Governments raise funds so that they can pay for the services they provide to their constituents. But sometimes the public finance function goes beyond mere revenue raising and into the realm of social engineering. Excise taxes, for example, can go beyond mere user fees if the intent is to punish certain forms of behavior. Income taxes can be imposed not only to raise revenue but also to redistribute income. Tax subsidies can be used to subsidize certain forms of behavior. This article explores some of the ethical problems that can result when the public finance function goes beyond mere revenue raising and into the realm of social engineering.
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