York,
Macmillan & Co. 1895) ("It is now generally agreed that we pay taxes not because the state
tions, however, the debates over redistribution and overall tax bur-
dens have remained firmly grounded in the realm of politics, rather
than being enshrined in material constitutional limits on the taxing
power.
C. Taxpayers and Citizens-The Dialectic of Congruence
As noted above, the Hobbesian view evolved over time from the
initial stance that saw the sovereign, or any ruling elite, as the apex for
any obligation to pay tax to a view grounded in solidarity, one in
which the citizens acting under the rules of democratic decision-mak-
ing are the source of power. Since the days of the French Revolution,
the "people" as such-in German parlance the "Staatsvolk"-have
taken over as the source of legitimacy for the exercise of the state's
powers. This replacement of the monarch by the people, which we
witness throughout the nineteenth and twentieth centuries, lends to
the interaction between taxation and democracy a specific twist. Fol-
lowing Montesquieu's and Rousseau's dialectical view of the members
of a nation being both the "objects" of the state's powers and the
"subjects" of government,1 3 2 taxpayers see themselves both as being
part of the taxing power and being subject to its execution. 1 3 3 In other
words, congruence. At first glance, this dialectical perspective might
suggest that the Hobbesian and the Lockean views collapse into one
once full democratic government has arrived. Under the new rules, no
tax will be levied that is not built on the consensus of the people. For
Rousseau such congruence meant that there was no need for further
protects us, or because we get any benefits from the state, but simply because the state is a
part of us. The duty of supporting and protecting is born with us. In a civilized society the
state is as necessary to the individual as the air he breathes; unless he reverts to stateless
savagery and anarchy he cannot live beyond his own confines. . . . We pay taxes not be-
cause we get benefits from the state, but because it is as much our duty to support the state
as to support ourselves or our family."); see also Lily L. Batchelder, Fred T. Goldberg Jr.
&
Peter R. Orszag, Efficiency and Tax Incentives: The Case for Refundable Tax Credits, 59
Stan. L. Rev. 23, 66-68 (2006) (discussing the concept of "civic duty" and its impact on
refundable tax credits); Lawrence Zelenak, Learning to Love Form 1040: Two Cheers for
the Return-Based Mass Income Tax (2013) (discussing the current U.S. debate on taxation
as a "civic duty") (reviewed by Ajay K.Mehrotra, Reviving Fiscal Citizenship, 113 Mich. L.
Rev. 943 (2015)).
132 Montesquieu, Spirit of Laws, bk. 2, ch. 2, at 10 (Anne M. Cohler, Basia Carolyn
Miller & Harold Samuel Stone eds. & trans., Cambridge Univ. Press 1989) (1748); Jean-
Jacques Rousseau, Of the Social Contract or Principles of Political Right, bk. 1, § VII, at 16
(Charles M. Sherover trans., Harper & Row 1984) (1762).
133 This dialectical view is still very much present in current French scholarship. See
Andr6 Barilari, Le Consentement A L'Imp6t 15 (2000) ("d6doublement du citoyen");

Rosa, note 119, at 394-99; Kallergis, note 16, paras. 72-79.
protective devices: "The individual does not need any guarantees to-
wards the state as the body will not do harm to its members." 1 3 4
As we have seen, though, congruence at this level of generality need
not align with meaningful protection of individual interests. Georg Jel-
linek, one of Germany's most astute constitutional lawyers at the turn
of the twentieth century, clarified that the (fiscal) decisions taken by
the people acting as a homogeneous "organ" of the state in the sense
of Rousseau, bear no conceptual relationship to the individual consent
of taxpayers or their peer groups as required in the Lockean world. 13 5
Specifically, the introduction of a majoritarian voting rule seems inevi-
table in order to avoid a complete standstill of the government. 136
But this brings up the underlying paradox. The minority is subject
to a majority decision that they have not voted for but which they
have to accept as being their own. 13 7 It is quite telling that a political
philosopher who grew up in France but was exposed to democracy in
America-Alexis de Tocqueville-became the most prominent critic
of the "tyranny of the majority" in democratic systems in the nine-
teenth century. In his view, the majority of voters, lacking any per-
sonal financial means and taxing capacity, would not only plead for
large-scale redistribution but also for a major increase in public spend-
ing on the whole.13 8 The raw fact that the majority of voters have an
incentive to exploit the minority cannot be superseded by dialectical
idealism in the sense of Rousseau. In the same vein a prominent Swiss
constitutional theorist, Johann Caspar Bluntschli, wrote in 1881:
Rousseau repeats here the error of Hobbes and comes like

him to an absolute sovereignty. Of course, he declares him-
self to be a friend of the general freedom of the citizens
while Hobbes favored the domination of one over all. But
the absolutism of this demos proclaimed sovereign is no less
dangerous for the freedom of the individuals than the abso-
lutism of the Hobbesian monarch. Whether my individual
character is oppressed by the foolishness of the crowd or tied
by the arbitrariness of a despot, is equally ruinous to my
freedom; and even though the democracy of Rousseau is not
as much averse to the general freedom as the despotism of
134 Rousseau, note 132.

135 3 Georg Jellinek, Allgemeine Staatslehre 582-90 (3d ed. 1929).
136 Christian Hillgruber, Mehrheitsprinzip, in I Leitgedanken des Rechts 659, 660-63
(Hanno Kube, Rudolf Mellinghoff, Gerd Morgenthaler, Ulrich Palm, Thomas Puhl
&
Christian Seiler eds., 2013).

137 Dietrich Murswiek, Paradoxa der Demokratie, 72 JuristenZeitung 53, 55 (2017).
138 1 Tocqueville, note 62, pt. 2, ch. 7. As to the fiscal theory behind Tocqueville's work,
see Leroy, note 34, at 25-50.
the absolute ruler, the former is more powerful than the lat-
13 9
ter and it becomes more difficult to resist its raw power.
How ought the erosion of congruence with majoritarian rule in a

democracy composed of diverse interests affect the fundamental ques-
tion about the desirability of material constitutional constraints on the
taxing power? One could cure the erosion of congruence with a una-
nimity rule, as favored by Wicksell, but this is entirely impractical.
There would seem to be only two practical possibilities: adopt mate-
rial constitutional constraints or rely upon robust democratic decision-
making under majoritarian rule that is, nonetheless, protective of mi-
nority interests.
James Buchanan argued for the former approach. When discussing
the alternative between the utopian principle of unanimity as pro-
posed by Wicksell and a simple and practical majority rule in fiscal
matters, Buchanan accepted majoritarian rule in order to overcome
transaction costs and collective action issues. However, he phrased his
concerns about minority protection in equally strong words: "Indeed,
it may be suggested that commonly observed majoritarian rule can
best be modeled as if it embodies no effective constrainton the exercise
of government powers at all."1 40 For Buchanan, the conclusion was
clear. Majority rule requires additional constitutional constraints in
order to protect the individual.1 4 1 Against this background, a substan-
tial number of political economy theorists support the view that the
material principle of equality should play a major role for taxpayer
protection. Admittedly, democracy works better than dictatorship
when it comes to the decision on public goods, redistribution, and
funding, as the majority of voters will tax themselves while the dicta-
139 "Rousseau wiederholt hier den Irrtum des Hobbes und kommt wie dieser zu einer
absoluten Staatsgewalt. Freilich bekennt er sich als Freund der gemeinen Bfirgerfreiheit,
w~hrend Hobbes die Herrschaft des einen tiber alle beginstigt. Aber der Absolutismus
seines als Souveran proklamierten Demos ist ftir die Freiheit der Individuen nicht weniger
gef~hrlich als der Absolutismus des Monarchen bei Hobbes. Ob meine Eigenart von dem
Unverstande der Menge unterdrtickt oder von der Willkir eines Despoten gefesselt werde,
ist fOr meine Freiheit gleich verderblich; und wenn auch die Demokratie Rousseaus der
gemeinen Freiheit aller nicht so abgeneigt ist wie die Despotie des absoluten Firsten, so ist
jene doch starker als diese und es wird schwieriger, ihrer rohen Ubermacht zu wider-
stehen." Johann Caspar Bluntschli, Geschichte der Neueren Staatswissenschaft:
Allgemeines Staatsrecht und Politik Seit dem 16. Jahrhundert bis zur Gegenwart 349-50
(1881).
140 Buchanan, note 74, at 7 (emphasis in original).
141 Id. at 187-92. The link between Buchanan's work and the German debate on consti-
tutional constraints has been emphasized by Vogel. Vogel, note 32, at 19 n.4, 31-32; see also
Charles Delmotte, The Political Economics of Tax Exemptions: Tax Uniformity as a Con-
stitutional Principle (2017); Wolfgang Schan, Grundrechtsschutz gegen den demokratis-
chen Steuerstaat, 64 Jahrbuch des 6ffentlichen Rechts 515 (2016).
tor doesn't tax himself.1 4 2 Within a democratic environment, collective
decision-making works even better, though, if the principle of equality
in tax matters ensures that there is equal cost for everyone for financ-
ing the collective good. 143 This principle guarantees that majority deci-
sions cannot go too far to the detriment of the outvoted minority.1 4 4
At the same time, it makes sure that minorities with disproportionate,
concentrated power are not in the position to extract unjustified tax
benefits.
Absent material constitutional constraints, the question is whether
it is possible to overcome the conflict between the majority and the
minority by democratic means. In other words, is it possible that the
minority accepts the outcome of a majoritarian vote as the true ex-
pression of the general will of the people? Starting from Rousseau's
optimistic assumptions as to the creation of the volonti gindrale he
was forced to assume that the defeated minority simply "got it
wrong,"1 4 5 that it had a false perception of reality and a misunder-
standing of the best solution and should be educated to accept it. In
today's world Habermas's model of democratic decision-making as a
procedurally organized discourse of arguments is meant to lead to suf-
ficiently justified outcomes.1 46 Against this background, a group of
German constitutional lawyers 47 has rejected the jurisprudence of the
German Constitutional Court on hardwired constraints on the work of
142 Mancur Olson, Dictatorship, Democracy, and Development, 87 Am. Pol. Sci. Rev.
567, 570-71 (1993).
143 Howard R. Bowen, The Interpretation of Voting in the Allocation of Economic Re-
sources, 58 Q.J. Econ. 27, 46-47 (1943). In a similar vein, Hayek proposed that progressive
taxes should only be admissible to the extent that the majority of voters finds itself in the
highest tax bracket. See Hayek, note 75, at 441.
144 It is interesting to note that in The Federalist No. 21 (Alexander Hamilton), Alexan-
der Hamilton pleaded for consumption taxes rather than personal taxes to fund the federal
budget as excise taxes are conceptually applied in a broad manner, leave the decision to
consume to the taxpayer, and cannot therefore serve as a means to expropriate specific
taxpayers or groups of taxpayers: "It is a signal advantage of taxes on articles of consump-
tion, that they contain in their own nature a security against excess. . . . If duties are too
high, they lessen the consumption; the collection is eluded; and the product to the treasury
is not so great as when they are confined within proper and moderate bounds. This forms a
complete barrier against any material oppression of the citizens, by taxes of this class, and
is itself a natural limitation of the power of imposing them."
145 Rousseau, note 132, bk. 4, ch. 2; for a skeptical view on the wisdom of majority rule,
see Hayek, note 75, at 449.
146 Jirgen Habermas, Faktizitdt und Geltung: Beitr5ge zur Diskurstheorie des Rechts
und des demokratischen Rechtsstaats 349-98 (1992); see also James Bohman, Public Delib-
eration 9-21 (1996); John S. Dryzek, Discursive Democracy: Politics, Policy, and Political
Science 14-22 (1990). For a critical view of this concept in the context of European deci-
sion-making, see Fritz Scharpf, De-constitutionalisation and Majority Rule: A Democratic
Vision for Europe, 23 Eur. L.J. 315, 327-30 (2017).
147 Oliver Lepsius, Constitutional Review of Tax Laws and the Unconstitutionality of
the German Inheritance Tax Law, 16 Ger. L.J. 1191, 1202-25 (2016).
the tax legislator in order to retain leeway for such parliamentary de-
liberation and compromise. Similarly, Richard Bellamy has put for-
ward a more procedural understanding of democratic discourse,
148
stressing the value of the political process vis-a-vis the courts.
But is taxation really about democratic discourse? It is interesting
to learn that Knut Wicksell clarified as early as 1896 that it makes a
big difference whether factions within a democratic legislature disa-
gree in terms of their personal opinions or in terms of their personal
interests. 149 Differences of opinion (e.g., how best to attain a common
goal such as environmental protection or a reform of the educational
system) can by and large be addressed by discourse and solved by
majority vote. Differences of interest (e.g., regarding the level of
wealth redistribution within a society) are harder to manage and it
would seem rather naive to regard the outcome of a majority vote as a
simple exercise in philosophical deliberations around a common goal,
15 0 This is one of
given that nobody acts under a "veil of ignorance."
the reasons why Wicksell pleaded for (nearly) unanimous consensus.
He wanted to weed out those proposals that do not seem to carry
enough weight to be regarded as clear outflows of the common good.
As this is a utopian approach and as democratic discourse seems inad-
equate to solve fundamental conflicts of interest, one is left with a
powerful normative case for material constraints to majority voting in
fiscal matters. As congruence erodes, so the normative case for such
constraints builds.
D. Judicial Review and Its Limitations
That case, however, still faces a substantial hurdle. Constitutional

constraints will have to be enforced by courts. One must thus confront
fundamental critiques of judicial review, such as Jeremy Waldron's ar-
guments grounded on the weak democratic foundations of judicial
power. 151 And one must confront challenges to judicial review in the
context of taxation specifically. Regarding the latter, one issue that
critics might consider a major flaw in the judicial review of tax legisla-
tion is the fact that the economic impact of tax provisions (and taxa-
148 Richard Bellamy, Political Constitutionalism: A Republican Defense of the Constitu-

tionality of Democracy (2007).
149 Wicksell, note 51, at 111.
150 Sch6n, note 141.
151 Jeremy Waldron, The Core of the Case Against Judicial Review, 115 Yale L.J. 1346,
1386- 1401 (2006); Jeremy Waldron, Judicial Review of Legislation, in The Routledge
Companion to Philosophy of Law 434, 444-47 (Andrei Marmor ed., 2012). For a compara-
tive analysis of the arguments pro and contra constitutional review, see Mark Tushnet,
Advanced Introduction to Comparative Constitutional Law 49-82 (2d ed. 2018).
tion in general) cannot be fully assessed in isolation. 152 Any individual
tax provision will generally be part of a larger piece of fiscal legisla-
tion, involving the design of the tax base, the tax rate, and the concur-
rent existence of other taxes as well. Thus, the impact of any specific
income tax provision has to be seen in the context of the income tax in
general and in the context of additional taxes borne by an individual
(wealth taxes, consumption taxes, etc.). Moreover, the distributive ef-
fects of tax payments play out differently depending on the size and
scope of public goods or transfer payments financed from the public
revenue raised by taxation. 153 It makes a difference whether fiscal
contributions by "the rich" are spent on building an opera house or an
orphanage. 1 5 4 This broader view seems to lead to a fiscal nirvana
where no meaningful judgment can be made on the substantive merits
of specific taxes or tax provisions.
Yet this fundamental critique is built on the thesis that in the ab-
sence of optimal "first best" solutions for the tax world, constitutional
law should not even try to secure "second-best" solutions and avoid
dystopian outcomes. Yet "second-best" solutions carry some value in
themselves. Therefore, it makes sense to disentangle the different ele-
ments of the fiscal system and to assess these elements on a separate
basis. To give an example, any unjustified tax privilege granted to a
specific social group (e.g., based on invidious criteria such as age, race,
or gender) should be avoided irrespective of how and for whose bene-
fit the overall tax revenue is spent and which other taxes are levied
simultaneously. To the contrary, if there is a good reason to spend the
revenue on specific valid purposes (financing public goods or social
transfers), this reason does not justify the inequitable allocation of fis-
cal obligations on the taxpayers. It should be possible to raise the
same amount of revenue by designing the tax following the principle
of horizontal equity. This approach does not pit equity against effi-
ciency, as it might be said that most infringements on traditional tax
principles such as "horizontal equity" in a legal sense indicate an eco-
nomic inefficiency that might be due to a malfunction of the political
process.15 5
E. Constitutional Constraints-A Comparative View

The above sections have traced the historical evolution of the con-
sent-based and content-based approaches to taxpayer protection and
152 Alex Raskolnikov, Accepting the Limits of Tax Law and Economics, 98 Cornell L.
Rev. 523, 560-66 (2013).
153 Louis Kaplow, The Theory of Taxation and Public Economics 401-03 (2008).
154 Wicksell, note 51, at 76-87.
155 Kaplow, note 153, at 398-99.
have offered a normative argument that the case for material con-
straints increases as congruence erodes. For countries that are histori-
cally within the Hobbesian content-based tradition, the adoption of
material constitutional constraints meshes well with basic, underlying
philosophical commitments. For countries in the Lockean consent-
based camp, however, this is not so. In this section, I provide a com-
parative analysis of England, Germany, and the United States to fur-
ther elaborate this divide.
1. The English Approach

The English approach traditionally rejects the notion of hardwired
substantive limitations to parliamentary legislation in the area of taxa-
tion. Nevertheless, it should not be overlooked that the nineteenth
century saw a strong current among tax experts in Britain that some
general "principles" of taxation had to be recognized as unwritten
compulsory constitutional constraints in fiscal affairs. As historian
Chantal Stebbings has shown, the then growing impact of the central
government's powers in the area of tax administration was heavily
criticized by contemporaries. In particular, the introduction of inquisi-
torial procedures and the shift of tax collection from local lay commis-
sioners to central authorities were regarded as "unconstitutional." The
main argument was that these intrusions into the taxpayer's sphere
156
were not covered by the "real" or "true" consent of the taxpayer.
This argument ran into the problem that it insinuated a double
meaning for the word consent. According to critics, the approval of
the government's action by a majority of members of Parliament
would not be sufficient to substitute for "real" consent by the taxpay-
ers. But this double notion of consent did not meet with much favor as
the paramount sovereignty of Parliament had been widely accepted in
England at this point in time. Moreover, given that there was and is no
written constitution under English law, it was hard to transform the
constitutional resentment of a fair number of taxpayers against mod-
ern intrusions of the taxing state into hardwired obstacles to
legislation.
Taking a closer look, one cannot help but state that the institutional
framework of the United Kingdom seems to adhere to the counterfac-
tual fiction that Parliament is not identical and not synchronized with
the government and that it is the foremost obligation of Parliament to
protect the interests of the citizenry vis-A-vis the Queen and her gov-
ernment. This Lockean theory of Parliament's role has been preserved
156 Chantal Stebbings, Consent and Constitutionality in Nineteenth-Century English

Taxation, in 3 Studies in the History of Tax Law 293, 312-14, 320-21 (John Tiley ed., 2009).
in some time-honored customs such as the introductory preamble to
the annual UK Finance Act, which to this day clarifies the voluntary
character of any tax as a gift by the people to the monarch.' 5 7 Moreo-
ver, some major taxes such as the income tax have to be formally re-
confirmed under each annual finance act for the following fiscal year;
otherwise they might simply expire.1 58 But this traditional language
cannot conceal the political fact that the British Parliament has the
power to set its own political agenda and to pursue its will with full
force, as several governments have shown in the course of the twenti-
eth century.
Therefore, it remains a puzzle why there has never been in England
a political or legal movement to limit the taxing power of Parliament
by means of constitutional law, given the fact that for more than 100
years the sovereignty of the House of Commons in fiscal matters has
been more or less completely unrestrained. The reason might lie not
only in the lack of a written constitution and a strong belief in Parlia-
ment's sovereign power, but also in historical, social, and political pe-
culiarities of the United Kingdom where political parties and voters
have been more cautious of increasing the tax burden and empower-
ing the state than on the Continent. As early as 1912, Adolph Wagner
was amazed by the fact that the leading political parties in Britain
consistently competed in general elections by offering tax reduc-
tions.15 9 From a broader perspective, Cambridge historian Martin
Daunton has shown that during the time period between the Napole-
onic Wars and the First World War, the share of the public sector in
the overall economy in Britain gradually decreased as opposed to de-
velopments on the Continent.16 0 Thus, it may well be that in England,
during that formative period, taxpayer protection was effectively en-
sured by the political process and widely shared economic principles,
not by hard-and-fast constitutional rules.
But as history has also shown, the United Kingdom, along with the
United States, has seen the highest volatility in regard to the top mar-
157 See, e.g., Finance Act 2018, c. 3 (Eng.) ("WE, Your Majesty's most dutiful and loyal
subjects, the Commons of the United Kingdom in Parliament assembled, towards raising
the necessary supplies to defray Your Majesty's public expenses, and making an addition to
the public revenue, have freely and voluntarily resolved to give and to grant unto Your
Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech
Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent
Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and
Commons, in this present Parliament assembled, and by the authority of the same, as fol-
lows: .....
.
158 See, e.g., Finance Act 2017, c. 10, pt. 1, § 1 (Eng.) ("Income tax is charged for the tax
year 2017-18."); see also Constitution du Grand-Duch6 de Luxembourg [Constitution] art.
100.
159 3 Adolph Wagner & Hermann Deite, Spezielle Steuerlehre § 108 (2d ed. 1912).
160 Daunton, note 58, at 65.
161
ginal tax rate on personal income during the twentieth century. Po-
litical scientists have traced this imbalance back to the "highly
unstable tax structure" brought about by the "centralized single-mem-
ber, first-past-the-post electoral system." 162 On this basis, the postwar
years have seen an unprecedented tax burden on the British economy
for many decades before both the Conservative (Margaret Thatcher)
and Labour (Tony Blair) governments reconfirmed the British con-
sensus to reduce rather than to increase the tax burden of the people.
Once a truly left-leaning government comes to power in England,
there will be hardly any constitutional constraints to their willingness
to move to a new fiscal paradigm.
2. The U.S. Approach

The United States is a special case. While many areas of public pol-
icy have been subject to constitutional debate and to "judicial activ-
ism" at the level of the Supreme Court, we find a high degree of
judicial deference to the political decisions taken by Congress and
state legislatures in fiscal matters. 163 Chief Justice Marshall's famous
164 might have
dictum that "the power to tax is the power to destroy"
been mitigated by later findings, most prominently by Oliver Wendell
Holmes. 165 But as compared to their counterparts in continental Eu-
rope, 166 the Justices of the Supreme Court have never developed as
strong material limitations to tax legislation-for example, under the
168 Even the Uni-
Equal Protection Clause1 67 or the Takings Clause.
See the statistical findings in Scheve & Stasavage, note 25, at 57.
161
Sven Steinmo & Caroline Tolbert, Do Institutions Really Matter? Taxation in Indus-
162
trialized Democracies, 31 Comp. Pol. Stud. 165, 171 (1998).
163 Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1 (1999); Boris I.
Bittker, Constitutional Limits on the Taxing Power of the Federal Government, 41 Tax
Law. 3 (1987).
164 McCulloch v. Maryland, 17 U.S. 316, 327 (1819).
165 Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 223 (1928) ("The power
to tax is not the power to destroy while this Court sits.").
166 As to the deferential position the U.S. Supreme Court has taken as regards economic
legislation, which is only subject to scrutiny under a "rational basis test," see Gerald Gun-
ther, The Supreme Court, 1971 Term, Foreword: In Search of Evolving Doctrine on a
Changing Court: A Model for a Newer Equal Protection, 86 Harv. L. Rev. 1 (1972) (dis-
cussing the foundations of rational-basis jurisprudence); Raphael Holoszyc-Pimentel, Rec-
onciling Rational Basis Review: When Does Rational Basis Bite?, 90 N.Y.U. L. Rev. 2070
(2015); Vicki C. Jackson, Constitutional Law in an Age of Proportionality, 124 Yale L.J.
3094, 3172-83 (2015); Robert F. Nagel, Legislative Purpose, Rationality, and Equal Protec-
tion, 82 Yale L.J. 123 (1972).
167 See Armour v. City of Indianapolis, 132 S.Ct. 2073 (2012) ("And we have repeatedly
pointed out that '[1]egislatures have especially broad latitude in creating classifications and
distinctions in tax statutes."'); Regan v. Taxation With Representation of Washington, 461
U.S. 540, 547 (1983); see also Fitzgerald v. Racing Ass'n of Central Iowa, 539 U.S. 103, 107-
08 (2003); Nordlinger v. Hahn, 505 U.S. 1, 11 (1992); Lehnhausen v. Lake Shore Auto Parts
formity Clause, which ensures equal treatment among taxpayers from
different states, has never been developed into an overarching princi-
ple of tax equality.1 69
The most prominent hardwired constraint to federal and state tax
legislation stems from the division of fiscal competences between the
states and the federal government, which the Supreme Court has em-
ployed to limit federal and state taxing powers on many occasions.1 70
At the end of the nineteenth century, the Supreme Court declared a
federal progressive income tax unconstitutional as it did not comply
with the constitutional requirement to "apportion" the tax burden
equally among the states,1'7 and the U.S. Constitution had to be
changed by the Sixteenth Amendment in 1913 to provide a legal basis
for today's federal income tax. State legislators, on the other hand,
have to comply with constitutional limitations of their competences as
well, in particular under the "dormant commerce clause," which has
been employed to strike down tax legislation in a multitude of
cases.1 72 One might fairly say that the constitutional allocation of tax-
ing powers between the federal government and the states establishes
some indirect safeguards for the taxpayers as well, but this seems to be
rather a collateral effect and not an outright goal of this constitutional
framework.
When Chief Justice Marshall declared the power to tax to be "the
power to destroy" in 1819, he simultaneously expressed an optimistic
view as to this dimension of representative democracy:
The people of a State, therefore, give to their Government

a right of taxing themselves and their property, and as the
Co., 410 U.S. 356, 359 (1973); Madden v. Kentucky, 309 U.S. 83, 87-88 (1940); Citizens'
Telephone Co. of Grand Rapids v. Fuller, 229 U.S. 322, 329 (1913); William Barker, The
Three Faces of Equality: Constitutional Requirements in Taxation, 57 Case Western Res.
L. Rev. 1 (2006) (providing a comparative account of the principle of equality in the
United States and Germany).
168 Brushaber v. Union Pacific R.R., 240 U.S. 1, 24-25 (1916); Eric Kades, Drawing the
Line Between Takings and Taxation: The Continuous Burdens Principle, and Its Broader
Application, 97 Nw. L. Rev. 189 (2002). For a more forceful use of the takings clause in
fiscal matters, see Epstein, note 99, at 283-305.
169 Bittker, note 163 (citing Knowlton v. Moore, 178 U.S. 41 (1900) (declaring a progres-
sive inheritance tax to comply with the Uniformity Clause).
170 Ackerman, note 163 (analyzing the constitutional limitations on "direct" federal
taxes).
171 Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895). It should not go unno-
ticed, however, that at the state level, some constitutions provide that only "proportional"
and no "graduated" or "progressive" income taxes can be levied. See Walter Hellerstein,
Kirk J. Stark, John A. Swain & Joan M. Youngman, State and Local Taxation: Cases and
Materials 98 (10th ed. 2014).
172 Michael S. Knoll & Ruth Mason, The Economic Foundation of the Dormant Com-
merce Clause, 102 Va. L. Rev. 309 (2017).
exigencies of Government cannot be limited, they prescribe
no limits to the exercise of this right, resting confidently on
the interest of the legislator and on the influence of the con-
stituent over their representative to guard them against its
abuse. 173
This approach makes the political process, but also specific instru-
ments such as a "government shutdown," much more important than
substantive limitations on the state's power to tax its own citizens.
And it may well be, as recent studies have tried to show, that in the
United States there exists a relatively stable antipathy among the elec-
torate against "taxing the rich." 174 But even in the United States some
scholars have expressed doubts as to the long-term viability of these
political arrangements.1 75 They propose that basic principles in taxa-
tion should be linked to individual rights and liberties under the Con-
stitution. This is the direction constitutional law has tried to take in
Germany and many other European 76 and Latin American countries.
3. The German Approach
German constitutional thinking does not start from the assumption

that the fiscal powers of the Bundestag act as a shield against the exec-
utive branch's fiscal outreach. Rather, the Bundestag is in full control
of the government-the Federal Chancellor and the Cabinet being re-
sponsible to and dependent on the trust of the Parliament. Tax legisla-
tion, once it has been established, will remain in force until the
Bundestag decides to amend and change its text, but there is no need
to reintroduce the legal basis for taxation each and every year. Parlia-
ment is seen as the supreme source of stately power and not as a coun-
terweight to the exercise of stately power by the other branches of
government.
Against this background it is interesting to note that in the context
of the German tradition, constitutional protection of the individual
taxpayer has emerged as a fundamental element of the finely tuned
balance between the individual and the state. In Germany, the legisla-
ture-or, the people-have assumed the role of the monarch, and it is
one of the basic features of Germany's constitution, that citizens have
to be protected against overreaching fiscal claims by relying on the
173 McCulloch v. Maryland, 17 U. S. 316, 327, 428 (1819).

174 Scheve & Stasavage, note 25, at 12; Kenneth Scheve & David Stasavage, Wealth
Inequality and Democracy, 20 Ann. Rev. Pol. Sci. 451, 463-64 (2017).
175 Epstein, note 99, at 283-305.
176 For the Italian approach, see A. Giovannini, Legalith ed Equith: Per un Nuovo Sis-
tema Impositivo in Diritto e Pratica Tributaria 2335 (Universita di Parma 2017).
fundamental rights enshrined in the constitution, notwithstanding the
fact that the people's representative is the source of fiscal legislation.
In this context, the application of the fundamental right is meant to
fulfill two purposes. It is meant to protect minorities against the over-
whelming interest of the majority and against self-serving coalitions
between different stakeholder groups within the citizenry. It is also
meant to strike down illegitimate tax benefits awarded to powerful
pressure groups, building on the earlier tradition of banning fiscal
privilege. In such a system, the material principle of fiscal equity com-
plements democratic decision-making. It fights tax privilege for the
rich as well as special charges on individual economic actors and
groups. 177
It is not possible to address all constitutional facets and implications
of (horizontal and vertical) tax equity in this Article.1 78 It is not even
clear to what extent redistribution of wealth by tax means simply fol-
lows from the principle of equity or whether it requires specific imple-
mentation and justification at a separate level. 179 But one thing is
clear. The principles of horizontal and vertical equity do not preordain
the structure and the scope of any tax system. They leave a lot of
leeway to the legislator to decide on the types of taxes, the definition
of the tax base, and the setting of the tax rates.
One of the most relevant aspects of this constitutional framework
concerns the progressivity of tax rates in the area of the income tax
and the net wealth tax or the inheritance tax. To what extent does the
principle of equal treatment prohibit steep surges in the tax rate? The
German Constitutional Court raised the issue in 2006 in a general
fashion (when it discarded the "half-income limitation" under the Ba-
sic Law's property clause) and admonished the legislature not to in-
troduce overly steep progressivity for income taxation. 180 The issue
may reach the courts in Germany quite soon again as the newly
formed German coalition government has agreed to scrap the so-
called solidarity surcharge 81 on the income tax for 90% of taxpayers.
177 Paul Kirchhof, Besteuerung im Verfassungsstaat 10 (2000); Wolfgang Schan,

Besteuerungsgleichheit und Subventionsgleichheit in Steuerrecht im Rechtsstaat- Fest-
schrift fOr Wolfgang Spindler 189 (Rudolf Mellinghoff et al. eds., 2011). For a recent over-
view, see Johanna Hey, Entwicklungen und Zukunftsfragen des Steuerverfassungsrechts,
in 100 Jahre Steuer-rechtsprechung in Deutschland 1918-2018: Festschrift for den
Bundesfinanzhof 451 (Klaus-Dieter Draen, Johanna Hey & Rudolk Mellinghoff eds.,
2018).
178 Musgrave, note 48, at 61, 90.
179 Christine Osterloh-Konrad, Zur Legitimation steuerlicher Umverteilung, 93(46)
Steuer und Wirtschaft 305 (2017).
180 Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court] 2 BvR 2194/99,
Jan. 18, 2006, vol. 115, 97, 114-17 (Ger.).
181 The solidarity surcharge ("Solidarithtszuschlag") had been introduced in 1990 to fi-
nance the cost of German reunification. It has remained in place for more than twenty-five
It will remain in force only for the upper 10%, a strange and novel
application of the notion of "solidarity." 1 8 2 In other European nations,
there exists some additional constitutional jurisprudence in this area.
In France, a special income tax rate of 75% on income exceeding 1
million C was declared unconstitutional in 2012 by the Conseil Consti-
tutionnel, but a later version was approved in 2013.183 Nevertheless,
while the Conseil Constitutionnel validated the marginal tax rate of
75%, the Conseil hit the brakes as some items of financial income
were subject to an overall tax burden of more than 90%, which it
found to violate the "ability-to-pay principle" enshrined in the French
Constitution. 18 4 In Switzerland, as early as 1973 the Federal Tribunal
found some elements of a cantonal wealth tax unconstitutional as
progressivity was used to an extent that applied marginal tax rates of
up to 250% in certain tax brackets.1 85
The issue of special tax benefits, or privilege, has not gone away
since the days of the French Revolution. As current political practice
shows, tax privilege today takes the form of intended or unintended
"tax incentives," most prominently tax breaks for business income or
business assets. From a constitutional background this leads to the
problem of the legitimacy of pursuing nontax goals in fiscal legislation.
The most prominent case in recent years, where the overall problem
became highly visible, concerned inheritance taxation as reformed in
2008.186 This legislation combined two main deficiencies where mate-
rial principles of taxation and the legitimating power of democracy
clash. On the one hand, the Bundestag decided to establish generous
tax-free thresholds that exempted 90% of the country's citizens. On
the other hand, rich business owners (in particular family businesses),
being a formidable pressure group in German politics, succeeded in
lobbying for large-scale tax exemptions for business owners. In the
end, neither the large majority of low-wealth voters nor the special-
years. Multiple attempts to have it struck down by the Constitutional Court have failed so
far.
182 Christian Democratic Union et al., Ein neuer Aufbruch fur; Europa-Eine neue
Dynamik fur Deutschland-Ein neuer Zusammenhalt fur; unser Land: Koalitionsvertrag
zwischen CDU, CSU und SPD, 19 Legislaturperiode 68 (2018). For a first critical assess-
ment from the point of view of constitutional law, see Hanno Kube, Steuerpolitische Per-
spektiven der neuen Legislaturperiode-Vorstellung, Wdirdigung, Ausblick, 100 Finanz-
Rundschau 408, 409-10 (2018).
183 Conseil constitutionnel [CC] [Constitutional Court] decision No. 2012-662 DC, Dec.
29, 2012 (Fr.).
184 Conseil constitutionnel [CC] [Constitutional Court] decision No. 2013-684 DC, Dec.
29, 2013 (Fr.).
185 Bundesgericht [BGer] [Federal Supreme Court] July 20, 1973, 1973 BGE 99, 638, 656
(Switz.).
186 Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court] 1 BvL 21/12,
Dec. 17, 2014, vol. 138, 136, 252-55 (Ger.) (Baer, J., Geier, J. & Masing, J., dissenting).
interest group of superrich business owners contributed a meaningful
amount to the revenue from inheritance tax, which fell upon a small
residual constituency of high-income professionals owning investment
assets but not business assets. Applying the principle of equal treat-
ment, the Constitutional Court urged the German legislature in 2014
to limit the extent of tax breaks for business gradually, but the court
did not dare challenge the underlying policies in a fundamental
fashion.18 7
V. INDIVIDUAL MIGRATION-TAXATION, CITIZENSHIP, AND VOTING
This Part of the Article is devoted to the interaction among taxa-

tion, voting rights, and constitutional constraints that arises when indi-
viduals migrate (for nontax reasons) across national boundaries.
Congruence breaks down in two ways under these conditions. First,
citizens living abroad are by and large free of tax burdens in their
home country but can retain voting rights. Second, resident foreigners
have to pay taxes on their worldwide income without enjoying formal
participation in the political process. This gives rise to issues of consti-
tutional policy along the lines of the dichotomy between "consent"
and "content" as laid out in Part IV. Should one bolster congruence in
the case of nonresident citizens through a consent-based approach
that makes voting rights dependent on being subject to domestic taxa-
tion? Should one bolster congruence in the case of resident nonci-
tizens through a parallel consent-based approach under which such
residents obtain voting rights, even absent citizenship? Or, should one
counter the erosion of congruence here through a content-based ap-
proach that adopts constitutional principles of nondiscrimination vis-
A-vis taxpaying citizens? I first take up the case of nonresident citi-
zens, then turn to the inverse case of resident noncitizens.
A. Nonresident Citizens
1. (No) Taxation
Given the amount of theoretical thinking and political argument

that has been devoted to the interaction among taxation, democracy,
and citizenship, one might assume that citizenship would be a promi-
nent element in designing tax laws around the world, particularly with
respect to its international dimension. This line of thinking is corrobo-
rated by international customary law, which does not constrain a
187 Id. at 179-246.

188 Reality
country's right to tax its own citizens wherever they live.
looks different. Citizenship has become largely irrelevant for (interna-
tional) tax policy and has been replaced by concepts of residence and
territoriality. Specifically, under most income tax laws, only (but all)
residents are subject to worldwide taxation irrespective of their na-
tionality, while nonresidents are only taxable with respect to their in-
come sourced in the taxing jurisdiction.18 9 Thus in most cases
nonresident citizens will owe no tax to their country of citizenship so
long as they have no income sourced therein. Solely the United
90 and Eritreal 91 strictly (but not exclusively) adhere to world-
Stateso
wide taxability on the basis of nationality. 192 Given the fact that mi-
gration and globalization have led to a substantial number of people
living outside their country of citizenship, it has become a natural and
widely observed pattern that personal taxability is disconnected from
citizenship both in the legal sense and as an economic and social
reality. 193
2. Representation
As a general matter, of course, citizens have a right to vote in demo-

cratic societies. But what if those citizens don't pay taxes to their
country of citizenship? Is it possible, or even legitimate, to link voting
rights for citizens to taxability in their country of citizenship? In other
words, can one bolster congruence in this type of case by curtailingthe
vote? This is not an issue for a country like the United States, as U.S.
citizens are both subject to unlimited tax liability and entitled to vote
iss Kallergis, note 16, para. 297 (2018); Rutsel Silvestre J. Martha, The Jurisdiction to
Tax in International Law 66-73 (1989) (highlighting the "undesirable" character of nation-
ality-based taxation); F. A. Mann, The Doctrine of International Jurisdiction Revisited Af-
ter 20 Years, in Further Studies in International Law 3, 8-9, 14 (F.A. Mann ed., 1990).
189 Hugh J. Ault & Brian J. Arnold, Comparative Income Taxation 431-34 (3d ed. 2010).
190 Reg. § 1.1-1(a)(1) (2015) ("Section 1 of the Code imposes an income tax on the in-
come of every individual who is a citizen or resident of the United States"); Reg. § 1.1-1(b)
("all citizens of the United States, wherever resident, . . . are liable to the income taxes
imposed by the Code whether the income is received from sources within or without the
United States"). For "accidental Americans," the compatibility of citizenship taxation with
international customary law has been challenged recently. See Allison Christians, A
Global Perspective on Citizenship-Based Taxation, 38 Mich. J. Int'l L. 193, 226-30 (2017).
191 S.C. Res. 2023 ¶1 10-11 (Dec. 5, 2011) (condemning the use of "extortion, threats of
violence, fraud and other illicit means" to enforce their "diaspora tax").
192 Levente Torma, IBFD Tax Research Platform, Hungary-Individual Taxation 2
(2018) (showing the special case of Hungary where citizens are deemed to be resident and
therefore taxable with their worldwide income).
193 Indirect taxes such as the nearly omnipresent value-added tax and specific consump-
tion taxes never carried any link to the citizenship of suppliers or consumers as a personal
quality-these taxes are traditionally levied on the basis of the territorially delineated con-
sumption of goods and services.
in U.S. federal elections wherever they live. 194 But countries that do
not exercise their right to tax their expatriate citizens have to address
the question of whether these expatriates should have voting rights or
not.
State practice varies hugely in this respect. In a 2011 report, 195 the
European Commission for Democracy through Law (Venice Commis-
sion) laid out that there is no uniform model in place. Many countries
sustain voting rights without time limits irrespective of residence (e.g.,
France, Portugal or Switzerland). Other countries award the franchise
only to people living inside their home country and grant narrow ex-
ceptions from this rule specifically to foreign-based diplomatic and
military personnel (e.g., Ireland and Israel). Most countries apply a
compromise position. In Germany voting rights typically expire
twenty-five years after taking foreign residence, and the United King-
dom applies a similar statute of limitation of fifteen years, as many
British citizens learned the hard way when they were denied a vote in
the Brexit Referendum in June 2016.196
While the overall political consensus favors generous allowance of
out-of-country voting, 197 the courts have, nonetheless, frequently held
in favor of legal constraints on expatriate voting rights. Neither the
European Court of Human Rightsl 98 nor the European Court of Jus-
tice' 99 have forced EU Member States to extend voting rights to citi-
zens living abroad, and this result has been confirmed by domestic
courts. 2 0 0 It has been largely accepted that there must be some leeway
for national legislators to decide when the link between people and
their home country has become so tenuous and weak that they are not
194 For a recent account and critical assessment of U.S. worldwide taxation on the basis
of citizenship, see Ruth Mason, Citizenship Taxation, 89 S. Cal. L. Rev. 169 (2016).
195 Eur. Commission for Democracy through Law (Venice Commission), Report on
Out-of-Country Voting (June 24, 2011), https://www.venice.coe.int/webforms/documents/
default.aspx?pdffile=CDL-AD(2011)022-e.
196 This measure was upheld by the British courts. Shindler and MacLennan v. Chancel-
lor of the Duchy of Lancaster and Secretary of State for Foreign and Commonwealth Af-
fairs [2016] EWHC 957 (Eng.).
197 Report on Out-of-Country Voting, note 195, at para. 92; Rainer Baub6ck, Political
Membership and Democratic Boundaries, The Oxford Handbook of Citizenship 60, 70
(Ayelet Shachar, Rainer Baubock, Irene Bloemraad & Maarten Vink eds., 2017); Rainer
Baubbck, Stakeholder Citizenship and Transnational Political Participation: A Normative
Evaluation of External Voting, 75 Fordham L. Rev. 2393 (2007).
198 Doyle v. The United Kingdom [2007] 45 EHHR SE3; Shindler v. The United King-
dom [2013] 58 EHHR 9. For a critical assessment of this jurisprudence, see Richard Lap-
pin, The Right to Vote for Non-Resident Citizens in Europe, 65 Int'l & Comp. L.Q. 859
(2016).
199 Case 300/04, Eman and Sevinger v. College van burgemeester en wethouders van
Den Haag, 2006 E.C.R. 1-8055 paras. 54-55.
200 R (Preston) v. The Lord President of the Council [2012] EWCA Civ 1378.
sufficiently affected by and knowledgeable about the political deci-
sions to be made at home.
The most recent cause c6l6bre in this field is Frank v. Canada, a
case recently decided by the Supreme Court of Canada on the 1993
elimination of expatriate voting rights (becoming effective five years
after a citizen's emigration). In 2015, in a judgment of the Court of
Appeal for Ontario, 2 0 1 the majority of judges rejected the view that
this limitation infringes upon Section 3 of the Canadian Charter of
Rights and Freedoms, which grants each Canadian citizen the right to
vote. Their judgment goes directly back to the contractarian views of
the state as promoted by Locke and Rousseau:
The electorate submits to the laws because it has had a

voice in making them. This is the social contract that gives
the laws their legitimacy. . . . Permitting all non-resident citi-
zens to vote would allow them to participate in making laws
that affect Canadian residents on a daily basis, but have little
to no practical consequence for their own daily lives. This
would erode the social contract and undermine the legiti-
0 2
macy of the laws.2
The Supreme Court of Canada took a different view in its final

judgment. The majority, led by Chief Justice Wagner, held that the
concept of a "social contract" belongs to the realm of theory and does
not form part of the relevant legislation. 203 Moreover, even non-resi-
dent Canadian citizens would "maintain connections to Canada in
many ways, including through family, online media and visits home,
and by contributing taxes and collecting social benefits." 204
In sum, one encounters a range of approaches regarding the extent
of voting rights of nonresident citizens. Where countries do allow such
voting rights to survive, there will be a breakdown in congruence.
Note that this breakdown cannot be solved by material constitutional
constraints regarding taxation. The relevant individuals here have al-
ready escaped the burdens of taxation. But should there be constitu-
tional constraints regarding voting that would restore congruence?
3. Constitutional Constraints
As a matter of constitutional policy, does it make sense to enable
those who do not pay the tax to decide on its levying and on its spend-
201 Frank v. Canada (Attorney General) [2015] ONCA 536.

202 Id. at paras. 5-6.
203 Frank v. Canada (Attorney General), [2019] 1 S.C.R. 3 para 53.
204 Id. para. 69.
ing? Specifically, should a constitution legally prevent citizens living
abroad from gaining a decisive vote in fiscal matters? 2 05
On balance, such constitutional constraints would not be justified.
First, although there is a breakdown in congruence for nonresident
citizens, congruence is often lacking with respect to resident citizens as
well. Yet one would not, under modern conditions, consider that
breakdown as a basis for stripping resident citizens of their rights to
vote. Specifically, the right to vote of resident citizens does not at pre-
sent depend on their current financial contributions to the public cof-
fers, even if that was largely the case in the nineteenth century. 206
Further, resident citizens who live on public welfare are not excluded
from voting under current laws. Second, in a modem democracy, par-
liamentary elections are not only about current taxing and spending
but affect many more long-term aspects of social, economic, and polit-
ical life. A nonresident citizen who doesn't pay tax in a given year still
has the fundamental right to return to the country in the future.
Therefore, the citizen might be affected by other decisions taken to-
day by the institutions acting on behalf of her country of citizenship,
for example, matters of foreign policy, internal security, international
trade, and military activities. These foreign resident citizens are
"stakeholders in the future of the political community." 207 As long as
foreign resident citizens may bear the effect of these decisions in the
long run, it seems legitimate to award them the right to vote in domes-
tic elections.
B. Resident Noncitizens
1. Taxation
A complementary feature of the international tax order is the will-

ingness that most countries show when they tax resident noncitizens.
These individuals are not only liable to tax on their territorially
sourced income and local assets but also on their worldwide income
and net wealth. A London-based lawyer who has been assigned to a
German law firm for two years will have to pay tax in Germany not
only on income generated in Germany but also on income derived
from sources in third countries or home jurisdiction. This is the com-
mon state of affairs in most countries, confirmed by a multitude of
double taxation treaties. 20 8
205 Claudio L6pez-Guerra, Should Expatriates Vote?, 13 J. Pol. Phil. 216 (2005).
206 Baubock, Stakeholder Citizenship, note 197, at 2413; Lappin, note 198, at 881.
207 Baubbck, Stakeholder Citizenship, note 197, at 2446.
208 See, e.g., OECD, Model Tax Convention on Income and on Capital: Condensed Ver-
sion 2017, art. 4, paras. 1-2; Ault, note 189, at 431-34.
According to long-standing jurisprudence and scholarship in inter-

national customary law, the territorial scope of a state's jurisdiction
9
enables the state to levy taxes along these lines. 2 0 As the state is enti-
tled to exercise its jurisdiction over all persons and assets present on
its territory, the resident alien will not have any right to reject these
tax claims out of hand. International law only requires some kind of
"genuine link" to exist between the taxpayer and the taxing state that
is readily apparent when the taxable person is present on the state's
territory. 2 1 0 An archaic notion of territorial raw force is very much
alive in this argument. As Ely put it back in 1888: "The element of
might also undoubtedly enters into taxation, and the mere fact that a
foreigner is so situated that he can be forced to contribute to the ex-
penses of government is at times held to be sufficient reason for plac-
1
ing a tax upon him." 2 1
This statement does not yet give an answer to the question of
whether there exists a material justification for the taxation of resi-
dent aliens. Why should, to borrow from Jeremy Waldron, a resident
alien regard a country to be "my country" in terms of fiscal sacri-
fice? 2 12 And how should domestic tax law address, as Daniel Shaviro
has put it, the fundamental necessity to distinguish between "us" and
"them" when it comes to delineating the body of those "potential
community members" 213 who deserve to be subjected to taxation on
worldwide income?
In this respect, it is interesting how unlimited taxation of resident
aliens has developed over time.2 14 During the nineteenth century, tax-
ability was typically linked to nationality in the same vein as military
215
service, which could only be expected from a state's nationals. For-
eigners were taxable on their locally derived income and assets but
only became subject to unlimited liability after a certain period of
time. This primary orientation on citizenship was still present in 1923,
when the famous "Four Economists" (led by Seligman), in their highly
influential report on international tax policy for the League of Na-
tions, pointed out that "when we deal with the question of personality,
209 Martha, note 188, at 88-93.

210 Kallergis, note 16, paras. 267-93 (discussing different categories of "genuine links").
211 Ely, note 131, at 9; see also Georg von Schanz, Zur Frage der Steuerpflicht, 9
Finanzarchiv 1 (1892).
212 Jeremy Waldron, Special Ties and Natural Duties, 22 Phil. & Pub. Aff. 3, 5-7 (1993).
213 Daniel Shaviro, Taxing Potential Community Members, 70 Tax L. Rev. 75, 89-97
(2016).
214 Otmar Bibler, Prinzipien des Internationales Steuerrecht IStR 161 (Internationales
Steuerdokumentationsburo Amsterdam C, 1964); Wolfgang Schon, Persons and Territo-
ries: On the International Allocation of Taxing Rights, 6 Brit. Tax Rev. 554, 555-57 (2010).
215 Ernst Isay, Internationales Finanzrecht 46 (Verlag W. Kohlhammer, 1934); Schanz,
note 211, at 6.
we are confronted by the original idea of personal political allegiance
or nationality." 2 1 6 Similarly, around this point in time, Article 134 of
the Constitution of the Weimar Republic provided that "all citizens,
without any difference, are obliged to contribute to the public weal
according to their means." 2 17
But this traditional approach, which linked taxability to nationality,
was soon regarded as overly narrow and misleading. 2 18 There was am-
ple reason why resident foreigners, who benefit from public goods in
their country of residence and who compete with local citizens in the
economy, should also bear the burden of public financial needs. 2 1 9
Against this background, taxation of residents was more and more
modeled on the tax treatment of citizens. 220 Since the 1920s, citizen-
ship taxation retreated to the background internationally and resi-
dence taxation took center stage. A review of the literature shows that
the old paradigm has been destroyed so thoroughly that renowned
scholars both inside 22 1 and outside 222 the United States now seem to
regard citizenship as a "proxy" for residence in tax matters, thus turn-
ing the historical trajectory on its head.
Yet unlike most current writers, those scholars, who in the nine-
teenth century advocated the move away from a "contractual" and
benefit-oriented approach to taxation toward an approach shaped by
"membership" and sacrifice, 223 clearly struggled with the fault line be-
tween taxation of citizens and taxation of resident aliens. Ely, who
strongly dismissed the libertarian "contractual" view of taxation in the
case of citizens, maintained it grudgingly for resident aliens:
Taxes on foreigners are justified on the ground that they

must derive some benefit from the existence of the govern-
ment taxing them, and in so far such taxes may be regarded
as a payment for protection, for it cannot be held that the
duties of citizenship devolve upon foreigners. 224
216 Report on Double Taxation Submitted to the Financial Committee by Professors

Bruins, Einaudi, Seligman and Sir. Josiah Stamp, League of Nations Doc. E.F.S. 73 F 19,
pt. II, sec. L.A (1923).
217 1919 Const. art. 134 (Weimar Republic).
218 Anschtitz, note 91; Colquhoun v. Brooks [18891 112 AC 490 (HL) 499 (appeal taken
from Eng.).
219 Bihler, note 214, at 162; Wagner, note 90, ch. 169(a).
220 Seligman, note 131, at 117.
221 Edward A. Zelinsky, Citizenship and Worldwide Taxation: Citizenship as an Ad-
ministrable Proxy for Domicile, 96 Iowa L. Rev. 1289, 1291 (2011).
222 Richard J. Vann, International Aspects of Income Tax, in 2 Tax L. Design and Draft-
ing 718, 729-34 (Victor Thuronyi ed., 1998).
223 See notes 130-31.
224 Ely, note 131, at 9; see also Isay, note 215, at 47-55. Schanz identifies the fault line
clearly. Schanz, note 211, at 44. His example (the resident foreigner is obliged to pay taxes
The justification to tax aliens who are resident in a jurisdiction is
indeed rather strong when applying the "benefit principle," which
22 5
qualifies a tax as a consideration for the enjoyment of public goods.
But it is less straightforward when one characterizes a tax as a sacri-
fice for the sake of a community to which the taxpayer belongs. If we
were of the opinion that solidarity is only conceivable and enforceable
within the political community of citizens in a formal sense, alien re-
sidents could opt out or demand lower and other charges with good
reasons. They might even reject the application of a progressive tax
rate on their overall income. Only if and insofar as they enjoy the
output of domestic institutions, including benefits provided by the
226 But this
welfare state, could they be asked to pay their fair share.
would not be a view that can be traced back to "patriotic affect and
allegiance" within a "nation," 227 as the traditional view would require.
This leads us to the question of whether one should, in the twenty-
first century, move forward and reconceptualize "solidarity" for fiscal
purposes on the basis of territorial cohabitation rather than on the
basis of political membership. From the perspective of political philos-
ophy, this question has been put forcefully by David Miller: "If we
speak of 'countries' as the sites of distributive justice, what does
'country' actually mean? Does it refer to a geographical territory, a
nation, a state, or all of these at once?" 2 28
Contrary to this clear question, in philosophical writing both the
political and the territorial element have been conflated. When John
Rawls discussed this matter in The Law of Peoples, he seems to have
had in mind a "people" organized on a territorial basis, as this terri-
tory is essential in "supporting" their cooperative endeavors "in
perpetuity." 2 2 9 But he did not address the situation of resident for-
eigners explicitly. Michael Blake accepts the Rawlsian view but re-
mains unclear as well: "The criteria for membership within the group
of people entitled to justification through principles of liberal justice,
on my account, is membership as a citizen within the territorial
state. "230
We will not solve in this Article the fundamental issue of delineat-
ing "membership" in a polity as its ramifications go far beyond fiscal
employed to finance preparing a war against his home state) shows that even the benefit
principle is not easy to apply in this situation.
225 See Whitney v. The Commissioners of Inland Revenue [1924] 538 AC 88 (HL) 112
(appeal taken from Eng.).
226 Schanz, note 211, at 8-9; Waldron, note 212, at 16.
227 Waldron, note 212, at 19.
228 David Miller, Justice for Earthlings 143 (2013).
229 John Rawls, The Law of Peoples 38-39 (1999).
230 Michael Blake, Distributive Justice, State Coercion, and Autonomy, 30 Phil. & Pub.
Aff. 257, 289 (2002).
matters. 231 But we can address the question of whether the current
technical concept of "residence" under domestic and international tax
law works as a good proxy for belonging to a stable political or social
community. This is not the case. As Ruth Mason has shown, the no-
tion of taxable fiscal presence in a jurisdiction on the basis of resi-
dence covers a diversity of cases, such as students studying abroad,
corporate employees being assigned to a foreign subsidiary, perma-
nent resettlers and "accidental" foreign citizens (who have acquired
citizenship in their country of birth on the basis of ius soli but have
never lived there and may not even know about their citizenship sta-
tus). 2 3 2 It is clear that the strength of the link between these groups
and the local communities they live in varies hugely. Moreover, the
overly broad scope of the definition of fiscal residence under current
tax practice (a "substantial presence test" varying from country to
country) typically doesn't meet the benchmark for deep social "inte-
gration" into a domestic community. If anything, the traditional En-
glish concept of "domicile" seems to be a more adequate proxy as it
makes the tax status of resident aliens dependent on the missing inten-
tion of taxpayers to return to their home country in the future. 233
Against this background, current residence taxation for resident
foreigners as such seems to be a legitimate fiscal tool only on the basis
of the benefit principle. The mere fiscal residence of a (foreign) per-
son is and remains therefore fundamentally different from citizenship
as it denotes not a "personal" or a "political" but a merely "territo-
rial" or "economic" concept that does not easily justify worldwide tax-
ation. 234 This indicates a meaningful lack of congruence in the way
that resident noncitizens are generally taxed.
It is interesting that some jurisdictions have been more generous
toward resident aliens regarding the taxation of foreign income. The
most prominent example is the United Kingdom, which has awarded
major tax benefits to non-domiciled foreign residents for more than
100 years. These only have to pay tax on their worldwide income as
far as this income is remitted to (and probably consumed on) the terri-
231 For a fully fledged move from birthright citizenship to a citizenship based on resi-
dence, see Jacqueline Stevens, State Without Nations: Citizenship for Mortals 73-103
(2010).
232 Mason, note 194, at 196-240.
233 See Jonathan Schwarz, Booth & Schwarz: Residence, Domicile and UK Taxation
(19th ed. 2016).
234 Schan, note 214, at 557; Klaus Vogel, Ober "Besteuerungsrechte" und uber das Leis-
tungsfahigkeitsprinzip im Internationalen Steuerrecht, in Steuerrecht, Verfassungsrecht,
Finanzpolitik: Festschrift far Franz Klein 361 (Paul Kirchhof et al. eds., 1994); Albert Hen-
sel, Steuerrecht 50 (1924) (speaking of a "personal-territorial" link between the state and
the resident taxpayer).
tory of the United Kingdom. 235 A similar regime is applied in Japan
where short-term residents (up to five years) are only taxable on their
domestic income. 2 3 6 Over time, more and more countries have de-
cided to follow suit and to postpone the full effect of worldwide taxa-
tion in regard to foreign nationals who move their residence to a new
home jurisdiction. 237 Most recently, Italy introduced in 2017 a new tax
regime that virtually waives worldwide taxation for a period of fifteen
years for taxpayers who relocate to Italy and who did not reside in
Italy for at least nine years of the ten years preceding taking residence
in Italy.238 This shows that at least some countries have developed a
more sophisticated approach to the alignment of tax liability on a
worldwide basis and the stability of the connection between resident
noncitizens and the country. Where this is the case, congruence is bol-
stered, at least to some extent, through the contraction of taxing
rights. But these approaches are the exception rather than the norm.
2. (No) Representation
Outside these specific hybrid regimes that provide limited taxation

for resident noncitizens, current international practice obliges resident
aliens to pay no less tax than domestic citizens. This leads to the ques-
tion of whether one should aim for greater congruence through the
mechanism of increased voting rights, allowing greater voice on deci-
sions about how to raise and how to spend these taxes. If one takes a
wide view and subscribes to the thesis that voting rights should be in
the hands of those individuals who are "affected by"2 3 the state's ac-
9
tions, it becomes obvious that resident aliens cannot be excluded eas-

ily. They contribute to the state's funds and they benefit from the
state's public expenditure. The mere fact that they entered the state's
territory voluntarily and that they are free to return to their home
country whenever they want may justify their obedience to domestic
235 It should be noted that when modern income tax was introduced to Prussia in 1892,
representatives of the enjoyable Rhine Valley towns pleaded for a similar tax privilege for
rich foreigners taking their retirement homes in Prussia; this was rejected by Minister of
Finance Miquel on several occasions. See Walter Mathiak, Das preupische Einkommen-
steuergesetz von 1891 im Rahmen der Miquelschen Steuerreform 1891/93, at 133-35, 169
(2010).
Ault & Arnold, note 189, at 434.
236
Giorgio Beretta, Mobility of Individuals After BEPS: The Persistent Conflict Be-
237
tween Jurisdictions, 72 Bull. for Int'l Tax'n 439, 442-43 (2018).
238 Giorgio Beretta, From Worldwide to Territorial Taxation: Is Italy Now an Attractive
Destination for Migrating Individuals?, 71 Bull. for Int'l Tax'n 437, 437-43 (2017).
239 Ludvig Beckman, Citizenship and Voting Rights: Should Resident Aliens Vote?, 10
Citizenship Stud. 153, 153-62 (2006).

tax legislation as such 240 but not the denial of individual political
rights.
What does this mean for the delineation of the electorate? If one
regards residence-based taxation as a form of quasi-citizenship taxa-
tion, the argument for voting rights is strong. But this is not the posi-
tion taken in this Article. Fiscal residence does not, as has been laid
out above, relate to a sufficient level of integration of a taxpayer into
the domestic society on polling day. Moreover, national elections are
not only about taxation and not only about the current year. They
affect many elements of public life and the diversity of issues makes it
hard to extend full electoral rights to people who are not formally
members of the citizenry of a state. Taking a more generous approach
would also lead to a slippery slope. If one grants voting rights to each
individual who is subject to substantial tax claims in a country in a
given year, one would also have to think about voting rights for for-
eign taxpayers living abroad who, due to their domestic investment
and the business carried on within a jurisdiction, happen to contribute
substantially to the public sector. Last but not least, as internationally
active taxpayers tend to pay taxes in multiple states, issues of multiple
voting rights would have to be solved as well. Therefore, it makes
more sense to offer alien residents who show the intention to join the
local community generous access to acquiring citizenship and thus full
political rights 24 1 than to attribute voting rights to them on the basis of
current tax payments.
This argument does not logically exclude intermediate solutions-
for example, the allocation of limited or split voting rights to foreign
taxpayers. Many countries grant resident foreigners access to local
elections, thereby providing them with political influence on local tax
matters. 242 But in terms of elections at the central level, where repre-
sentatives are entrusted by the people in a comprehensive fashion
with all political issues that may arise during a certain time interval,
the case for limited or split voting rights benefiting foreign taxpayers
is hard to make.
240 Waldron, note 212, at 8-9.

241 Bellamy, note 3, at 78-96.
242 Id. at 62-63. The European Court of Human Rights has so far not addressed the issue
of whether the European Convention on Human Rights obliges Member States to extend
voting rights to lawfully resident aliens. See Christoph Grabenwarter, Reception of Mi-
grants: Material and Procedural Guarantees for Settled Migrants, Opening of the Judicial
Year Seminar at the European Court of Human Rights (Jan. 27, 2017).
3. Constitutional Constraints
This brings us back to the question of whether any lack in "consent"
should be compensated for by "content," in particular by the applica-
tion of a principle of equal treatment.2 4 3 Should, from the vantage
point of constitutional policy, resident aliens who cannot influence tax
legislation by "voice" be protected by the principle that they are not
subjected to a harsher tax burden than domestic citizens? This would,
to employ a distinction proposed by Richard Bellamy, award resident
aliens at least a substantial degree of "legal citizenship" compensating
2
them for the lack of full "political citizenship." 44
From a historical perspective, visible safeguards against tax discrim-
ination of foreign nationals were first introduced by means of interna-
tional conventions, in particular under the treaties on "friendship,
commerce and navigation," which provide for equitable treatment of
245
nationals of a contracting state by the other country's authorities.
Countries like the United States, Japan, and Germany have made
wide use of them since the late nineteenth century, including provi-
246
sions securing "national treatment" in tax matters. Today, nondis-
crimination of resident aliens is firmly established around the world
under double tax conventions.
247
Most forcefully, European Union
law forbids any discrimination in fiscal matters by Member States
against citizens of EU Member States wherever they reside in Eu-
rope. 2 4 8 But buried underneath this heap of international agreements
there remains the question: Should equal treatment of resident aliens
in tax matters also be a requirement under domestic constitutional
law?
Such constitutional protection is not self-evident from a historical
and comparative perspective. In 1930, Albert Hensel, one of the
founding fathers of tax law scholarship in Germany, explicitly took the
view that the constitutional protection of horizontal equity (champi-
See Part IV.B.2.

243
Bellamy, note 3, at 27-51.
244
245 See generally Andreas Paulus, Treaties of Friendship, Commerce and Navigation, in
Max Planck Encyclopedia of Public International Law (2011). For a specific example, see
Treaty of Friendship, Commerce and Consular Rights, U.S.-Hungary, art. VIII, June 24,
1925, 44 Stat. 2441, 2447 ("The nationals and merchandise of each High Contracting Party
within the territories of the other shall receive the same treatment as nationals and mer-
chandise of the country with regard to internal taxes. . . .").
246 Alexander Rust, OECD MC Commentary, in 2 Klaus Vogel on Double Taxation
Conventions 1661 (Ekkehart Reimer & Alexander Rust eds., 4th ed. 2015).
247 See id. at 1657.
248 Wolfgang Sch6n, Neutrality and Territoriality-Competing or Converging Concepts
in European Tax Law, 69 Bull. for Int'l Tax'n 271 (2015). The main feature of the Euro-
pean development lies in the fact that the nondiscrimination principle has been extended
by the CJEU from nondiscrimination of foreign citizens to nondiscrimination of foreign
residents, a consequence not taken under double taxation conventions.
oned by him in the field of domestic taxation) should only apply
among the citizenry of a country, while the tax burden to be applied to
resident aliens should be left to the discretion of the national legisla-
ture. 2 4 9 This reflects a widespread attitude dating back to the nine-
teenth century and early twentieth century according to which the
principle of equal protection pertains only to the citizenry of a state.
Things have not improved dramatically when we look at them to-
day. 2 5 0 The traditional view that only citizens in the formal sense ben-
efit from the principle of equality can still be found in many
constitutions. 2 5 1 More specifically, Article 31 of the Spanish Constitu-
tion requires tax equality according to ability to pay for all those con-
tributing to the public sector, but this is part of the general chapter on
the rights of "citizens" and not addressed in the context of the funda-
mental rights available to everyone. 252 1n a more generous fashion, the
principle of equal treatment laid down in Article 3 of the German
Basic Law does not distinguish between citizens and foreigners. 253 The
Swedish Constitution contains an equal protection clause that does
not distinguish between Swedish citizens and foreigners and explicitly
awards equal protection to foreigners in regard to retroactive tax leg-
islation.254 And the Constitution of the Netherlands goes even further
and explicitly provides equal treatment for "all persons in the Nether-
lands" 2 5 5 on a clearly territorial basis.
How does political philosophy deal with the issue of whether and
under which circumstances resident noncitizens should have a right to
benefit from the binding principles of distributive justice established
in a society? 2 5 6 The baseline seems to be that while fundamental hu-
249 Albert Hensel, Verfassungsrechtliche Bindungen des Steuergesetzgebers:

Besteuerung nach der Leistungsfthigkeit-Gleichheit vor dem Gesetz, in 4 Vierteljahress-
chrift fur Steuer- und Finanzrecht 441, 442 (1930). In a similar vein, see Isay, note 215, at
53-54.
250 For a comparative study from the perspective of the United States, see David Cole,
Are Foreign Nationals Entitled to the Same Constitutional Rights as Citizens?, 25 T. Jef-
ferson L. Rev. 367 (2003).
251 This is the case, for example, in Belgium and Luxembourg. La Constitution [Consti-
tution] 1994 Const. arts. 10-11 (Belg.); Constitution du Grand-Duch6 de Luxembourg
[Constitution] art. 101.
252 Constitution of the Kingdom of Spain art. 31.
253 This point has been elaborated very clearly in Bundesverfassungsgericht [BVerfG]
[Federal Constitutional Court] Mar. 22, 1983, 2 BvR 475/478, vol. 63, 343, 368, 371. See also
BVerfG Jul. 18, 2006, 1 BvL 1/04, 1 BvL 12/04, vol. 116, 243; BVerfG Feb. 7, 2012, 1 BvL
14/07, vol. 130, 240, 252-60.
254 Constitution of Sweden, Successionsordningen (Act of Succession) [SO] 1:9, 2:22.
255 Constitution of the Kingdom of the Netherlands art.1, sub.1.
256 For the sake of clarity, this issue has to be disentangled from a much larger prob-
lem-the problem of international distributive justice. There is a major international de-
bate on whether poor states (or poor people in other states) deserve to participate in cross-
border transfers of wealth in order to establish social justice at the world level. See gener-
manitarian principles have to be followed on a global scale, the more

demanding aspects of social justice, such as the principle of equal
treatment, only apply in the context of a limited political community.
This involves, according to Thomas Nagel, "putting (the fellow citi-
zens of a sovereign state) into a relation that they do not have with the
rest of humanity, an institutional relation which must then be evalu-
ated by the special standards of fairness and equality that fill out the
content of justice." 257
Taking a closer look, according to the view of Nagel and his follow-
ers, access to this kind of distributive justice is available for a limited
group of "members" based on a tripartite concept. Distributive justice
requires that a group is jointly under the control of a singular "coer-
cive power," that the members of this group share "coauthorship" in
the underlying institutional arrangements, and that they engage in
some "cooperative practice" as regards political and economic af-
fairs. 258 For resident noncitizens this brings up an intricate question. Is
it possible to build their claim for nondiscrimination on the fact that
they are subject to the same "territorial" coercive power of the do-
mestic government and engage in the same "cooperative practice"--
that is, participate in the network of the domestic economy? Or, does
the claim for equal treatment require a further degree of political
"membership" that would include voting rights or even, to refer to the
above-mentioned undercurrent of solidarity within a nation, "com-
mon sentiments"? Nagel seems to regard both elements as relevant
for social justice. Both the "coercive" power of the government and
the "coauthorship" of the law:
ally Michael Blake & Patrick Smith, International Distributive Justice, Stanford Encyclo-
pedia of Philosophy (Oct. 24, 2013), https://plato.stanford.edu/entries/international-justice/.
"Internationalists" such as Rawls, note 229, at 117, and his followers, most prominently
Thomas Nagel, The Problem of Global Justice, 33 Phil. & Pub. Aff. 113 (2005), are quite
restrictive on this issue and only plead for international "assistance" and "humanitarian"
help. See also David Miller, National Responsibility and Global Justice (2007); Blake, note
230. Among tax lawyers, this distinction has been drawn forcefully by Michael Graetz,
Follow the Money 98-103 (2016). Outside the domestic community, a group of "cosmo-
politans," led by Thomas Pogge, World Poverty and Human Rights (2002), have estab-
lished the view that national boundaries following the concept of citizenship have become
arbitrary and should be abandoned when matters of equality and social justice arise. See
also Ilan Benshalom, The New Poor at Our Gates: Global Justice Implications for Interna-
tional Trade and Tax Law, 85 N.Y.U. Law Rev. 1 (2010); Gillian Brock & Thomas Pogge,
Global Tax Justice and Global Justice, 1 Moral Phil. & Pol. 1 (2014); Peter Dietsch
&
Thomas Rixen, Tax Competition and Global Background Justice, 22 J. Pol. Phil. 150
(2014); Miriam Ronzoni, Global Tax Governance: The Bullets Internationalists Must
Bite-and Those They Must Not, 1 Moral Phil. & Pol. 37 (2014). This debate is not ad-
dressed in this Article.
257 Nagel, note 256, at 120.
258 Michael Blake, Global Distributive Justice: Why Political Philosophy Needs Political
Science, 15 Ann. Rev. Pol. Sci. 121, 131 (2012).
I submit that it is this complex fact-that we are both pu-
tative joint authors of the coercively imposed system, and
subject to its norms, i.e., expected to accept their authority
even when the collective decision diverges from our personal
preferences-that creates the special presumption against ar-
bitrary inequalities in our treatment by the system. 259
This argument runs into problems that become clearly visible in the
case of the taxation of resident noncitizens. While they do not partici-
pate in the political process, as they are not entitled to vote, they are
still under the same coercive power and under current practice subject
to exactly the same tax burden as domestic citizens. And as long as
"citizens and residents, in all but the most extreme cases, provide the
financial and sociological support required to sustain the state," 2 6 0 it
would be hard to explain, or even cynical to assume, that resident
aliens can be forced without constraints to make those "unrequited
payments" to the state but cannot demand equal treatment by that
state.
This leads us to agree with the opinion expressed by Michael Blake,
that "coercion, not cooperation, seems to be the sine qua non of dis-
tributive justice, making relevant principles of relative deprivation." 2 61
Coauthorship in legislation is not required for the claim for equal-
ity. 2 6 2 It is rather "the shared subjection to a coercive state apparatus
that makes for a morally relevant property that fellow citizens
share." 263 Under these circumstances, the right to equal treatment ap-
plies "among those who share in the provision of the basic collective
goods required to develop and act on a plan of life." 2 6 4
From a constitutional policy perspective, this is the line to take. In
order to avoid any discrimination and exploitation of resident nonci-
tizens being fully taxable in a jurisdiction but deprived of the right to
vote, constitutional law should prohibit any specific tax burden due to
foreign nationality. 265 Rather, as they are not full political members of
the local society and not obliged to equal sacrifice, 2 6 6 they should be
taxed less intrusively than local citizens. Thus, while the treatment of
259 Nagel, note 256, at 128-29.

260 Andrea Sangiovanni, Global Justice, Reciprocity, and the State, 35 Phil. & Pub. Aff.
3, 20 (2007).
261 Blake, note 256, at 289; Blake & Smith, note 256, para. 3.1.
262 Sangiovanni, note 260, at 14.
263 Mathias Risse, What to Say About the State?, 32 Soc. Theory & Prac. 671, 678
(2006).
264 Sangiovanni, note 260, at 38.
265 Cole, note 250, at 376; see also John Hart Ely, Democracy and Distrust: A Theory of
Judicial Review 161 (1980).
266 See Part IV.B.2.
nonresident citizens will fall short of the level of congruence achieved
under the vote allowed in the domestic situation, resident noncitizens
ought still to be entitled to content-based protections. Only domestic
citizens are in the position to vote on fiscal matters, and these deci-
sions also affect resident noncitizens who are liable to tax on a territo-
rial basis. But the electorate and its representatives are not allowed to
abuse their voting rights to the detriment of that nonvoting part of
domestic society. The content-oriented principle of equality should
take care of those who are not entitled to make tax policy through
their vote.
VI. TAX COMPETITION AND THE TAX-MOTIVATED MOVEMENT OF

LABOR AND CAPITAL
A. Basic Tax Competition Model
This international dimension of taxation and democracy gains a

completely different dynamic once we enter the field of tax competi-
tion. The basic model of tax competition is easily explained. Mobile
taxpayers and mobile production factors are able to move with ease
between jurisdictions. This is particularly true for high-skill or high-
net-worth individuals and for financial and intangible capital. Con-
versely, low-skill labor, sunk investment, and land are relatively im-
mobile and stay put. Mobile persons and mobile factors should be
able to exert pressure on local governments to provide a beneficial tax
framework. Governments will feel obliged to recast their tax systems
and to lower the tax burden on those mobile persons and factors.
Moreover, they will also reconsider the sheer size and the composition
of the public sector, the efficiency of public spending and the scale of
redistribution. The very concept of the social welfare state comes
under pressure. 267 This is viewed by many authors and political actors
26 8 Mobile tax-
as a severe constraint on democratic decision-making.
payers gain influence on the political process and its outcomes going
far beyond their formal voting power.
The economics of tax competition have been one of the mainstays
of public finance research for several decades now and shall not be
reiterated in this Article. 269 Moreover, we shall not delve into the
heated debate on the merits of concepts like "harmful tax competi-
267 Reuven Avi-Yonah, Globalization, Tax Competition, and the Fiscal Crisis of the Wel-
fare State, 113 Harv. L. Rev. 1573 (2000); Philipp Genschel, Globalization, Tax Competi-
tion, and the Welfare State, 30 Pol. & Soc. 245 (2002); Hans-Werner Sinn, The Selection
Principle and Market Failure in Systems Competition, 66 J. Pub. Econ. 247 (1997).
268 Dietsch & Rixen, note 256, at 150-56; Ronzoni, note 256, at 37.
269 Keen & Konrad, note 27.
tion"270 or the assessment of "aggressive" tax planning by multina-
tional companies. 271 In this respect there is a growing consensus
among states led by international and supranational bodies such as the
G20, the OECD, and the European Union to outlaw some extreme
tax-saving options like tailor-made preferential regimes or tax ar-
rangements devoid of economic reality. But this development has not
fundamentally changed the playing field. It remains undisputed that
countries are still free to define their tax bases and the applicable tax
rates. They are in no way hampered in competing for outside invest-
ment and in particular attracting bona fide business activities. This is
the background for the recent new wave of reductions of corporate
tax rates by the current governments of major countries such as the
United Kingdom and the United States. Moreover, we see a growing
tendency by countries to offer attractive tax packages to "Olympic cit-
izens," 272 high-net-worth individuals, and high-skilled labor.2 7 3 Such
tax reductions will generally force those generous governments either
to shrink the public sector or to increase other taxes or to take on
additional public debt. These competitive moves are not only in line
with international standards after the BEPS Action Plan implemented
by the G20 and OECD and EU law requirements, they are also meant
to put pressure on other governments, most notably on the Member
States of the European Union,2 7 4 to adjust their fiscal policies.
What does this mean for the balance between majoritarian democ-
racy and individual rights in the tax area? The outcome is mixed. We
observe both improvements and distortions of the democratic process
on tax legislation. For taxpayers who are mobile, democratic process
may actually be improved by tax competition (and the mobility it pre-
supposes). For taxpayers who are immobile, the story is a darker one
and invites again the question about the desirability of material consti-
tutional constraints.
B. Tax Competition as a Complement to Democracy

Theorists of tax competition have long emphasized the fact that the
option of a mobile taxpayer, corporate or individual, to move out of a
270 OECD, Harmful Tax Competition: An Emerging Issue (1998). For the
grounding of
mutual obligations between states to follow certain rules of "sound" tax competition in
political philosophy, see Allison Christians, Sovereignty, Taxation, and Social Contract, 18
Minn. J. Int'l L. 99 (2009).
271 OECD, G20 Base Erosion and Profit Shifting Project, 2015 Final Reports.
272 Ayelet Shachar, Picking Winners: Olympic Citizenship and the Global
Race for Tal-
ent, 120 Yale L.J. 2088, 2117 (2011).
273 Allison Christians, Buying In: Residence and Citizenship by Investment, 62 St.
Louis
U. L.J. 51, 52 (2017).
274 Sch6n, note 30.
tax jurisdiction can be modeled following Albert 0. Hirschman's fa-
mous trinity of exit, voice, and loyalty. 275 A minority of taxpayers
whose fiscal preferences can be suppressed by majority rule but who
are not constrained by strong loyalty to their country can use the exit
route in order to escape adverse conditions in their home state, either
by shifting residence to another country or by moving investment
outside the jurisdiction.
Given the fact that constitutional constraints for tax legislation are
either weak or nonexistent in many countries, the exit option can sub-
stitute for material controls. Tax competition can then work as a limi-
tation on the expropriation of the rich minority by the poor majority.
Importantly, mobile taxpayers need not actually move. It is the mere
threat of migration that can constrain domestic tax policy.
This is particularly relevant for the progressivity of the tax rates on
income, inheritance, and net wealth, which is hardly regulated by con-
stitutional law. For example, the special 75% tax on high-income earn-
ers introduced in France in 2012 was condoned by the French Conseil
Constitutionnel in 2013.276 This surtax on the regular income tax was
nonetheless repealed in 2015, as it turned out that the amount of reve-
nue was negligible, while the threat of emigration by high-net-worth
individuals was serious. 2 7 7 In Germany, the question of whether con-
stitutional law prohibits an income tax rate above 50% has been dis-
cussed ad nauseam both by tax scholars and constitutional lawyers
since the invention of the "half-income limitation" by the Constitu-
tional Court in 1995,278 but not a single tax assessment has been struck
down on the basis of this half-income principle. Tax competition, on
the other hand, drove down the corporate income tax rate from 56%
in 1988 to 15% less than twenty years later. The top income tax rate
fell during the same period from 56% to 47%, including a surtax for
high-income earners ("Reichensteuer") and the "solidarity surcharge"
on the income tax introduced in the course of German reunifica-
tion. 279 Countries such as the United States and the United Kingdom,
where no meaningful constitutional constraints to the tax burden seem
to exist, have embarked on an even more substantial lowering of the
corporate tax burden, following Ireland's example where a 12.5% tax
0
rate has proved to be highly attractive over many years.28 It is not
275 Dagan, note 116, at 30.

276 Rouzaud, note 99.
277 Anne Penketh, France Forced to Drop 75% Tax After Meager Returns, The Guard-
ian, Dec. 31, 2014.
278 German Constitutional Court, note 112.
279 Ganghof, note 79, at 112-37.
280 As of 2018, the federal corporate tax rate in the United States has been reduced from
35% to 21%. In the United Kingdom, the corporate tax rate is announced to be reduced to
unreasonable to assume that without tax competition in place, the bal-
ance of powers between majority and minority in the democratic fiscal
state might be tilted substantially more toward the majority.
C. Tax Competition as a Threat to Democracy

To what extent should constitutional rules and principles, in particu-
lar rules on horizontal equity and the ban on tax privilege, constrain a
country's engagement in tax competition? What if the beneficial treat-
ment for high-mobility individuals and foreign investment, relative to
the average treatment of similar domestic individuals and domestic
investment, becomes too great? Taking the historical emergence of tax
principles in the seventeenth and eighteenth centuries as a starting
point, one could compare modern-day fiscal preferences for individu-
als to invidious tax privilege historically granted certain persons and
social classes-preferences meant to be wiped out in the course of the
nineteenth century. Should a constitutional principle of horizontal eq-
uity be used to counter the tendency to grant overly generous tax
breaks for foreign taxpayers and foreign capital?
In this respect, recent tax history has seen several major examples
where emerging fiscal privilege driven by tax competition has been
subjected to a constitutional test.2 81 One prominent case is legislation
in some Swiss cantons where "regressive" income tax rates sought to
attract high-income individuals. In a landmark judgment delivered in
2009, the Swiss Federal Tribunal declared these regressive income tax
rates to run afoul of the ability-to-pay principle as enshrined in the
Swiss constitution. 2 8 2 But the tribunal left open the option for the leg-
islature to introduce narrower tailor-made solutions in order to be
able to participate in tax competition. 2 83 In Germany, the introduction
of a low flat rate on interest and dividend income in 2008 and a reform
proposal to establish a "dual income tax" 2 8 4 along these lines gave rise
17% by 2020. See IRC § 11; HM Revenues & Customs, Rates and allowances: Corporation
Tax, https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/
rates-and-allowances-corporation-tax (last visited March 11, 2019).
281 See generally Ulli Konrad, Gleichheit und Differentiation: Die Duale Einkommen-
steuer und der Gleichheitssatz (2016).

282 Bundesgericht [BGer] [Federal Supreme Court] June 1, 2007, No.2P.43/2006/fco, 9
8.3 (Switz.). A similar outcome was reached by the German Constitutional Court in a judg-
ment concerning a regressive tax on "second homes" without any reference to the special
case of tax competition. See Bundesverfassungsgericht [BverfG] [German Constitutional
Court] Jan. 15, 2014, 1 BvR 1656/09, 135 Entscheidungen des Bundesverfassungsgerichts
136.
283 BGer, note 282, ¶1 10-11.
284 German Council of Economic Experts, Max Planck Institute for Intellectual Prop-
erty, Competition and Tax Law & Center for European Economic Research, Dual Income
Tax, 39 ZEW Economic Studies (2006).
to a heated debate on whether the constitutional principle of horizon-
tal equity prohibits any distinction between income from (mobile)
capital and income from (immobile) labor, an issue avoided so far by
the Constitutional Court in its jurisprudence. 285 A third example was
mentioned above. Many countries have introduced large-scale exemp-
tions from inheritance taxation for "business assets," thus granting re-
lief to the superrich to a large extent and shifting the brunt of the tax
to the upper middle classes who own "private assets." 286 Again, one of
the main arguments is competitive pressure by foreign businesses and
the fear of losing out to taxpayer emigration. In a 2014 judgment, the
German Constitutional Court accepted this justification but urged the
legislature to award preferential treatment to business assets only in a
narrow and targeted fashion, examining the necessity and the propor-
tionality of the tax benefit in light of the principle of tax equality. 2 8 7
In order to assess the normative strength of these various ap-
proaches, it is necessary to consider the fundamental question of inter-
national taxpayer solidarity. In other words, is there sufficient
solidarity among mobile and immobile taxpayers to ground material
constitutional constraints?
One clear element of tax competition is the retransformation of a
tax into a price for benefits received. This echoes the way that con-
tractarian political philosophers such as Locke conceived of the fiscal
burden for the citizens of a state.2 8 In such a world, taxpayers individ-
ually decide on their willingness to pay a certain price for the protec-
tion and support of their personal and business activities by the
government. From the perspective of the closed state and the closed
economy, this contractarian view had been replaced during the nine-
teenth century by a state-oriented or membership-based perspective,
speaking not of equal benefit for the taxpayer but of equal sacrifice by
the taxpayer, hypothesizing a community of citizens showing mutual
285 Bundesverfassungsgericht [BverfG] [German Constitutional Court] June 21, 2006, 2

BvL 2/99, 116 Entscheidungen des Bundesverfassungsgerichts 164 (191) ("The economic
purposes of promotion and of incentives which are aimed at the protection of Germany as
a location for business are appropriate to complement the compensation of the trade tax
burden which is the decisive justification for the unequal treatment vis-A-vis those who
earn profits from non-commercial activities. Whether these purposes are per se and under
circumstances different from those here existent sufficient to have legitimizing effect, does
not have to be decided by the Senate [in this case].") (translation by author).
286 Johanna Hey, Dieter Birk, Aloys Prinz, Janine V. Wolfersdorff & Detlev J. Piltz,
Zukunft der Erbschaftsteuer: Wege aus dem Reformdilemma aus verfassungsrechtlicher,
okonomischer und rechtspraktischer Sicht, 506 Institut Finanzen und Steuern (2015).
287 BVerfG, note 186.
288 Dagan regards both the "marketization" and the "fragmentation" of the relationship
between the taxpayer and the state as dimensions of this change. See Dagan, note 116, at
24.
solidarity to each other and contributing to the public funds according
to ability to pay. 2 8 9
Tax competition gives back to taxpayers the notion of individual
consent in a Lockean sense, not by casting a vote in a universal ballot
but by deciding where to reside and work or where to invest and carry
on a business. The contractarian view of taxation as a price for bene-
fits delivered by the state thus resurfaces under the pressures of
globalization. Against this background we are confronted with the
widely heard claim that multinational companies and other mobile
taxpayers should pay their "fair share" of tax, just as everyone else
does.2 90
This brings us to the question of whether the concept of compulsory
solidarity and distributive justice has a meaning in this brave new tax
world. As Miriam Ronzoni and Tsilly Dagan have shown, there are
two ways to think about this problem. 291 One can confront the issue
from the vantage point of "global tax justice," in which case one has to
address the impact of tax competition on global inequality among the
citizens of the world, in particular on the allocation of fiscal revenue
among developed countries, tax havens, and developing countries. 292
This is a serious issue but not at the core of this Article. Or, one can
also address the impact of tax competition on democratic decision-
making and distributive practice inside a given state. This is the issue
this Article is about. But if we want to make the claim of social justice
operational from the perspective of an individual state, we must iden-
tify and define the community to which these taxpayers belong and to
which the principles of social justice can be applied. 293
This is not easy. Consider individuals first. If the willingness of for-
eign taxpayers to relocate is at issue, it is simply not feasible to apply
to them the principles developed for a community based on citizen-
ship or linked to a concept of a territorial community where principles
of social justice prevail. A state that wants to attract a foreign tax-
payer to move to its territory (and to become liable to tax for the first
time) cannot expect the taxpayer to show the same degree of solidar-
ity as a local citizen. The contractarian status of taxation logically and
temporally precedes the accession to membership in a community
where sacrifice and solidarity define the mutual relationship. Foreign
taxpayers can therefore make their decision to relocate dependent on
the willingness of the state to grant preferential fiscal status, at least
for a couple of years until the entrant has become a full member of
289 See Part IV.D.2.

290 OECD, Action Plan on Base Erosion and Profit Shifting 7 (2013).
291 Ronzoni, note 256, at 44; Dagan, note 116, at 189.
292 Dagan, note 116, at 185.
293 Id. at 38.
the domestic community. The receiving state has no choice. This is
reflected in the time-limited benefits contained in most packages of-
fered to high-net-worth individuals and other attractive taxpayers for
moving to countries such as the United Kingdom, Italy, Portugal, and
other places. 2 9 4
If a state aims to attract foreign investment, as opposed to individu-
als, the notion of distributive social justice plays an even less promi-
nent role. A foreign taxpayer who merely invests capital in a country
is neither a member of the citizenry of this country nor a member of a
territorially defined society. Such taxpayers are not under any moral
obligation to refrain from making their investments dependent on
beneficial tax treatment.
To be sure, from the perspective of social justice, the analysis of
solidarity looks different when an individual existing member of a
given community, a citizen or a resident, exercises the right to invest
abroad or to move personally to another country with the intention of
reducing an overall tax burden. As long as the person does not leave
the country, the fiscal state can exercise its authority and demand full
taxation of worldwide income and wealth and apply a progressive tax
rate. The same holds true for domestic residents and citizens when it
comes to net wealth taxation and inheritance taxation.
The problem is that under the current framework, which allocates
taxing rights on the basis of residence and not on the basis of citizen-
ship, each taxpayer can simply cut the ties of fiscal solidarity by actu-
ally moving to another jurisdiction where the tax environment is more
attractive while keeping citizenship, and thus political membership,
unchanged. 2 9 5 As shown above, under the current legislation applica-
ble in most countries, taxpayers will not even lose their voting rights
once they have moved abroad. 296 The only option a country has under
these circumstances is to unilaterally extend unlimited tax liability on
the basis of ongoing citizenship either for good (as under U.S. law) or
2 97
for a limited number of years (as under Dutch or German tax law.)
294 Beretta note 237; Beretta, note 238.
295 With reference to the absolutist notion of total dominion of the "Sovereign" over the
people and the wealth located in the state's territory, the seventeenth and eighteenth cen-
turies had seen in Europe the application of a "gabella emigrationis." See Isaak David van
Buytenhem, Dissertatio juridica inauguralis de Gabella Emigrationis Quae Jure Patrio Vo-
catur Exu-Geld (Utrecht 1757). This "gabella emigrationis" was only abolished after the
French Revolution in many parts of Europe. See Clive Parry, Review of Plender, Interna-
tional Migration Law, 21 Am. J. Comp. L. 794 (1973). For Germany, see Article XVIII lit.b
of the "Bundesakte" concluded at the Vienna Congress in 1815, which introduced the indi-
vidual right to move between countries without being subject to an emigration tax
("Nachsteuer").
296 See Part V.B.
297 Aujensteuergesetz [International Tax Act] §2. This "extended tax liability" of citi-
zens living abroad has been held to be compatible with the European fundamental free-
Even so, if a taxpayer decides to give up both residency and citizen-
ship in a country, the taxpayer would be free of all forward-looking
fiscal obligations, apart from settling a "final tax bill" on unrealized
gains and profits. 2 98
The most complicated case, though, involves prospective nonresi-
dents, who simply threaten to leave the country in order to press for
beneficial treatment. On the one hand, they claim to remain members
of the domestic community (for the time being); on the other hand,
they want to make this status dependent on a significant lowering of
the tax burden. While this clearly reduces the level of solidarity they
show in terms of fiscal sacrifice, the question remains whether the do-
mestic legislator should be prevented from meeting their demands and
should be obliged to stick to the principle of equality and the envis-
aged level of redistribution. This is a hard choice, not because of the
interest of the individuals threatening to leave but because of the in-
terest of the community in keeping these individuals and their eco-
nomic power inside the territory for the benefit of all. Is some
inequality tolerable if it increases general welfare? 299 Or, is this the
opening of a Pandora's box, inviting all sorts of tax privilege? From
the point of view of constitutional policy, it seems advisable to "estab-
lish and secure the more attractive prospects for the better off" if "do-
ing so is to the advantage of those less fortunate." 3 On the other
hand, if tax benefits for mobile persons, assets, and activities do not
"trickle down" to the less mobile members of society, the tax legisla-
tor might have good reasons to revoke the benefits granted in the pur-
suit of general welfare.
The examples discussed in the preceding paragraphs have analyzed
the perspective of a single country-that is, the country that either
grants concessions to retain mobile taxpayers currently in the base or
that grants concessions to attract mobile taxpayers not currently in the
base. The domestic questions of tax and democracy are largely the
same across these cases of taxpayer retention and taxpayer attraction.
Specifically, what level of equal treatment of mobile and immobile
taxpayers is demanded if taxation is no longer taken to be based on
"equal sacrifice" but rather is reconceived as a price for public goods
open to negotiation? We have seen that the question is complicated
and given the limits on international solidarity, tax competition can
indeed pose meaningful threats to democracy. The detrimental effect
doms by the European Court of Justice. See Case C-513/03, Heirs of M.E.A. van Hilten-
van der Heijden v. Inspecteur van de Belastingdienst, 2006 E.C.R. 1-1981 para. 44.
298 Wolfgang Schon, Steuerstaat und Freiziigigkeit, in Steuer- und Sozialstaat im
europtischen Systemwettbewerb 41 (Ulrich Becker & Wolfgang Sch6n eds., 2005).
299 Id. at 175-80.
300 John Rawls, A Theory of Justice 75 (1971).
of this change of paradigm, however, may be diminished if we expand
the analysis to consider compensating tax treatment across countries.
A case in point is limited tax liability. Foreign taxpayers who are
only taxable in a country on the basis of inbound investment and local
business activities might reject demands of solidarity with the local
fiscal community since they are neither members of the territorially
defined social organism nor in a political sense citizens of that state.
They will simply regard source taxation as a price to pay for setting up
shop. But still, foreign taxpayers will be fully taxable in their state of
residence where principles of worldwide taxation and progressivity of
the tax rate will be applied. The fact that the requirements of social
justice do not apply to them in the source state can be accepted under
the requirements of social justice if and to the extent they are fully
taxable in another state. Residence taxation then works like a back-
3 01
stop to secure "onetime taxation" under a fully progressive tax rate.
On the other hand, the state of residence is in the position to grant tax
reliefs that are perceived to be adequate from the point of social jus-
tice. 302 In a similar vein, a state's complaint about a taxpayer's moving
out of the country is less forceful if and to the extent the taxpayer
becomes subject to fiscal obligations in another state, trading one tax
community for another without drastically reducing the overall tax
burden.
This raises the question of whether it should be ensured that a per-
son is taxable at least in one state in full. In recent years, this problem
has been raised by the G20/BEPS process on international business
303 But
taxation whenever "stateless" income seemed to go untaxed.
the issue was recognized as early as 1888 by Ely who found that full
taxation of resident aliens might be good policy in order to ensure that
people could not free themselves from unlimited tax liability for good
by emigrating from their country of citizenship without fully integrat-
ing into the country of residence. Writing like a "cosmopolitan" politi-
cal philosopher avant la lettre he referred to this as a general matter of
humanity: "It may be further urged that a man owes certain duties to
humanity, and if he fails to discharge the offices of citizenship at
home, it is ethically allowable for a foreign government, which can lay
its hands on him, to force him to do his part towards the support of
304
government."
While the spirit of this position is laudable as long as taxpayers have
not committed themselves to a certain fiscal community it is hard to
30 Schdn, note 214, at 557.

3 Case C-279/93, Koln-Altstadt v. Schumacker, 1995 E.C.R. 1-225.
303 Edward Kleinbard, Stateless Income, 11 Fla. Tax Rev. 699 (2011); Edward
Kleinbard, The Lessons of Stateless Income, 65 Tax L. Rev. 99 (2011).
304 Ely, note 131, at 9 n.2.
say which mechanism might be used to enforce their obligation "to
humanity." There is no international tax organization allocating tax-
payers to certain countries in order to prevent them from hiding away
as citizens of nowhere. Moreover, while Ely's argument might justify
other states to take action against resident aliens and other foreigners
escaping meaningful taxation in their home country, this does not re-
quire these other states to do so. Rather, as current tax competition
shows, states feel inclined to offer attractive packages to foreign tax-
payers built on beneficial treatment. When states have no incentive to
preserve a high level of taxation and when mobile taxpayers have no
incentive to fully integrate into a fiscal community, any moral obliga-
tions to pay their "fair share" of taxes "somewhere" hang in the air.
This leads us back to the Rodrik world where only a substantial move
of public authority to a supranational level will solve the problems of
regulatory competition in open market societies. In the current state
of affairs domestic material constitutional constraints on the content
of tax law will thus lack efficacy, even if normatively desirable. Indi-
vidual states, given both their constitutional setup and their political
preferences, will not, by themselves, be able to ensure an equal level
of taxation.
VII. CONCLUSION
The congruence of voting on tax legislation, payment of taxes, and
the enjoyment of public expenditure is today more myth than reality,
even in countries with the strongest democratic commitments. Al-
though such congruence may well have been a robust possibility when
Locke articulated a theory of taxation grounded in taxpayer consent,
the expansion of the franchise domestically and the mobility of indi-
viduals and capital globally have continually eroded congruence over
the last three centuries. This invites the pressing question of whether
material constitutional constraints are warranted in order to protect
taxpayer interests.
Within the Hobbesian tradition of content-based protection, such
constitutional constraints are a natural fit and are, indeed, observed in
many jurisdictions across the world that have historically endorsed the
Hobbesian notion of the primacy of the state. At least in the domestic
sphere, I have argued here that there are solid grounds on which to
adopt such constraints within the Lockean consent-based tradition as
well, though the key adherents to that tradition have not, to date,
taken that path.
In the international sphere matters are more complicated. Some-
times one encounters the migration of individuals for nontax reasons,
leading to an erosion of congruence. In this case, I have also argued in
favor of material constitutional constraints. The case of resident
noncitizens is central to this claim. At present, such individuals fre-
quently are liable to tax on worldwide income to a polity in which they
cannot vote. One could cure such defect by enhancing congruence,
either by curtailing taxing rights or by expanding the franchise. Given
that each of these approaches is flawed, the adoption of material con-
stitutional constraints to protect the interests of resident noncitizens is
justified and of a piece with long-standing constitutional commitments
to protect minority interests in liberal democracies.
Once one comes to the problem of tax competition and the issue of
tax-motivated movement of capital and labor, however, the domestic
constitutional well would seem to run dry. Tax competitive forces can
clearly lead to disproportionate burdens being borne by relatively im-
mobile taxpayers. The deep problem here, though, is that domestic
constitutional provisions are no more resistant to the relentless forces
of globalization than are day-to-day nonconstitutional legislative prac-
tice. Absent material constraints at the supranational level, the adop-
tion of constitutional constraints here would seem doomed to failure
as a practical matter.
304 TAX LAW REVIEW

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Bluebook 21st ed.

ALWD 6th ed.

APA 7th ed.

Chicago 17th ed.

McGill Guide 9th ed.

AGLC 4th ed.

MLA 8th ed.

OSCOLA 4th ed.

This Article is meant to be a contribution to comparative constitu-

II. CONGRUENCE: TAXATION, REPRESENTATION, AND PuBLIc

Both from a historical and a comparative perspective, the starting

6 Magna Carta, 1 12 (1215), https://www.bl.uk/magna-carta/articles/magna-carta-english-

1o U.S. Const. art. I, § 7.

14 Simon Kempny, Die Staatsfinanzierung nach der Paulskirchenverfassung [The Public

It is interesting to see that the apparently happy interaction be-

A. Domestic Erosion of Congruence and the Call for Redistribution

B. Globalization and the Erosion of Congruence

26 Dani Rodrik, The Globalization Paradox (2011).

IV. DOMESTIC TAx LEGISLATION AND CONSTITUTIONAL CONSTRAINrs

The following part of this Article is devoted to the interaction be-

30 Wolfgang Sch6n, Tax Competition in Europe-General Report, in Tax Competition

A. Content Versus Consent: Two Different Concepts of Taxpayer

1. Protection by Content-The Evolution of Material Tax

that Justice be equally administered to all degrees of the

To Equall Justice, appertaineth also the Equall imposition

Equality of taxation (according to Hobbes on the basis of "benefit")

As I said before, a different line of thinking links the justification of

It is true, governments cannot be supported without great

Reading Locke from the perspective of modern political economy,

70 See Part III.A.

75 3 F.A. Hayek, Law, Legislation and Liberty 441 (1979).

3. The Enduring Divide Between Content and Consent-The

so Mill, note 47, bk. 5, ch. 2, § 2 ("Government must be regarded as so pre-eminently a

B. Property, Redistribution, and Constitutional Commitments

Two of the main differences between the content-oriented frame-

1. Private Property and the State

Locke, as noted, deduces the necessity of taxpayer consent from the

Every man has indeed a Propriety that excludes the Right

It is visible from this quotation that Hobbes regards the property of

95 2 Hobbes, note 33, ch. XXIX.

No public tax, custom or contribution shall be imposed

In political and constitutional discourse, the Hobbesian notion that

108 Schumpeter, note 106.

social model of the state and society is particularly important in the

C. Taxpayers and Citizens-The Dialectic of Congruence

Andr6 Barilari, Le Consentement A L'Imp6t 15 (2000) ("d6doublement du citoyen");

Rousseau repeats here the error of Hobbes and comes like

134 Rousseau, note 132.

Christian Seiler eds., 2013).

How ought the erosion of congruence with majoritarian rule in a

D. Judicial Review and Its Limitations

That case, however, still faces a substantial hurdle. Constitutional

148 Richard Bellamy, Political Constitutionalism: A Republican Defense of the Constitu-

E. Constitutional Constraints-A Comparative View

1. The English Approach

156 Chantal Stebbings, Consent and Constitutionality in Nineteenth-Century English

2. The U.S. Approach

The people of a State, therefore, give to their Government