9.8 Discussion of assessment results and recommendations

In relation to the three topics of innovation, the environment, and employment, good arguments were found for state intervention in the case of clear market failures. A more proactive approach by states, and the choice how to intervene, would however require careful consideration of the different options available, and of the potential drawbacks pertaining to those options.

Furthermore, based on the three assessed topics, it seems uncommon in practice for taxation to focus on well-being. This may have to do with observed difficulties of specificity, measurability, and achievability that seem to surround concepts of well-being. Moreover, and similar to the conclusions reached in chapter 3 of this research, for each of the topics assessed it proved difficult to convincingly establish a dominant importance of well-being, above and beyond other matters that, while they may affect well-being, may reasonably also carry importance outside the sphere of well-being. Notwithstanding, and as also argued in chapter 3, the topics at the same time suggest that consideration of well-being as an aim for states has its value, in that it obliges states to consider in a broad way what is good for people, and thus calls for further discussion of the more traditional emphasis from states on for instance economic production, or on income or other money-oriented measurement items. In addition, use of a concept such as well-being obliges states to consider the effects of their policies not in isolation but in integration, taking into account how different government policies affect each other and ultimately, how such policies impact the way life is going for the individuals concerned.

Thus, and in line with the answer to the first main research question established in chapter 3 of this research, it is concluded that, while there is a case to be made for states to aim for well-being through taxation, such a case cannot find a broad basis of normative support and brings with it many intricate and important issues to which states need to be very sensitive. Therefore, states should exercise caution and restraint when aiming for well-being through taxation.

In answer to the second main research question, a framework that instils caution and restraint in states was proposed and explained in chapter 4, to allow for plural assessment through ten questions. It was recommended that the answers to those questions are published by states as part of their legislative or other tax policymaking processes. Publication increases transparency, the possibilities for scrutiny, and with that, state accountability. Answers provided during the tax law policymaking process to the questions contained in the assessment framework can thus also provide clarity to judiciaries as to the meaning and intent of the law, and can stimulate for instance consistency of enforcement, as well as efficiency and effectiveness in execution and administration of the law. It was furthermore recommended that the answers to the questions contained in the proposed assessment framework are subsequently reviewed and results following therefrom are regularly evaluated by institutions that are independent of the institutions that design and apply the tax in question.

Application of that assessment framework to the topics of, respectively, tax incentives for innovation, environmental taxes, and tax incentives for employment, also suggests that a variety of alternatives to tax measures exists for states that pursue well-being aims, with many of those alternatives providing for a more fundamental intervention. While a substantive body of research attaches importance to, and focuses on, a predominantly consequentially oriented assessment of the effectiveness and efficiency of tax measures, such research typically focuses on assessment in light of narrower or more economically oriented concepts than well-being, such as welfare. Substantiation of overall net well-being effects, the contribution of the tax measure thereto, and the incidence of tax measures, is no easy task due to data and methodological challenges. Systematic and rigorous evaluations using high-quality data, as proposed in chapter 4 of this research, are not (yet) standard, and long time horizons typically need to be factored in.

The three case studies also suggest that deontologically oriented questions, regarding conformity of tax measures with applicable laws and regulations, and regarding potential conflicts with principles that underlie tax systems, are typically assessed in isolation in existing research. Pro-active use of tax measures to aim for well-being not only increases the chances of conflict with laws or principles, but also raises a deontological concern with regard to their potential impact on political processes. Notably, using tax, with a view to well-being, may be susceptible to additional lobbying by special interest groups, which may result in distortion of the tax over time into something else than originally envisaged or intended. Similar to the conclusions drawn in chapter 3 therefore, aiming for well-being through taxation increases the risk of ‘injustice’ in taxation, in the sense that using taxation to achieve states’ well-being aims is more likely to create conflict with norms, principles, and procedures that should, in the deontological view, govern taxation.

The application of the assessment framework in chapters 5 to 7 furthermore suggests that it is currently relatively rare for tax measures to be assessed in terms of their virtuousness, notwithstanding the finding that tax measures can on the one hand stimulate character traits that are typically positively viewed upon, but on the other hand can also stimulate character traits that carry negative connotations. The three case studies suggest that aiming for well-being through taxation can meet with reduced public support, and risks encouraging competition for existing well-being rather than bringing about additional well-being. In line with what was observed in chapter 3 of this research, aiming for well-being through taxation may undermine people’s faith in and respect for tax law, and thus might detract from virtuous behaviour.

Thus, these results that follow from illustrative application in chapters 5 to 7 of the assessment framework to, respectively, tax incentives for innovation, environmental taxes, and tax incentives for employment, support the answers to the main research questions arrived at earlier in chapters 3 and 4. Not taking heed of the caution and restraint advocated in this research when dealing with taxation aimed at well-being can generate serious issues, as was illustrated in relation to the case studies addressed in chapters 5 to 7. Previously addressed issues and recommendations are also bundled and illustrated once more in chapter 8 through the assessment of a previously existing wide-ranging and ‘society-reforming’ Dutch investments tax incentive, which involved matters of innovation, the environment, and employment.

Furthermore, chapter 8 concludes that the illustrative application of the assessment framework aligns with the intended purpose and function of that framework, which is primarily to serve as an essential supporting structure in assessment of taxation aimed at well-being, and to instil caution and restraint in states that choose to aim for well-being through taxation.

Finally, certain suggestions for potential future research are provided. One of these suggestions, which is also embodied in the assessment framework proposed in chapter 4, is for further research to be performed on well-being and taxation, as current information is patchy, due to limitations in available research data, knowledge gaps, and less than full understanding of linkages. Future research could furthermore continue assessing tax measures concerning other topics that are related to well-being, using the framework proposed in this research. Lastly, future research could see continued application of the established framework of assessment specifically to a particular tax measure, tax, or practice, whether currently existing or proposed.